The Untapped Value of Analytics
The growing availability of data is creating an unprecedented opportunity for businesses to analyze it better understand their value of analytics.
The growing availability of data is creating an unprecedented opportunity for businesses to analyze it and radically improve their decision-making. Because of this the value of analytics has never been higher. But this is a brave new world for most C-suite executives who find themselves unable to answer crucial questions: How do we compare with our competitors? What areas of our business are most valuable? Do we have the best talent? Is our budget big enough? And, most importantly, does the profit we are likely to accrue—thanks to the exploitation of data—justify our investment in analytics?
With this in mind, Melbourne Business School and Kearney created the Analytics Impact Index to determine the potential impact on a company’s profitability and identify the areas with the greatest opportunities for improvement. We have studied hundreds of companies around the world, and our research reveals that the 8 percent of companies that are market leaders in analytics have generated 60 percent more profit than the businesses that lag so far behind them.
Although most discussions about analytics are focused on technology and infrastructure, our study shows that leadership and organizational culture are also vital. The leading organizations typically have a well-defined analytics strategy and a culture of data-driven decision-making that is embedded throughout the organization. In fact, companies that invest in analytics ecosystems without any strategic leadership actually see a negative impact in the short to medium term.
The Analytics Impact Index provides a framework for measuring the impact of analytics. Forward-thinking companies can use it to identify the gaps and the potential opportunities—building the case for change. Over time, the Index can be used to chart a company’s analytics capability as it evolves.
In this paper, we discuss the Analytics Impact Index and take an in-depth look at the strategies companies can use to become analytics leaders and assess the financial impact this may have.
The Analytics Impact Index
Many companies are unlocking the value ofanalytics by trying to uncover meaningful patterns in their data - across disciplines such as statistics, optimization, simulation, visualization, and machine learning - in an attempt to develop data-driven decision-making. But how effective are these initiatives?
Now, for the first time, our Analytics Impact Index gives organizations an understanding of the potential value of analytics as well as the capabilities that are needed to capture the most value. To create the Index, Melbourne Business School and Kearney surveyed more than 400 companies with a median revenue of $1 billion across 34 countries and a dozen industries - benchmarking both the value realized and the analytics capabilities within each organization.