Two Paths to Transformation

While Transformed organizations serve as benchmarks for establishing analytics competencies, almost half of the organizations we surveyed are at the Experienced level, somewhere between the most basic and the most advanced segments.10 We took a closer look at this large transitional segment to better understand those organizations (see Figure 11).

We found that organizations, after starting, diverge in their approach to analytics. We characterize the alternative paths as Specialized or Collaborative, based on the way analytics is leveraged and deployed:

The Specialized path. Deep analytics expertise is developed within lines of business or specific functions using a wide array of analytical skills and techniques. Analytics is used to improve specific business metrics. Slightly more than half of the Experienced organizations took this route.

The Collaborative path. An enterprisewide information platform is created, enabling insights to be developed and shared across lines of business. Analytics is used to improve enterprise objectives. Slightly fewer than half of Experienced organizations took this route.

See Figure 12 for a comparison of the relative proficiency levels these paths exhibit for each of the three analytics competencies.

The Specialized Path Can Lead To Well-Defined Gains

With impetus coming from within lines of business, organizations on the Specialized path pragmatically focus on improving their operational metrics while growing revenue and increasing efficiency. They use their analytical prowess in advanced skills and techniques, such as predictive modeling, to focus on orchestrating marketing campaigns and finding the best match between individual customers and sales representatives.

FIGURE 11: Paths to Transformation



View Exhibit

In addition to the revenue gains resulting from these programs, the Specialized path takes organizations through a wide range of efficiencies and cost savings. Predictive scenarios and simulations, for example, make it possible to understand how changes caused by internal strategies and external forces will impact individual units in terms of resource allocations, revenue growth and operating costs. We found that organizations on this path increased their use of analytics over the last 12 months, but rarely as a core part of the overall business strategy.

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References

1. Organizational performance is a self-assessed measure that delves into the organization’s competitive position relative to its industry peers. Respondents are asked to select one option from five choices: substantially outperforming competitive peers, significantly outperforming competitive peers, on par with competitive peers, slightly underperforming competitive peers, or significantly underperforming competitive peers.

2. LaValle, Steve, et al. “Analytics: The New Path to Value.” MIT Sloan Management Review and IBM Institute for Business Value knowledge partnership. October 2010.

3. ibid.

4. IBM Institute for Business Value. “Capitalizing on complexity: Insights from the 2010 IBM Global CEO Study.” May 2010.

5. Corporate Executive Board, “Internal Audit’s Role in ERM,” referenced 21 October 2011.

6. Torok, Robert. “Improving enterprise risk management outcomes.” APQC. 2011.

7. Clanton, Brett. “Chevron stayed busy while idling in deep water: Staying busy while idle – Confronting a deep-water slowdown in the Gulf, Chevron worked to get more from its data.” Houston Chronicle. July 11, 2011.

8. ibid.

9. Teerlink, Dr. Marc and Dr. Michael Haydock. “Customer analytics pay off: Driving top-line growth by bringing science to the art of marketing.” IBM Institute for Business Value. September 2011.

10. Our findings on the two paths are based on response patterns from a representative sample of Experienced organizations using a subset of key questions from our survey.

i.Looking at Robert Bruce’s Two Huge Healthcare Bets,” Guru.com. September 6, 2011. Accessed on October 17, 2011.