Like you, we often find difficulty in deriving and reporting the value of analytics. So, we have researched and prepared a list of best practices, from our own experience as well as those industry pundits.
In the Data Mill, Nicole Laskowski summarizes industry pundits’ outline for analytics programs within companies for 2016. Within the article, analyzing and driving out the value of analytics as one of the key focuses for the year was strongly suggested. Often, analytics is hidden within IT as business intelligence and does not have a separate return on investment. Analytics is often contained deep in the recesses of an IT shared service and therefore the use of analytics to drive competitive advantage is lost. However, “”Recognizing that analytics is its own muscle within an organization, I think viewing it that way, under that same lens will help increase the buy-in with leaders in the organization,” Magestro said.
Cisco has gone so far as to add Value Analysts to help customers understand the business case for analytics. Analytics and Cisco, you ask? How do those two things line up? Cisco has made a significant investment in purchasing and integrating analytics companies into their lineup, anything from Composite (data virtualization) to location based analytics (more about Cisco in another post). Cisco includes the following items in their return on investment analysis:
- Measure the business value of the insights: Improved access to more current and reliable data and improved speed to business outcome as a result of data-driven insight.
- Measure the IT value: Specific IT measures of improved business data integration, reduced hardware and software costs with more efficient and best suited architectures, and improved data management.
- “Measure the direct benefit of the insights: Return on investment(ROI) could come from an increase in revenue or a decrease in spend from identifying inefficiencies.
- Measure the accumulated knowledge gained: Harder to quantify than ROI, but something that’s still “very real,” Magestro said. Even if a project turns out to be a bust, the results become part of a library of analytics knowledge that will influence additional work. “The way I like to say it is every hour that gets spent on analytics work makes the company smarter,” he said.
- Measure the analytic efficiencies gained: Having an in-house analytics team cuts down on possibility of duplicating work across an organization; plus, it means companies don’t have to outsource the work to an expensive firm. “There’s a cost of not doing the work that needs to be called out,” Magestro said.”*
Now that you have identified your ROI, market like Kickstarter!
Harvard professor, Thomas Davenport stated that the first stage to become a company who competes based upon analytics is to gain interest, managerial support, executive interest and finally momentum around the application of analytics. The use of insights has to move from non-existent, through to localized interest, and into one that is analytically driven. How do each of us become like kickstarter and leverage analytics to market the opportunity? Kickstarter leverages the insights around the activities of 2014 to drive more revenue for 2016. Brilliant simplicity. Insights in action.