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The hype around data and analytics has reached a fever pitch. From baseball to biomedical advances, the media highlights one money-making or money-saving corporate experience with analytics after another. Stories abound about data scientists applying their wizardlike talents to find untapped markets, make millions, or save lives. Pundits have been talking up the promise of data in grand terms for several years now: Data has been described as the new oil, the new soil, the next big thing, and the force behind a new management revolution.1
Despite the hype, the reality is that many companies still struggle to figure out how to use analytics to take advantage of their data. The experience of managers grappling, sometimes unsuccessfully, with ever-increasing amounts of data and sophisticated analytics is often more the rule than the exception. In many respects, the hype surrounding the promise of analytics glosses over the hard work necessary to fulfill that promise. It is hard work to understand what data a company has, to monitor the many processes necessary to make data sufficient (accurate, timely, complete, accessible, reliable, consistent, relevant, and detailed), and to improve managers’ ability to use data. This unsexy side of analytics is where companies need to excel in order to maximize the value of their analytics initiatives, but it is also where many such efforts stall.
Moving past the hype takes a measure of resolve that few companies demonstrate. A 2015 survey of more than 2,000 managers conducted by MIT Sloan Management Review and SAS Institute — as well as more than a dozen interviews with executives at global companies — reveals insights about the unglamorous but necessary actions required to improve decision making with analytics.
Five key findings came from this research:
- Competitive advantage with analytics is waning. The percentage of companies that report obtaining a competitive advantage with analytics has declined significantly over the past two years. Increased market adoption of analytics levels the playing field and makes it more difficult for companies to keep their edge.
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1. See, for example, “The 11 Best Data Quotes,” July 8, 2012, https://blog.datamarket.com; A. McAfee and E. Brynjolfsson, “Big Data: The Management Revolution,” Harvard Business Review 90 (October 2012): 60-68; and B. Marr, “Big Data-as-a-Service Is Next Big Thing,” April 27, 2015, www.forbes.com.
2. Several surveys conducted by other organizations point to dissatisfaction with results from big data technology, but general managers, who comprise the bulk of our respondents, remain enthusiastic about the potential of analytics. For a different point of view about satisfaction trends with data technology, see Q. Turner, “Data Digest: Big Data Disappointment, Stranded Data Scientists, and Locking Down Mobile Devices,” October 26, 2015, https://tdwi.org; and D. Henschen, “Big Data Meets Trough of Disillusionment: Gartner,” November 18, 2013, www.informationweek.com.
3. We did find that senior managers, especially CEOs, were more optimistic about analytics compared to middle and nonmanagers.
4. General Electric, “What’s the Matter With Owen? — ‘Hammer’,” September 8, 2015, www.youtube.com.
5. R. Clough, “GE Forms Digital Unit to Expand $6 Billion Software Business,” September 14, 2015, www.bloomberg.com.
6. See S. Ransbotham, D. Kiron, and P.K. Prentice, “The Talent Dividend: Analytics Talent Is Driving Competitive Advantage,” MIT Sloan Management Review, April 2015, https://sloanreview.mit.edu/projects/analytics-talent-dividend/; and D. Kiron, P.K. Prentice, and R.B. Ferguson, “The Analytics Mandate,” https://sloanreview.mit.edu/projects/analytics-mandate/.
7. J. Ross, D. Kiron, and R.B. Ferguson, “Do You Need a Data Dictator?,” August 28, 2012, https://sloanreview.mit.edu.
8. “Gartner Identifies the Top 10 Strategic Technology Trends for 2015,” press release, October 8, 2014, www.gartner.com.
9. “High Performers in IT: Defined by Digital and Driving Growth,” 2013, www.accenture.com.
i. D. Kiron, P.K. Prentice, and R.B. Ferguson, “The Analytics Mandate,” MIT Sloan Management Review, May 2014, https://sloanreview.mit.edu/projects/analytics-mandate/.
ii. These groupings are based on respondents’ answers to two questions that use a five-point Likert scale: “To what extent is your organization getting a competitive advantage from analytics?,” and “To what extent is your organization innovating with analytics?” The Analytical Innovators group is comprised of respondents who gave a top score in both categories.
iii. “The Bank’s Strategic Plan — One Bank, One Mission,” n.d., http://www.bankofengland.co.uk/about/pages/strategicplan/default.aspx.