This is part 6 of 11 from “Analytics: The New Path to Value,” a report on the findings of the 2010 New Intelligent Enterprise Global Executive Study and Research Project.
When executives first realize their need for analytics, they tend to turn to those closest to them for answers. Over time, these point-of-need resources come together in local line of business units to enable sharing of insights. Ultimately, centralized units emerge to bring a shared enterprise perspective — governance, tools, methods — and specialized expertise. As executives use analytics more frequently to inform day-to day decisions and actions, this increasing demand for insights keeps resources at each level engaged, expanding analytic capabilities even as activities are shifted for efficiencies. (see Figure 9.)
Sophisticated modeling and visualization tools, as we have noted, will soon provide greater business value than ever before. But that does not mean that spreadsheets and charts should go away. On the contrary: New tools should supplement earlier ones, or continue to be used side by side, as needed.
There are other ways that capabilities grow and deepen within an organization. Disciplines like finance and supply chain are inherently data intensive, and are often where analytics first take root. Encouraged by early successes, organizations begin expanding analytic decision making to more disciplines. In Transformed organizations, reusability creates a snowball effect as models from one function are repurposed into another with minimal modifications.
Over time, data-driven decision making branches out across the organization. As experience and usage grow, the value of analytics increases, which enables business benefits to accrue more quickly.
Add value with an enterprise analytics unit Organizations that first experience the value of analytics in discrete business units or functions are likely soon to seek a wider range of capabilities — and more advanced use of existing ones. A centralized analytics unit, often called either a “center of excellence” or “center of competency,” makes it possible to share analytic resources efficiently and effectively. It does not, however, replace distributed and localized capabilities; rather, the central unit is additive, built upon existing capabilities that may have already developed in functions, departments and lines of business.
We found that 63 percent more Transformed organizations than Aspirational organizations use a centralized enterprise unit as the primary source of analytics. A centralized analytics unit can provide a home for more advanced skills to come together within the organization, providing both advanced models and enterprise governance by establishing priorities and standards by:
- Advancing standard methods for identifying business problems to be solved with analytics
- Facilitating identification of analytic business needs while driving rigor into methods for embedding insights into end-to-end processes
- Promoting enterprise-level governance on prioritization, master data sources and reuse to capture enterprise efficiencies
- Standardizing tools and analytic platforms to enable resource sharing, streamline maintenance and reduce licensing expenses.
In three distinct areas — application of analytic tools, functional use of analytics and location of skills — we found that adding capabilities without detracting from existing ones offers a fast path to full benefits from analytics-driven management.