Analytics: The Widening Divide

Analytics:The Widening Divide

RESEARCH REPORT

FALL 2011

FINDINGS FROM THE 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECT

In collaboration with

MIT SLOAN MANAGEMENT REVIEW 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECT

© Massachusetts Institute of Technology, 2011

FIGURE 1: Creating a Competitive AdvantageThe ability of organizations to create a competitive advantage with analytics has surged in the past 12 months.

Percentage who rated as “substantial” or “significant” (4 or 5 on a five-point scale) the level that information and analytics is able to create a competitive advantage for their organization within their industry or market

58%

37%

2011

2010 57% increase



FIGURE 2: Analytics Sophistication AssessmentAnalytics competencies can be assessed by analyzing key attributes as they relate to the organization, including leaders’ reliance on fact-based decision making.



FIGURE 3: Increasing Competitive AdvantageThe ability of organizations to create a competitive advantage with analytics has surged in the past 12 months.

Percentage who cited a competitive advantage using analytics

80%

65%

63%

38%

39%

37%

2011

2010Transformed

2011

2010Experienced

2011

2010Aspirational

23% increase

66% increase

5% decrease



FIGURE 4: Increasing Analytic Integration Into Strategy and OperationsThe rate at which Transformed and Experienced organizations have integrated analytics into their core business strategies and operations during the past year indicates that the competitive and performance gaps between these organizations and Aspirational organizations will continue to widen.

Percentage who reported their organization had increased the level to which analytics and information was integrated into the business strategy and day-to-day operations in the past 12 months

70%

55%

34%

Transformed

Experienced

Aspirational



FIGURE 5: Reliance on AnalyticsThe majority of organizations rely on analytics to make decisions about financial and operational activities, but even Transformed organizations have room to increase the use of analytics in other areas.

Percentage of respondents0

Enhance customers’ overall experience

Optimize the match of sales reps to customers

Define marketingcampaigns

Identify target customers

Allocate employees’ time and efforts

Evaluate employee performance

Establish organizational strategic objectives

Develop/refine new products or services

Streamline operational processes

Manage supply chain or logistics

Allocate annual budget

Establish financial forecasts

20% 40% 60% 80%

Percentage who indicated their organization relies on data and analytics to execute these activities (4 or 5 on a scale ranging from 1=Intuition/ Experience to 5=Data/Analytics)

Customer

HumanResources

Majority ofRespondents

Strategic

Operational

Financial

TransformedExperienced

Aspirational



FIGURE 6: Focused on the Need for Speed in Decision MakingAn intense level of focus on the speed of making decisions is one area where Transformed organizations are using analytics.

Percentage who exhibited an intense level of focus on the speed of decision making, assessed by analyzing a series of questions

72%

49%

22%

Transformed

Experienced

Aspirational



FIGURE 7: Focused on Identifying and Managing Enterprise RisksThe vast majority of Transformed organizations are intensely focused on using analytics to better address enterprise risks.

Percentage who exhibited an intense level of focus on using analytics to better understand and manage enterprise risks, assessed by analyzing a series of questions

86%

6%

0%

Transformed

Experienced

Aspirational



FIGURE 8: Focused on Customers Transformed organizations are intensely focused on using analytics to create personalized relationships with customers.

Percentage who exhibited an intense level of focus on using analytics to better understand and connect with customers, assessed by analyzing a series of questions

62%

49%

34%

Transformed

Experienced

Aspirational



FIGURE 9: Analytics CompetenciesOrganizations must master three analytics competencies to achieve competitive advantage.



FIGURE 10: Key Characteristics of a Transformed OrganizationTransformed organizations rate themselves as highly effective at each of the key characteristics, represented by the percentages.

Percentage of Transformed organizations

0

Ability to analyze data

Ability to capture and aggregate data

Culture open to new ideas

Analytics as a core part of business strategy and operations

Embed predictive analytics into processes

Insights available to those who need them

20% 40% 60% 80% 100%

Percentage of Transformed organizations rating themselves as highly effective at each of the key characteristics

78%

77%

72%

77%

66%

65%



FIGURE 11: Paths to TransformationExperienced organizations take either a data-centric enterprise-driven path or a skills-and-tools centric path on their journey toward analytic transformation.

Collaborative path

Specializedpath

Enterprise driven

Line-of-business

driven

Informationmanagementproficiency

Analytic skills andtools proficiency

Data-oriented culture

High

High

Low

Low

Transformed

Aspirational

Experienced



FIGURE 12: Observed Competency LevelsEach path to transformation has unique strengths and weaknesses in the three competencies, which pinpoint areas for improvement and investment.

Information management

Solid information foundationStandardized data management practicesInsights available and accessible

Analysis skills and tools

Skills developed as a core disciplineEnabled by a robust set of toolsDelivers action-oriented insights

Data-oriented culture

Fact-driven leadershipAnalytics used as a strategic assetStrategy and operations guided by insights

Observed competency levels

Specialized Collaborative

MasteryRudimentary Minimal Moderate Significant



FIGURE 13: Respondents Who Rate These Challenges as Extremely Difficult to ResolveChanging the way people behave and interact with one another within an organization poses a more difficult challenge than changing their tools or technologies.

Percentage who rate these challenges as extremely difficult to resolve

44%

24%

Organizational challenges

Technology challenges

1.8x more

difficult

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Analytics: The Widening Divide