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Analytics gap: information 'haves' outpace information 'have-nots,' study finds

Analytics gap: information 'haves' outpace information 'have-nots,' study finds

Posting in Finance

New IBM-MIT study finds companies with advanced analytic capabilities accelerating ahead of their analytically challenged peers.

A new survey finds a widening gap between the "haves" and "have-nots" in terms of companies' ability to use data to their competitive advantage. Analytics is seen as the competitive differentiator -- perhaps the only competitive differentiator -- between companies competing in the new global realm.

Source: MIT-IBM 2011 Analytics Study

The global survey of 4,500 executives, managers and analysts, released by MIT Sloan Management Review and the IBM Institute for Business Value, finds the information 'haves' -- companies with in-depth experience with analytics technologies and methodologies -- increasingly saw competitive advantage, and were more than twice as likely to have outperformed their analytically challenged peers over the past year. (Full report available from MIT SMR or IBM.)

Overall. adoption of analytic capabilities has been rapidly proliferating as of late. Fifty-eight percent of organizations now apply analytics to create a competitive advantage within their markets or industries, up from 37% just one year ago, the study confirms.

Eight out of ten "Transformed" companies -- those with strong, industry-leading analytics capabilities -- report demonstrable competitive advantage, up 23% from the MIT-IBM survey a year ago. For "Experienced" companies -- those with moderate to heavy analytics usage -- there was a 66% spike in reported competitive advantage. Among the less-advanced portion of the respondents, the percentage of those with favorable competitive positions slipped over the past year.

However, there is still much, much work to be done. The study found that the majority of organizations are using analytics to manage financial and operational activities, but are less likely to rely on analytics-based insights for decisions in other key areas.  Tellingly, only about half of the advanced analytics companies rely on data and analytics outside finance, to make decisions involving customers, business strategy and human resources. Fewer than 25% of the less-developed companies are using analytics in this way.

The information 'haves' tend to be further along in their abilities to analyze data (78%); capture and aggregate data (77%); foster a culture open to new ideas (77%); build analytics into their core business strategies and operations (72%); embed predictive analytics into process (66%); and make insights available to those who need them (65%). This last point is significant, as it suggests that two out of three of the advanced analytics companies have figured out ways to "democratize" their business intelligence and analytics to decision makers at all levels.

The report also provides guidelines on building a more analytics-capable operation, starting with an assessment of  current analytic capabilities; focusing on improving competencies via information foundation, analysis skills and tools, and creating a culture that acts on analytics; and  having an overall information agenda to make analytics part of the day-to-day enterprise.  As the survey finds, 44% of respondents say their organizations aren't receptive to becoming a more analytical culture. Only 24% say they don't have access to the right technology to make it happen.

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Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure