Tom Davenport presented on competing on analytics — he published an article with this title in 2006 in HBR. He believes that the planets are aligned for analytics:
- Powerful IT, and a new model for IT use
- Data critical mass: ERP, POS and web data
- Skills sufficiency, at least for the individual pieces
- Business need: a differentiated, personalized, well-informed easy use experience
He makes a distinction between reporting and analytics, and sees analytics as a way for companies to find the best customers and charging them the right price, or analyzing search logs to design a better website.
He sees the following attributes of a user-centric analytical strategy:
- Analytics are used to design and modify the customer experience
- Analytics are used to measure and maximize user engagement
- Analytics are used to determine what the user wants, and personalize to the user
- Analytics are employed across all customer channels
- Analytics are made available to the user
This includes companies such as Amazon and Netflix through their targeted recommendations, Google with customized ads and do-it-yourself analytics, eBay with behavioral targeting, Harrah’s and Marriott with loyalty programs, and Royal Bank of Canada and Capital One with targeted cross-selling across channels. Analytics can also be used for public service: New York City reduced crime through predictive analytics of where crimes were most likely to occur.
He stepped through what’s required for competition grade analytics: data (which he envisions in a data warehouse, counter to Weinberger’s arguments about the more serendipitous discovery of data), enterprise (widespread access to a centralized data store), leadership (executive commitment), targets (focusing analytic activity), and analysts (professional, semi-pro and amateurs, using all levels of analytical tools).
He finished up with the next steps for analytics, from the pursuit of new data types to search/BI combinations to better model management.
Tom sure gets around doesn’t he? Interestingly most of his really good examples are about organizations that embed their analytic insight into their operational systems by automating decisions. This, of course, is my favorite topic and is why I like my partner’s recent phrase “Competing on Decisions”.
JT
James, good point — analytics aren’t that much use unless you act upon them, hence using analytics to drive decisions in operational systems is a way to make this real. Worth reading the paper of his that I link to; it was free for a while when it first came out, but is now behind the HBR paywall.