December 2020 | 733 words | 3-minute read
Analytics today is where technology was a few decades ago. While technology has shaped new business models and transformed the way of doing business, analytics has the power to lead us into new ways of working.
We are at an inflection point where analytics will transform our businesses. Maturity models, assessments and diagnostics unravel the current state and help identify future potential.
So do conversations!
“Analytics is a dark art” is how a loyalty head explained the solution to the chief marketing officer (CMO). A few months later, he was showing the CMO how a ‘k-means clustering’ algorithm unearthed micro-segments of customers exhibiting similar behaviours across a hundred attributes!
Such conversations validate that the question is not “should we” but “how do we” adopt analytics to change the way we work and impact business?
Solving the hitherto unsolved
It has been proven that analytics helps identify hidden process variations over time and is used to model behaviours and actions of users and consumers.
A company was faced with the challenge of identifying a fault in the product of a manufacturing process. While the existing solution was able to predict all instances of faults, there were too many instances of false alarms. Using analytics reduced false alarms by 75 percent. This demonstrates the impact of analytics in a manufacturing setup.
In this case, the team looked beyond the obvious data. For example, they looked at not only the slope of temperature change but also the relationship of the temperature with neighboring points. The journey doesn’t stop at 75 percent, and the model is being continuously fine-tuned to improve effectiveness.
However, this journey is iterative and requires a never-say-die attitude to achieve the desired outcomes.
Develop a portfolio mindset: Consider analytics investments as a portfolio of opportunities in the way a venture capitalist would. Most may give steady returns, some may fail while some may give a big payday.
Look beyond the obvious: Value may be found in areas not earlier identified; hence it is imperative to measure value more holistically. Consider a solution built for reducing logistics cost from the plant-to-distribution-centres, but during implementation future stock-outs were also identified as value levers.
Quantification beyond financial: The focus for most enterprises starts with leveraging analytics to drive financial impact. With increased adoption, analytics can be deployed for an ‘all pervasive’ approach across the enterprise, as processes do not operate in isolation.
Stitching solutions with ecosystem partners: It is a repeated refrain that “We have not found a partner yet that has all the skillsets needed to deliver this solution for us.” Companies today have realised the importance of ecosystem partners with varied capabilities to develop analytics solutions.
While companies are leveraging market research and category penetration reports, a wealth of data such as macroeconomic indicators, commodity prices, etc, is available to draw inferences from it. These data sources find applications across industries and problems, and data aggregators can be an integral part of the ecosystem.
Embracing analytics as one's culture
Enterprises have seen the value analytics brings to their core operations.
Having a data strategy goes a long way in ensuring that analytics is effectively leveraged. Analytics models are truly useful when they leverage internal and external data and its integration into the existing systems and processes.
Successful cultural transformation requires:
Leadership commitment: An enterprise-wide focus with the direct involvement of the CEO helps set the right tone. In many companies, senior business leaders are championing analytics initiatives.
Enabling structure: Building enabling structures such as centralised and decentralised teams, digital champions for each unit or function, and setting up an analytics Centre of Excellence.
Capability building: Invest in building newer capabilities in-house with support from partners.
Analytics is central to our digital future
Tata group companies have embarked on this journey and have made the right foundational investments in talent, organisational structures and technology. Sustained leadership commitment and engagement will be a key enabler in making this happen.
Our group culture of innovation and disruption, is accelerating this shift to embedding analytics into every aspect of doing business. The rate of change in digital has been unprecedented, and analytics is no different. But surely, analytics will be intrinsic to the digital transformation of every enterprise.
Author Vijaya Deepti is the CEO of Tata Insights and Quants (Tata iQ), a division of Tata Industries Ltd