The report, from Melbourne Business School and consulting firm AT Kearney, reveals that Australian companies extract 12% less value from analytics compared to the rest of the world, and are 14% less mature in their approach – while Chinese companies are leading the world in both maturity and impact.
“Australian companies are lagging behind both in terms of maturity (how developed their analytics capabilities are) and impact (how much value their analytics operations give to the bottom line) compared to the rest of the world, despite no significant differentiator between companies, except their approach to data analytics,” the report notes.
But, companies lagging behind with data analytics, stand to boost profits by as much as 60% if they improve their data strategies and culture, the report suggests.
- Oil and gas, industrial and technology companies were the most advanced users of analytics, ahead of government, energy and utilities, mining and others. Key use cases include making data-driven business decisions and optimising customer experience.
- Companies that spend too much money on their data ecosystem without strategic leadership tend to have lower profit than firms with strategic leadership guiding the use of technology
The 50 Australian businesses analysed scored lower across the board than global counterparts, attributed to risk-averse cultures and reluctance to experiment, their approach to using data in the business, and lack of recruitment and training of data specialists.
“Overall, the journey to extracting the most value from analytics has a slow beginning through the first two phases but has the potential to give exponential growth,” the report says.
Researchers Professor Ujwal Kayande of Melbourne Business School, and Enrico Rizzon, Partner at A.T. Kearney, proposed organisations should implement a four dimensional framework to implement data analytics strategies, focusing on strategy and leadership, culture and governance, talent and skills and data ecosystem, to best extract value from data analytics.
"Firms around the world are investing heavily in analytics, but there is very little research into what value they are extracting from that investment,” said Professor Kayande.
“That’s the question we sought to answer with the Analytics Impact Index. There are many studies out there that benchmark firms on their capabilities, but our study is unique in that we assess the impact of those investments on the bottom line.
"Our study provides guidance to boards on what companies need to do to make analytics investments worthwhile. Merely investing in technology doesn’t bring the benefit that top performing firms obtain – to have a good chance of obtaining that benefit, the firm requires leadership teams who advocate for analytics use across the organisation and an analytics strategy that is driven by the firm’s business strategy."
Rizzon said: "The perennial bias of technology investment as the solution to analytics maturity and impact persists. We often find that our clients have invested in but don't leverage the data ecosystems they have.”
“The study points to leadership, which drives utilisation of the data ecosystems to generate the fact-based insights necessary for improved decision making, as being key to delivering of analytic impact."