From the moment you wake your movements are under scrutiny. With the volume of data created by individuals growing at an unprecedented rate, leading companies are busy trying to mine that information so that they can know more about you.
Most major retailers already have an analytics department that is tasked with learning customer behaviour but increasingly, analytics is moving beyond the shop floor and into every company where it can be used to drive efficiencies in business.
However, as preliminary findings from research carried out by Accenture and the UCD Smurfit School of Business reveal, Irish companies might know that they need to embrace analytics if they want to get ahead, but few are currently doing so with any great gusto.
According to the unpublished study, use of data analytics by Irish-based companies is still very much in its infancy .
Accenture's global lead for information and analytics strategy is Brian McCarthy, a Corkman who now resides in Atlanta, Georgia, where he also leads the group's North American Financial Services Analytics group. He has advised Bank of America, Coca Cola, American Express and GE on how to get more out of their data.
In Dublin recently for an Irish Software Association roundtable at which he highlighted the relationship between analytics capabilities and high-performing businesses, McCarthy said Irish companies generally fared no worse than their counterparts elsewhere. However, he told The Irish Times that most of them had a long way to go before they could claim to be using it effectively.
“Globally, there are very few organisations you’d go to right now who would say analytics is not very important. A recent study we did with MIT showed that pretty much every firm interviewed felt it was essential to their business. However, while many companies around the world are doing pilot tests, only a few are actively applying analytics to solve strategic problems across the business.
“As our Irish research shows, adoption rates here are similar to those we see elsewhere in terms of analytics maturity. The reality, however, is that while many Irish firms aspire to be analytics competitors, very few are there yet,” he added.
Among those he is keen to acknowledge as moving full steam ahead are those with which Accenture works. Since establishing a dedicated Analytics Innovation Centre in Dublin back in 2011, the company has been collaborating with a wide range of organisations, including the Revenue Commissioners, the GAA, Tesco and even the Abbey Theatre, which has been using analytics to learn how to put bums on seats more effectively.
McCarthy believes that at a global level analytics adoption is at a tipping point with more companies set to start using it across multiple departments, rather than just for sales or marketing purposes.
“Broad-scale adoption is now taking place. Our research shows that analytics adoption rates increased threefold from 2009 to 2012, from around 10 per cent to about 35 per cent, and I’d say it’s considerably higher than that now.”
Leaders and followers
“The research we did with MIT shows there are a number of industries that are more advanced in terms of their use of analytics than others, and these include communications, consumer goods, retail, banking and capital markets. But other industries are following in their wake,” he added.
McCarthy believes that ultimately, while it might seem overly complex, analytics is all about doing business in a smarter way.
“Organisations in the digital age can fundamentally change the nature of the relationship they have with their customers in a way that increases stickiness, loyalty, retention, growth and profitability,” he said.
The challenge in adopting analytics is less to do with the technology involved than in encouraging businesses to think more broadly about how data can be mined effectively, he says.
“The technology is way ahead of some organisations’ ability to adapt to changes. Many businesses can struggle with knowing what’s possible and where to start.
“Companies need to decide where to focus investment. This is a huge challenge for some of them. The difference between those companies that are using analytics well and those that aren’t is that the successful ones start with the outcome. They figure out what they want to achieve – be it cross-selling, upselling, fraud reduction and so on – then work backwards to establish what data they need.”
No end goal
“Less successful companies begin with the data. They spend a lot of money tidying it up but little time mining it effectively because they have no end goal in mind. They end up in a place not achieving any positive outcomes and in frustration often pull back, leaving them in a worse position than when they started.”
McCarthy adds that no matter the size of the business, using analytics successfully can be troublesome. But the bigger the company, the more difficulties there can be, he said.
“We expected that smaller firms wouldn’t have the same resources as larger ones and so would not be able to drive the same results but our research showed they had an advantage because they could apply analytics and drive business outcomes more easily. Larger firms can have structural challenges,” he said.
Another problem is a lack of available talent. Some businesses are turning to speciality providers to supply analytics talent as needed, rather than trying to cultivate it internally.
“The best-performing companies using analytics usually adopt a multipronged talent strategy. They recruit and train, but also partner with third parties because they realise they can’t solve the talent problem internally”.
“The main challenge now is that there simply isn’t enough talent and so it is a matter of getting a good balance in terms of how you can manage the process successfully, “ he added.
