What do you think of when you hear the word "analytics"? A toolbox? A product? A specific solution applied to a particular departmental need?
Chances are most people involved with analytics today will answer "yes" to one, if not all, of these.
But as fact-based decision-making gains enterprise momentum, a growing number of people are starting to think beyond the tools at their fingertips. They're starting to think about analytics as part of the business process. Speakers at the SAS Power Series in Chicago identified this as a critical trend over the next several years.
"We're definitely seeing movement, and this will become an increasing reality between now and 2015," said Jim Davis, senior vice president and chief marketing officer at SAS. The ideal would be breaking a business process into pieces and applying fact-based decision-making from one end to another, as appropriate.
Tom Davenport, widely respected analytics expert and fellow SAS Power Series participant, provides guidance in his book, Analytics at Work: Smarter Decisions, Better Results. He recommends taking a systematic inventory and closely scrutinizing the structure and function of business processes, how decisions are made within them, and where opportunities for drastic improvement might reside.
Davenport gives nine quick examples of the kinds of business processes lending themselves to analytics. I won't go into depth here, but his list comprises business processes that are data rich; asset, information, and labor intensive; dependent on speed and timing, consistency and control, or distributed decision-making; cross-functional or cross-business in scope; or have low average success rate.
As an example of how applying analytics to business process can work within a company, he cites in his book the case of McKesson Pharmaceutical and its supply chain:
Building on its strong process orientation, the company brought together data from the sales, logistics, purchasing, and finance processes to achieve more integrated analysis and decision support. Now managers throughout the supply chain can look all the way up and downstream to evaluate the operational and financial impact of their decisions regarding delivery schedules, transportation utilization, quantity adjustments, product dating and drop shipping.
At the Chicago event, Davenport shared advice of a more personal nature relative to this trend. Today's successful analysts, great at working with the data and delivering valuable insight via reports, will likely find themselves playing a very different role when fact-based decision-making becomes routine within companies: "What we're talking about are changes in culture and influence, where you'll need to be sitting down and explaining things to people."
People in analytics, Davenport says, are going to have to make a decision: "Do you want to just do the math? A lot of the stuff we're talking about is about building relationships and selling decisions. That will make your organization successful, but it might not be for you."
Shawn I think it’s all the reasons you state and the fundamental fear that an analysis of business processes will make individuals in that area appear myopic. I have worked with many groups that were very apprehensive of any process analysis they thought it would mean a job loss scenario or a limited career potential when in truth process analysis can save jobs and create new opportunity. It is definitely a fear of the unknown. I have found that education up front is best to achieve cooperation and prevent hysteria.
Agree with you totally about the benefits but why is the issue so politically charged, do you think? Is it inertia, fear of change or the concern that certain people may be displaced by a new system. Perhaps getting to the root of the concern would be a good first step in winning people over.
Business Processes are an often overlooked goldmine in companies I have worked on many BPI(business process improvement) teams throughout my career and the results were always positive from a profitability perspective and had halo impacts to client satisfaction, sales satisfaction, and many other areas. While it can be a politically charged evaluation process it’s worth the effort.
Sounds like a fascinating event. I think the key isn't just finding existing business systems that could be revolutionized by analytics but also developing new and innovative techniques to leverage your business's capabilities using the new technologies. What will new technology make possible for your business that was never possible before? That's where the new revolution begins!
Interesting discussion. And I know it's overly simplistic, but I'll say it anyways: Understanding process and where analytics fits in is really where companies will find value in fostering cross-functional teams of analysts, business users and IT, and/or embedding analysts within the business units and making them liaisons between the business and IT.
@ David Good Point. And I agree this endeavor should not be solely entrusted to junior level analyst though I can see “exceptions to the rule” to this as well. But I think senior level executives are often times too busy dealing with the bureaucracy of their positions that they may not be able to address this issue with the kind of scrutiny that it demands. And I don't think just because someone has reached a senior position that that necessarily means they are any better equipped to address this challenge either.
This cultural change I am speaking of would seek to nurture those select few who hold the potential to do this type of analysis or are at least willing to earnestly take on this challenge. In my opinion, this means a commitment between the company and the individual analyst to see this lengthy process through. The process will take time, considerable time, but if a company makes this commitment, then the company should not lay these individuals off at a drop of a hat ( assuming they are bringing added value) nor can you expect the analyst to leave at the next best offer - this would seem to be to be counter productive.
You can argue that this is unrealistic and maybe so, but that is where the cultural change comes in. Are Asian and industrial European countries functioning in the way I just described ? I would argue they are more apt to commit to building a long term knowledge base than are U.S. based companies.
Unfortunately, it seems that U.S. based companies do not want to make the long term investments in the human capital that is required to address difficult issues and it shows. Sure some companies do this better than others for sure and they are usually the leaders of their particular industry(s).
In my opinion, this is a dilemma that businesses will have to face, whether they want to or not. And if they must reorganize to do so, then so be it, it was probably long overdue anyway.
I'm not so sure - it takes a lot for a company that is built with a hierarchical structure to allow people to cross organizational boundaries, and the people who are capable of doing so to find this insight at the basic level are typically the ones least empowered to do so. Try changing a broken system at a company; even with a good business case, it can be hard.
And as to systems changing to encourage this, it's a hard balance. The efficiencies that can be found may be overlooked with the volume of crap that would be genereated by allowing the junior-most people free reign; real insight is hard to find.
@ David Well said and I agree. Insight into processes is a very difficult hill to climb. It seems to me that the analyst must have a keen understanding of the entire product cycle and I am not so sure businesses foster such intense understanding. I could be entirely wrong in this but it just seems to me to be a real obstacle for any analyst who is aware enough to tackle this challenge.
Not to say it is impossible nor that it is not the best way to go - to extract value from process analysis - but I feel Mr.Davenport rightly states that it will mean a "cultural change" within businesses to ever come to grips with the detailed focus required of process analytics.
And I must say that this change is likely inevitable, as a result of the continued influence of a global economy and the inter-dependence that corporations play within it. Efficiencies must be extracted and those who do not manage their processes to the utmost - will not be around for long.
I heard students complain, back in the day, that math is hard. Those people had to learn it, and mostly did. That's because arithmetic, which is what they were dealing with, along with statistics, calculus, and even differential equations, are skills sets to be learned - no special level of insight is needed, teaching them is standard, and if you just need the basics, an average intelligence level and above average persistance will get you there. (Real math, when you need to prove things, well... maybe not as true. But it's irrelevant here.)
Selling the insight is a skill too - but one that seems even less difficult to teach. They may not be taught in the normal mainstream colleges, but they are taught. (Dale Carnegie, Toastmasters, etc. Classes exist - and are popular.) But insight into processes - it seems it's rarer. The ability to find the real problems, or come up with practical ways of exploiting data.
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