According to more than 1,000 CIOs and line-of-business executives who were interviewed as part of the IDC Asia/Pacific C-Suite Barometer survey in February 2011, business analytics was rated as the No. 1 technology area that would enable their organizations to gain a competitive edge in the year ahead. But senior managers of these entities have begun to realize that they have not been able to get the right information at the right time to the right stakeholders for the critical decision-making capabilities needed to drive the necessary business impact.
Hence, business analytics as a technology area is aggressively moving to the top of the CIO’s radar. As part of the new information management strategy, the industry’s game changers – such as mobility, machine-to-machine communications, social media and cloud – are contributing to the “big data” phenomenon, forcing a rethink of architectures, delivery models and technologies. The focus is to deliver more real-time intelligence to the business, enabling companies to harness analytics-led solutions to gain better customer insights, manage risk and financial metrics more effectively, and strive for unique market differentiation.
As business analytics becomes more important for CIOs, there are several issues that they have to cope with. Philip Carter, Associate Vice President for IDC Asia/Pacific Business Analytics, addressed some of these issues in the following Q&A session.
Q. There continues to be a significant amount of misunderstanding between IT and the line of business in relation to the execution of an analytics strategy. Why is this the case?
A. This is a major issue. A number of progressive organizations are looking to compete on analytics in order to differentiate themselves in the market – and this is normally a business-driven strategy (and in some cases by the CEO and the board). Be it a bank expanding its customer-centricity strategy while also focusing on risk management and compliance, a telco looking to aggressively roll out new value-added services to a more targeted set of customers, a utility assessing investment priorities in the context of smart meter projects, or an airline trying to understand route profitability in a more real-time fashion – all of these are key business initiatives that drive significant business impact – and more importantly, require sophisticated analytical capabilities that cut across department and business function. However, the CIO and IT department are not delivering according to expectations. And according the C-Suite Barometer highlighted above, the foremost challenge that CIOs point to in terms of leveraging their IT resources is “ineffective IT-business alignment.” In the context of delivering intelligence to the business, the reasons for this disconnect are threefold:
- Batch-mode mentality. Historically, the majority of these business analytics projects have been based on the creation of a data warehouse that took two to three years to build, and data from transactional systems was integrated and loaded on a nightly basis (sometimes taking more than 12 hours). But the fast-paced nature of the business world, with the impact of social media and sensory data, means that business needs the information on a more real-time basis. It also needs more flexibility in terms of the data analysis. Data quality has also been an issue, with business users questioning the credibility of the data, pointing to a weak data governance strategy.
- Lack of skills. Due to the unique domain-specific requirements of the business, IT has not been in a position to understand its requirements, and the lack of resources that could speak both IT and business language resulted in a fundamental misunderstanding between the two entities. The business has been saying that IT doesn’t get analytics, and on the other hand, IT says the same thing about business.
- The “KLTO” CIO. The complex and heterogeneous nature of existing IT environments has meant that most CIOs are spending the majority of their time in a “keep the lights on” (KLTO) mode, in terms of supporting existing systems and applications. This meant less time on strategic business discussions focusing on innovation and using IT to transform the business. Analytics clearly fits into this innovation category – meaning that not enough attention has been paid to it at the CIO level of most organizations, resulting in a lack of understanding of the potential impact versus the associated underlying spend. CIOs need to explore the correlation between these two variables as they assess IT budgets moving forward – particularly in the context of analytics.