The second annual Analytics Impact Index report report from Melbourne Business School and global management consulting firm A.T. Kearney – launched on Monday - shows that while only six percent (6%) of companies surveyed globally extract the full potential of analytics, the findings re-established that analytics maturity correlates directly with greater profit.
The analytics report follows the announcement last month by Melbourne Business School at the University of Melbourne and analytics provider SAS that they have agreed a five-year extension of the relationship underpinning support for the school’s Master of Business Analytics degree program.
This latest analytics impact report identifies those businesses found to be falling behind their global peers as “laggards” as opposed to explorers, followers or leaders able to generate up to 83% more profit if they were to adopt the processes and behaviours of leaders.
The maturity index is made up of four dimensions, including strategy and leadership, culture and governance, talent and skills, and data ecosystem – and APAC companies score two percent higher in ‘talent and skills’ compared to their global peers.
Professor Ujwal Kayande, founding director of the Centre for Business Analytics at Melbourne Business School, said: "These findings suggest that while organisations in the Asia-Pacific have access to high-quality analytics professionals, they may not be focusing sufficiently on the other areas that are required to see an impact on profitability.
"Having the right talent is great, but the picture is incomplete without also focusing on culture and governance, data ecosystems, and strategy and leadership.
“All of these things add up to make analytics operations effective. One thing in particular that we've seen in the results, both this year and last year, is that strategy and leadership at a senior level is important to extract the full value from analytics, with analytics teams led by C-suite execs generating more than twice as much profit as those led by managers.”
Professor Kayande said “effective analytics strategies require buy-in at every level – at senior levels to ensure they're approved, and at lower levels to be implemented’.
“Analytics teams led by C-suite executives are more likely to get the representation and support they need to secure this buy-in, and in turn deliver a greater impact. Another reason for this finding could be that analytics teams who are further 'down the line' from senior executives may lose sight of the bigger picture and focus on areas of lower priority and less impact." Professor Kayande concluded.
"Whilst many companies continue to invest in hiring talent and data/analytics infrastructure, it is often done in isolation to strategy and conducted by managers, who while passionate, don't have the skills or authority to drive the necessary whole of company strategy in relation to analytics,’ said Enrico Rizzon, Partner at A.T. Kearney.
“Boards should be asking their executives 'how is analytics making a difference to our business' and CEOs should be ensuring they have the right capabilities around them to realise the promise of analytics."
Meanwhile, while US organisations show a five to 10% better score in analytics practices and processes than the rest of the world - as they are more mature in their analytics approach - EMEA companies are the least mature, falling two to six percent behind the global average across all dimensions.
APAC and US organisations share the same industry-based maturity, with technology and professional services proving the most mature, and manufacturing proving the least mature - while technology, and energy and utilities companies in EMEA are the most mature sectors, with healthcare the least.