Why Analytics Is So Important Today and the Eleven Trends Impacting It | Article

AnalyticsOutsourcing providers have been offering their clients analytics services for at least 15 years. “But today the interest in analytics is completely unprecedented,” reports Pankaj Kulshreshtha, senior vice president, analytics and research at Genpact. Earlier, clients only considered a few specialized functions were appropriate for the ‘quants’; today it’s all functions, he notes. “Procurement, marketing and financial people– all want to talk about analytics and how it can improve the performance of their functions. The time of the geek has come,” quips the Genpact executive.

Why now? N M Sarma, head, knowledge services, Tata Consultancy Services (TCS) says the global economic environment is changing the way corporations conduct business. Today enterprises:

  • Have higher expectations of faster returns on investments made in the short and long term
  • Face intense competition, shorter time-to-market and demanding customers; all drive up the cost of customer acquisition and retention
  • Must comply with increasingly stringent regulatory requirements
  • Need to adapt to changes in the demographic mix with the emergence of the millennials as a consumer group and Web 2.0 and social media as channels

“In this volatile market, enterprises demand real-time responses, not just causal analysis,” Sarma explains.

Corporations have had access to data for as long as there has been data. Until now, “the analytics business has been traditional data warehousing and business intelligence-based reporting,” explains Naresh Nagarajan, senior vice president and head of the Big Data Initiative at HCL Technologies. “Actions and insights were based on historical evidence. Forecasting depended on structured data in the business domain.”

However, today, “the volume of data is exploding. And it is available in so many forms and in so many places,” points out Rahul Kanodia, CEO and vice chairman, Datamatics.

He says the big challenge is so much of the data is unstructured—tweets instead of numbers historically found in a database. IDC estimates the amount of Big Data stored electronically will reach 25 trillion gigabytes by 2020.

Nagarajan of HCL points out “the explosion of social Webs and their real-time data feeds have changed the game. Corporations need to look at Big Data analytics with a completely different lens.”

“Extracting meaningful insights has become a challenge,” continues Kanodia of Datamatics. “This has given birth to a need breed of solutions.”

Hence the new popularity of analytics. Stephen Morris, senior business architect, business architecture + transformation UK for Wipro, says companies recognize they have to leverage the data flow to build competitive strategies. But with Big Data becoming so enormous, many enterprises do not possess the requisite tools to make the best use of the knowledge buried inside. Analytics is “a fast-emerging solution to this challenge. But it’s not just about unraveling historical trends. It provides a compelling tool to predict,” he explains.

Analytic trends

Sarma of TCS says business analytics “enables fact-based, insight-driven decision making to help companies manage their strategic, operating and financial performance and create shareholder value.” Morris of Wipro defines this need breed of analytics as “the tool that shows the health of an organization and charts where it needs to go forward.” He says analytics helps companies “stay focused on the current task, look for future opportunities and deal with potential challenges in their current processes.”

Analytics also promotes new thought processes, he continues. “They create new brain waves so organizations can look at things differently,” explains the Wipro executive.

Here are 11 trends impacting analytics, Big Data and business intelligence.

1. There is a shift from B2B to B2C.

Nagarajan of HCL calls this “the age of consumer centricity.” He cites “tectonic shifts in the business landscape across most business, but especially financial services, healthcare, retail and utilities. For example, retail banking is transforming due to the mobility explosion. Why go to a bank branch when you can deposit a check using your phone? “Analytics enabled on a mobile phone in real time will determine which bank acquires the small attention span of the rapidly-growing Gen Y customer. This is on-the-fly, real time analytics for prescriptive business acquisition,” he says.

2. Analytics is becoming a competitive differentiator

Analytics and business intelligence have become “competitive differentiators,” says Kulshreshtha of Genpact, because today companies operate in an economy “where growth is harder to get.” For example, pharmaceutical companies with billion-dollar drugs are losing their patents as they expire. So they have to cut their sales and marketing expenses significantly while continuing to support growth. “Essentially they need to figure out how to market much more cleverly,” Kulshreshtha says.

At the same time, consumer behavior in the U.S. is changing. For example, the savings rate reached a high of 6.9 percent according to the Commerce Department’s Bureau of Economic Analysis. “The consumer has realized times are volatile and it’s better to save. Today companies have to understand the new dynamics, predict consumer behavior of the future and get ready to use those to drive growth,” says Kulshreshtha.

The Genpact executive says companies today can no longer run large numbers of test marketing campaigns “to get the right results. Today they have to make more conscious choices, which is why they need to have higher business intelligence when making decisions.”

3. Corporations want predictive and prescriptive modeling

In the past, companies used analytics as a decision-support system based on historical data, says Abhay Chitnis, CTO, L&T Infotech. Today they want “actionable analytics,” data that points out trends “that will tell them this can happen if you don’t do that.” For example, companies are using analytics for resource planning and calculating actions if there are disruptions or delays.

Predictive and prescriptive modeling helps corporations get answers to the right questions, according to Don Weinstein, senior vice president, product management for ADP, Inc. “Today the trend is to use analytics to improve HR practices,” he explains. Before analytics could tell the HR department how many open positions it had. But does that help the company win the war for the best talent? “Today we can ask, ‘How do we hire the right people and where do we find them?’” he says.

In the consumer segment, Kanodia of Datamatics says the new tools and automation service providers can help their outsourcing buyers “give birth to micro strategies that address different customer segment down to single consumers.” He says ferreting out and taking advantage of micro trends are crucial in today’s uber-competitive world.

4. Analytics makes processes more strategic to the business

Asking the right questions makes HR more strategic for business results, Weinstein of ADP adds. “Analytics makes HR more strategic. But the job is definitely tougher, because now corporate leaders are holding HR accountable for business results,” he notes. According to Kanodia, “Analytics ensures that companies identify and remove net asset value from the processes to optimize the business information flow.”

5. Analytics can combine disparate data streams to improve business results

Nagarajan says HCL is currently working on real world evidence solutions – analyzing data from insurance companies as well as clinical data from hospitals “to tailor consumer health plans for specific population sets.” Another example: pharmaceutical companies are combining data from clinical trials, insurance claims from healthcare payors and social intelligence “to predict drug effectiveness and pricing.” He adds, “We ignored disparate data before.”

6. Enterprises want data available at all times in real time

Chitnis of L&T Infotech says data has to be constantly available if it is to be able to impact business processes. He predicts users will be able to interface with this data on multiple devices. He calls this “data churning on the fly.” He says sectors like retail will value geospatial business intelligence, because they can see data based on maps.

7. Enterprises want consolidated data

Weinstein of ADP says data historically was siloed and self-contained, coming from one process. That, however, is no longer helpful. Instead, companies need their outsourcers to amalgamate the data from disparate sources to get a full view. For example, if a company wants to evaluate the effectiveness of its hiring processes or its human capital, it needs to combine personal performance data with business data. “The biggest change we see is architecting analysis around business performance rather than process performance,” he says.

8. The shortage of mathematicians and statisticians may become a problem for both service providers and buyers

The Genpact executive foresees a shortage of mathematicians who the service providers need “to make sense of this enormous amount of data.” Weinstein of ADP says enterprises will “need to rethink the skills they have on their teams.” As HR, for example, becomes more metric-driven, the HR department will need statisticians and data modelers “who can dissect trends in large pools of data.”

Sarma of TCS adds these statisticians and mathematicians also need to be subject matter experts and have “a thorough understanding of the industry and its opportunities and challenges.” He says service providers need to hire talent with basic statistics skills and then invest in building deep industry knowledge in specific industries.

9. Top talent will be happier campers with the analytics now available

This is a win for the corporation. “HR people didn’t get into HR to process transactions. Their mission: to build a high performance team; analytics now enables that goal,” the ADP executive explains.

10. Service providers will bring more people onshore to do the analytics work

Kulshreshtha of Genpact predicts offshore providers will do more work onshore in the analytics arena. “Genpact plans to have over 500 analytics resources working in the U.S. in the next couple of years,” he reports.

11. The growing importance of analytics presents a huge opportunity for outsourcers who understand it

Weinstein sums up the situation: “The growing importance of analytics is a huge positive for the outsourcing market. With so much more data available, clients need to devote even more time to understanding what’s happening in their businesses while offloading as much of the day-to-day processing as possible. Now the outsourcing value proposition of focusing on what matters is even more strategic. The BPO service providers also have more opportunity because clients want us to help them understand the data and develop the strategies they need to drive business results,” says the ADP executive.

Conversely, boutique and single-process providers may find the future “challenging,” says Weinstein. He says someone has to integrate the data if a buyer has selected a host of point solutions. “People outsource because they want the integration,” he says. The only way to get a true picture of the human capital at a company is to have a full talent acquisition suite, a time and labor suite, and workforce administration and benefits package all tied together.

Concludes Nagarajan of HCL, “Those service providers that can leverage Big Data analytics to focus on business pain points will move up the value chain faster.”

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