Analytics in industries, especially in finance, retail, healthcare, e-commerce, Consumer Packaged Goods companies have evolved beyond the usual set of projects to become a true discipline and is reshaping the way businesses work. Today, businesses have gone beyond the usual analytics advantage to adapting new analytical techniques to create new product lines, drive personalization and create new products correlated with customer data.
Consumer-focused data analytics has become the norm today – when it comes to product strategy and product development, applying advanced analytics to consumer data has become core to the strategy. Today, consumer-facing enterprises have a good understanding of the scope of big data demands from users and have put in place a robust infrastructure, however a major concern would still be meeting the data security standards and how to keep the customer’s data private.
Measuring the uptick in analytics spending in enterprises over the last two years
A recent survey pegs Big Data as a job engine with 46 per cent of funding coming from the IT budget. According to a joint study by EY & Forbes Insights, Indian enterprises are outperforming their global peers in leveraging advanced analytics for business initiatives and have emerged as frontrunners with a well-established analytics strategy. The report hints the growing adoption of analytics as a service with 34% of Indian organizations citing their advanced analytics strategy being viewed as a key strategic priority, edging out the 30% of global peers that share this viewpoint. When it comes to analytics maturity, Indian enterprises are again ahead of the global pack with 26 per cent of Indian executives citing advanced analytics have completely changed their business strategy.
One thing is abundantly clear – there is a growing financial commitment to data and analytics (now viewed as central to overall business strategy). The EY study noted that around three-quarters of companies surveyed would have invested $10 million or more for data and analytics resources.
And one of the major reasons of the uptick in the analytics adoption is senior management sponsorship, asserted Krishnakumar Ramasubramanian, Senior VP & Head, BI & Analytics CoE, Max Life Insurance sharing how the reason the company was so successful is because of sponsorship from top-level executives. Vijay Kumar, former Head of Analytics at SBI also seconded the view in an earlier interview, “The acceptance and adoption of Analytics will automatically improve, especially when there is sponsorship of Analytics initiatives at the highest levels of the organization.”
Finance sector leads the race in analytics spending
There was a time when adoption was high among finance & banks, e-commerce and healthcare – billed as the sunrise sector with IDC predicting banks leading the IT spending in analytics. Our 2017 study, titled Analytics India Industry Study 2017 revealed the numbers in terms of sectors contributing to analytics revenue, with finance and banking continuing to be the largest contributor standing at 37 per cent of the total amounting to $756 million in revenues. There is a 31 per cent increase compared to last year. Others that follow are marketing and advertising, e-commerce, pharma and healthcare.
Let’s outline the reasons why companies should increase analytics budget:
1) Validity of investment in analytics: One of the biggest challenges for enterprises for the tight budgetary constraint and an inherent culture of cost containment. The most commonly cited reason for a cautious budget in analytics is the return on investment is not measured, which makes the unproven ROI as a significant barrier. In the case of marketing analytics, CMOs, mostly from B2C group quibble about lack of the ways to quantify the impact of analytics.
Stakeholders should get more visibility into the budget to ensure that spending translates into success. One of the ways this could be tackled is through a human element, such as in-house insights manager who can connect the dots between the analytics usage and result. Also, the leadership should attempt to bring a larger share of expenditure under their control to get more visibility in total spending.
2) Analytics Budget competes with other factors: According to senior management executives — analytics budget, part of the IT budget competes with headcount/staffing and market research for leadership attention. And the top brass is under intense pressure to show performance in line with an increased analytics budget.
3) Overcoming piecemeal deployment of analytics: Unintegrated and uncoordinated deployment of data and analytics into a company’s existing operations is perhaps the biggest stumbling block in growth. Often, piecemeal deployment of technologies can lead to a fragmented success and senior management should come up with a formalized strategy to broaden the scope of analytics function. This requires an increased funding.
4) Want to adopt AI, analytics can pave the way: For enterprises that are in a mature analytics stage and want to capitalize on Artificial Intelligence and other forms of predictive models to find better outcomes, an increased funding is vital for success.
5) Let’s talk about the data element: According to former Head of Analytics at SBI Vijay Kumar the biggest challenge for banks continue to be the low availability of high-quality, up-to-date and well-integrated data. Scattered, missing and erroneous data presents its own unique governance challenge. He further added that not being able to present the insights in a timely fashion at the point where it is consumed is the greatest hindrance. Enterprises should put into practice a framework for data integration to ensure data is integrated across all lines of business and service channels. This challenge can be resolved only when data integration is perceived as important function.
6) Bringing on the right talent: Given the exposure the field of analytics has received over the last few years, there is no dearth of data science professionals who are well qualified to execute complex analytics projects, shared Aldrin Luiz, Vice President, Time Inc. However, the real challenge is finding individuals who bring with them the right balance of analytics skills coupled with core business domain knowledge i.e., the ability to look at and apply data from a business perspective. Enterprises that wish to succeed should bring on board the right talent and create a larger spending for hiring analytics talent.
7) Govt’s clarion call for Digital India has also led to ramped up budget: interestingly, most companies, and even SMBs have taken the cue from PM Modi’s vision for Digital India and are embedding analytics in some way in their business function. SMEs have been restructuring their tech knowledge and infrastructure to leverage large-scale benefits of big data and analytics. The availability of cloud computing is also enabling small businesses to deploy analytics solutions. Most SMBs start with a pre-built library of best practice reports and dashboards.
Try deep learning using MATLAB