Put analytics at centre of business or perish: Gartner

Organisations that don't put analytics at the core of their business will eventually die out, according to IT analyst firm Gartner.

In the past, many companies have poured their IT spend into improving the reliability and effectiveness of their business applications to increase business efficiency. This includes putting in new systems such as enterprise resource management (ERP). But since everybody has made the same investments and achieved the same results in the past few years, business efficiency can no longer serve as a differentiator for those organisations, according to Gartner vice president and distinguished analyst Bill Hostmann.

"Until now, analytics has been the poor cousin, something that supports business applications on the edge and a tactical rather than strategic priority within the organisation," he said at the Gartner Business Intelligence & Information Management Summit 2013 in Sydney. "Organisations that do not move analytics into the central part of both their IT strategy and business strategy are not going to meet their business objectives or even survive in the new world of realities we are facing."

Analytics can now provide differentiation between organisations by driving individualised business decisions. Data within a company will become increasingly interconnected, coming in from multiple business applications and processes, Hostmann said. Most of these business applications will be delivered as a service in the cloud, according to the analyst.

It's all well and good to say that organisations have to focus more on business analytics, but, according to Gartner, many of them just don't know how to do it well.

A number of companies are stuck doing descriptive analytics, which only yields pages of reports that nobody looks at, or don't provide insight into their businesses. Higher levels of analytics, such as diagnostic and predictive analysis, which gives more business insight and can aid in decision-making processes, are not widely used, because companies don't have the talent to decipher the data.

"A 2012 survey by Accenture and SAS found 72 percent of respondents planned to increase their spending in analytics this year — good numbers," Gartner managing vice president Ian Bertram said. "However, 60 percent actually said they don't have the skills required to effectively use analytics — that's money down the toilet."

At the high end of the business analytics food chain is prescriptive analysis, which uses things like mathematic modelling, situational analysis, and simulation to tell an organisation what they should be doing. According to Gartner data, only a small portion of organisations — under 3 percent — uses prescriptive analytics, even though more can be done with the same data that is used for basic descriptive analytics.

But many companies still rely on internal, countable data such as sales figures for analytics that can result in a tunnel-visioned view of their businesses, Bertram said.

"Business analytics has largely been focused on tools, technologies, and approaches for accessing structured transactional data," he said. "This information can have the effect of starving the decision maker by only giving them a partial view of the situation."

External data, such as those generated from social media or video content, should be weaved into the analytics process, and that is how big data comes into play, Bertram said.

"Correlating, analysing, and presenting insight from structured and unstructured data together will enable organisations to start personalising customer experience and exploit new opportunities for growth, efficiency, differentiation, and innovation," he said.

Gartner also encourages companies to monetise their data to get their return on investment (ROI) from business analytics tools, something that is done by very few organisations that exist today.

"Much of the data we have collected over time in our organisations has potential value," Bertram said. "That is assuming in the open market you have done all the right security and anonymity measures around all of that data."

By doing so, storing data will no longer just be a costly affair, but rather a revenue generator for the business, he said.

"You can only start doing this if you stop treating data as a liability, and instead treat it as an asset," Bertram said. "Organisations must stop locking their data up in a safe."