Competing on Analytics

In theory, companies are now capable of capturing and ana­lyzing the details of every minute transaction and event that occurs within their walls. Although businesses are being inundated with data, much of it is the wrong data. It’s not timely, and it’s not get­ting to the right end- users. This is perhaps one of the most vexing challenges to “ competing on analytics,” now seen as a key strategy for attaining competitive differ­entiation, and well- document- ed in popular books by indus­try experts such as Tom Davenport of Babson College.

“In the old days, you could more or less rely on your competitors being at about the same level of efficiency, but analytics changes the playing field dramatically,” Joe Pusztai, director of product marketing for Applix, told DBTA. “ Business process automation is important too, but it essentially only enables you to execute strategy; ana­lytics is what enables you to set the strategy in the first place, for example, by detect­ing trends and ‘ seismic shifts’ in your industry early.”

How can such shifts be accu­rately and quickly detected? Some leaders in competing on analytics have employed multi-faceted approaches that leverage a wide range of data sources, and they extend this capability to as many end­users as possible. One such organization, BlueCross BlueShield of Tennessee ( BCBST), offers account reporting to its largest groups, which allows the company to respond more effectively to RFPs to acquire new business and retain existing clients, Frank Brooks, senior manager of data resource management and chief data architect for BCBST, told DBTA. Analytical capabilities cur­rently delivered via the Internet to BCBST clients include utilization manage­ment through interactive reports and OLAP data cubes. BCBST plans to provide additional analytical capabili­ties for its account reporting packages, including national and regional benchmarking data from Blue Health Intelligence ( a national data warehouse of BlueCross BlueShield Plans), Brooks said. “ We’re now in the process of enhancing our busi­ness intelligence and analyti­cal infrastructure to also sup­port instant access to the results of text analytics and predictive analytics process­ing.” BCBST is taking a multi­pronged approach involving traditional business intelli­gence tools, as well as data

mining, text analytics, and enterprise search to sift through a variety of com­pany data sources to spot trends and pat­terns in service, claims, and utilization.

Clearly, the industry is moving into a new generation of tools that focus more on real-time delivery of operational data, as well as extending reporting capabilities to corporate performance management dashboard systems to pro­vide a picture of the health of the busi­ness.

However, many companies are inun­dated with data, and are still mired in earlier generations of query and report­ing products. “Most organizations are barely at the toddler stage when it comes to analytics,” Eric Blankenburg, vice president of application and integration solutions at Avanade, told DBTA. “We are drowning in information. It’s past the point where it is even possible for us to interpret the data and make reasoned decisions without some significant level of analytical support.”

A recent survey of 296 data applica­tions managers, conducted by Unisphere Research for the Oracle Applications Users Group (OAUG) in partnership with Cognos, found that a paradox exists in most organizations today. Decision- makers are over­whelmed by information overload, but at the same time, there isn’t enough of the right information available. The study found that 91 percent of companies said that their decision-making capabilities were stymied by a lack of complete information. Yet, three out of four also report they suffer from ‘information overload.’ Identifying and separating out the pieces of data that have the most value may be like looking for a particular piece of straw in a haystack. Add to this the fact that most end-users do not have access to the latest BI tools, and still have to go through IT or other depart­ments. The majority of respondents to the OAUG survey, in fact, report that it takes more than three to five days to get a report out of IT. Overall, the survey found, fewer than 10 percent of employ­ees have access to BI and corporate per­formance management tools.

“We’re still only touching the surface of business intelligence,” Marc Andrews, director of strategy and busi­ness development for unstructured information at IBM, told DBTA. “The number of business processes and the number of users across the organization that are leveraging the technologies is still only the fraction of the population potential.”

Other industry experts strongly agree that BI has not proliferated as thorough­ly as it should. “Companies have yet to find an effective way to deliver BI capa­bilities to more than a handful of ‘power users’ who have the technical expertise to leverage BI tools,” Mark Lorion, director of product marketing for the Spotfire Division of TIBCO, told DBTA. “Instead, their employees are using spreadsheets and other packaged applications because the BI platforms are not flexible enough to suit their analysis needs or pace. BI tools fre­quently are not intuitive, and require heavy IT involvement to reconfigure cubes or generate new reports. Because they require IT involvement, they do not work at the speed of front­line decision-makers.”

How does a company leverage such overwhelming data stores and learn how to compete on analytics? To suc­cessfully compete on analytics, compa­nies need to embed analytic functional­ity in every mission-critical application across the enterprise, IBM’s Andrews pointed out. “Most companies are using BI for traditional querying and report­ing, not for real-time operational busi­ness intelligence. They’re not using it as part of their business applications – as part of processing a claim, as part of helping a customer resolve a problem, or as part of processing a transaction. The future is enabling people to access business intelligence within a call cen­ter application – not as a standalone application that they have to go to for querying and reporting.”

Data quality also takes on greater urgency as companies turn on opera­tional analytics. Mary Crissey, analytics marketing manager at SAS Institute, sounded a note of caution that many companies may rush too fast to rely on real-time or near real-time data without vetting it for accuracy or timeliness. “With business intelligence, there’s a data integration piece, which involves the storage and cleansing of the data. We’re all putting data together from dif­ferent sources – some people are key­stroking it in, some people are collect­ing it in from the Web, some people are getting it over the phone. You get all this data coming in, lots of times, different formats, and you have to merge it all together. Cleansing of that data real­time is critical.”

Eventually, prices of sophisticated analytical tools – still out of the reach of many companies – may begin to come down as capabilities become more widespread. This will dramatically improve the availability of such tools and capabilities. “There has not been enough innovation in the BI industry for years,” agreed Scott Yara, co­founder and president of Greenplum, who posited that more powerful com­modity systems and open source soft­ware are poised to disrupt the entire BI industry. “Only very recently has it become possible to buy a high-perform­ance database for large-scale BI for under $1 million per terabyte. By com­parison, you can go to the store today and buy a terabyte of storage for well under a thousand dollars. It’s the cost and performance of the traditional solu­tions that have made it difficult for companies to adopt BI to analyze all ­or any significant portion – of their data.”

In the meantime, data managers need to sharpen their selling skills to cost-justi­fy BI expenditures to skeptical corpo­rate management. Demonstrating ROI on new BI technologies was the greatest challenge for BCBST, Brooks related. “Our biggest issue is the justification of new technology where the value cannot be easily quantified,” he explained. “ Unlike operational systems where projects or enhancements provide cost reductions in the form of increased effi­ciency and productivity, information management infrastructure enhance­ments often enable a more effective organization where cost savings or increased revenue are difficult to corre­late.” Many of the potential uses for enterprise data warehouses, for exam­ple, “are difficult to forecast a return on investment,” he said.

This requires greater understanding and education provided to the business as a whole. “Analytics at the strategic and competitive level of decision-mak­ing in enterprises is typically under­resourced, misunderstood, and doesn’t lend itself as well to digital solutions as the kind of tactical and day-to-day deci­sions that analytics, BI and knowledge management solutions are most com­monly applied to,’ observed Craig Fleisher, co-author of Business and Competitive Analysis (Financial Times Press) and professor at the University of Windsor. “ Many companies are, to some degree, competing on analytics, but the bigger issue is to what degree are they competing on analytics? Since the field of analytics, particularly whereby databases, systems, solutions and applications are concerned, is still in its early stages, companies are in var­ious stages of moving up their analytics learning curves,” he told DBTA.

Ultimately, Pusztai observed, the best pitch for greater analytics comes from the late management thinker Peter Drucker, who said, “We have to stop counting and start measuring.” “This means that many business analysts out there are actually ‘counting,’ not analyz­ing. BI and analytics puts an enormous amount of power into people’s hands, but they have to learn how to leverage it better,” Pusztai said.

Overall, fewer than 10 per­cent of employees have access to BI tools.