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Big Data and Advanced Analytics have been 'hot' topics for some time now, and spending in the segment looks set to double by 2020. Britain is currently spending £12 billion on advanced analytics, and while currently it lags well behind the maturity of competitors such as the US, the UK is set to catch up over the coming three years.
Big Data by definition entails the underlying need to process a voluminous and complex amount of data in the area of terabytes if not petabytes (in other words, a large volume of data). Its use has been touted as a potential game-changer for businesses as, while traditional data-processing application software is inadequate to deal with them, the capture, storage and data analysis of such data could reveal vital statistics relating to everything from corporate fraud, to changing consumer behaviour, to supply chain inefficiencies.
Due to this, Big Data is regarded as one of the most important drivers of digital transformation, however, tapping into that potential is easier said than done. Many UK companies are still finding their way around Big Data, testing technologies, use cases and tools, as well as new operational models, with as many as 70% recently stating that their Big Data projects failed to realise Big Data’s full potential. As a result, spending is expected to accelerate in the years ahead, because of greater proliferation of data, greater computing power, and the need to find ever more competitive advantage - all driven by analytics.
According to new research by strategy consultancy OC&C, early indicators demonstrate the major advantage that a decent understanding of analytics can deliver. The consulting firm found that of the ‘best’ performing companies, 94% have a good understanding of analytics, compared to 38% of average or poor performers. While it does not guarantee success then, being able to wield analytics with confidence thanks to an informed workforce clearly boosts a company’s chances of succeeding as a business. In line with this, some 90% of the best performers are those which have significantly changed their operations to facilitate advanced analytics.
US companies are currently a long way ahead of their UK counterparts in terms of advanced analytics however. The States currently boast a 58% uptake, ten percentage points higher than the rate at which British firms are adopting the technology.
The US also posts a better average in terms of functional areas per company taking up advanced analytics. In the US, 7.1% of each company’s functionalities leverage advanced analytics, compared to 5.7% in the UK. The US has already invested heavily in the analytics scene, and approximately 60% of companies across the US are planning to double their investment in the area in the next three years, from £58 billion to £112 billion by 2020.
According to the report, however, the UK, which is set to make its own concerted effort to invest in technology – as the country attempts to position itself as a global tech hub to soften the impact of Brexit – will match this level of commitment. In fact, while 60% of UK companies also plan to more than double their investment in analytics, OC&C researchers believe that the UK may gain ground on the US by 2020 in terms of analytics maturity. UK companies intend to increase their average spending on advanced analytics to £24 billion per year by 2020.
James Walker, Partner at OC&C Strategy Consultants, said of the results, “When it comes to investing in analytics to drive business results, the message from this research is: ‘go big, or go home.’ There is a clear relationship between spending more on analytics and outperforming your peers – the more you spend, the more superior your performance.”
Being successful with advanced analytics
Despite the intention of many company leaders to expand the role of advanced analytics, only a minority feel it is having a positive impact on their businesses, however. Opinion varies across sectors, with 33% of B2B companies perceiving a positive impact, followed by 26% of retailers, while even fewer businesses in the leisure (19%), Telecoms, Media and Technology (TMT) (13%) and Consumer Packaged Goods (CPG) (8%) sectors have found analytics to be beneficial.
According to Walker, in order to be successful, “it’s also important to create the right conditions for analytics to be successful and realise its potential. These include laying the right foundations, grounded in senior leadership commitment; enabling success by giving analytics critical mass at the core of the business; and creating a culture that embraces analytics around people who understand its value.”
OC&C therefore also set out a number of key steps companies can put in place to feel the benefits of data analytics more acutely. The report suggested that foundational imperatives are one such priority, with senior sponsorship, commitment, and a focus on business goals already driving 58% of the best performing organisations, in contrast to 20% in the worst performing companies.
Enabler imperatives are also important. This means that up-to-date technology, trust-worthy data, and a central analytics team with substantial resources, process alignment, and continuous feedback and evolution of the analytics capability can all facilitate success. This was supported by 71% of organisations which claimed technology implementation was the main trigger for investment in analytics, and the fact that 69% of the best performing companies already have centralised analytics teams.
Finally, OC&C recommend people centred imperatives. What should be common sense to most companies when introducing new technology and methodologies to their organisation is that training both the providers and consumers of analytics is important to get the most from them. To this end, alongside the previously mentioned statistic that 94% of the best performing companies reported a good understanding of analytics throughout their workforce, a further 80% of meetings in the best performing companies include analytics or data elements – expanding the practice throughout the culture of such entities.
