How To Make Analytics Projects Pay Off

IT departments that approach analytics with the same tools and mindset as business intelligence projects often struggle to deliver business value. Companies have spent billions on business intelligence (BI) software. In 2011 alone, worldwide revenue from sales of BI platforms, corporate performance management suites, and analytic application/performance management software reached $12.2 billion, according to Gartner Inc.¹

At this time, a lot of companies are pursuing analytics, many CIOs wonder whether their existing BI capabilities can be applied to these newer analytics initiatives, according to Richard Starnes, a principal with Deloitte Consulting LLP’s Information Management service line. “CIOs want to know if they should invest more in BI, or if this is a strategic purchases,” he says.

According to Starnes, analytics requires different tools, techniques, and organizational structures than BI because it attempts to answer open-ended, forward-looking questions. Too often, Starnes sees floundering analytics initiatives that fail to provide meaningful insights because IT departments are applying traditional reporting tools and development methodologies that just aren’t appropriate for analytics.

For these reason it is important to start with the following considerations:

1. Begin with business goals. Analytics initiatives are more likely to produce useful insights when companies begin with a specific business goal or use case such as, say, finding ways to reduce customer churn by predicting their likelihood of switching to a competitor. While traditional BI dashboards can show companies their churn rates, analytics can explain why customers are leaving and even where they’re going, allowing companies to formulate more targeted retention strategies, according to Starnes.

2. Establish an analytics office. Because many analytics efforts begin in shadow IT functions, leading companies have begun creating analytics offices, staffed with data strategists and data scientists, to oversee disparate projects

According to Kanishk Priyadarshi, a manager with Deloitte Consulting LLP’s Strategy & Operations service line, “the enterprise must make a strategic plan before buying a BI tool, as it should analyze the competitive advantages and functionality given that can be applied to the use of the tool according to business of the company

3. Don’t hoard data. Priyadarshi says some companies make the mistake of trying to gather all imaginable data to feed an analytics project prior to its start. “Humans are natural hoarders,” he says. “There’s an insatiable and addictive need to hoard data, but it distracts them from answering the questions that truly matter.”

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