Strategy&: Demand analytics boosts commercial performance

15 October 2014

Companies that have best practice demand analytics in place demonstrate better commercial performance levels than competitors, concludes a new joint research study from Strategy& and INSEAD. On average, leaders in demand analytics capabilities perform a multiple of 2.6x better on sales growth and even 8.5x on shareholder growth. The key message for executives is evident: embrace analytics or miss the boat.

A few months ago Strategy& and INSEAD decided to join forces to study the impact of demand analytics on financial performance. Led by Strategy& partner James Walker and INSEAD eLab Executive Director Joerg Niessing, the research team analysed the financial value of demand-side drivers of revenue, such as pricing, promotion, advertising, customer analytics, and e-commerce, as well as digital engagement with brands. Roughly 500 executives – INSEAD alumni – in commercial leadership roles across multiple geographies, industries, and businesses of different sizes participated in the research.

Impact of Demand Analytics

The findings reveal that the commercial value of demand analytics is substantial: 70% of the companies who are significantly investing on a yearly basis to develop their capabilities are seeing considerable impact, with 26% saying it helped to turn around a business and improve profitability. Additionally, 84% of the early adopters reported that they better understood what drives demand in their business and saw improved profitability. “Our research finds a clear positive correlation – companies who are taking the time to understand and invest in their Demand Analytics capabilities are clearly seeing greater commercial performance,” explains co-author Walker.

The researchers also asked executives to what extent demand analytics influences four key financial metrics. On average, leaders in demand analytics capabilities outpace peers by 2 - 3 times on sales, margin and profit growth, and even more than 8 times on total shareholder return.

Demand Analytics and Performance

Best practices
Given the clear benefits of demand analytics, Strategy& and INSEAD subsequently studied the characteristics that distinguish leaders from laggards, showing that the key to success lies not in IT but in people and structure. “We found that investing in people and processes seems to matter more than investing in tools or technology - which is where companies often first look to spend their development budget,” says Walker. Other key features of leaders include a clear link with strategic goals and the deployment of distinct enablers, such as data availability, creating clear processes for applying analytics, expertise, and focused analytics resources.

From a capability perspective the difference between leaders from laggards across the main category’s is relatively similar, with Consumer Analytics overall the most popular tool, while Digital- and Marketing Analytics reveal the largest performance gap between the two groups of companies.

Demand Analytics Categories

Embrace or miss the boat
For executives, the findings underline the importance of demand analytics to the business, says co-author Niessing. “Companies are facing three major trends – big data, customer-centricity and digitization. Demand Analytics sits right at the centre of these trends. Our message to companies is that if you don’t embrace the opportunities now you have already lost the race.”

See the report ‘The Demand Analytics Premium’ for more key findings and results.


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How data insights helped Network Rail improve the South-East route

11 April 2019

Amey Consulting has leveraged data insights to assist Network Rail with the improvement of its South-Eastern route. Using the Quartz tool, which monitors train movement, Network Rail will now be able to commit to data-enabled interventions to quickly improve underperforming train stations.

With rail services in the UK coming under strain from the demands of modern commuter life, while the infrastructure and service delivery of the nation’s railways has come in for sustained criticism in recent years, a period of regeneration is on the cards at last. Network Rail is the owner and infrastructure manager of most of the railway network in Great Britain, and has subsequently tapped the consulting industry on a regular basis to help find areas of improvement.

The group recently drafted in consultancy BearingPoint to conduct a thorough organisational evaluation and advise Network Rail (High Speed) on attaining a ‘fit for purpose’ organisational standard – for which the consultancy was nominated at the 2019 MCA Awards. Meanwhile, ArupArcadis and Aecom have been contracted to help Colas Rail and Babcock Rail implement a decade-long framework for Network Rail, aimed at supporting the delivery of the next generation of rail systems, with the contracts said to be worth as much as £5 billion

How data insights helped Network Rail improve the South-East route

As Network Rail further aims to improve its performance and customer service offering, another area it has sought help from the consulting sector for is its South-East route. The network of railways connects London with the southern parts of the country, as well as with Europe, making it the busiest in the country, with more than 500 million passenger journeys per year. This crucial expanse of rail was plagued with small minute delays, which were impacting millions of passengers every day, while reducing the efficiency and capacity of the overall network – something Amey Consulting was selected to help solve.

Amey Consulting soon determined that with the sub-threshold delays to services only lasting for 1 or 2 minutes, most were not the subject of detailed root cause analysis, and this made their corrections almost impossible – with dire consequences. Without addressing these delays, passenger satisfaction would fall, while the capacity and efficiency of the network would be reduced, stinging the income of Network Rail even before a host of delay-related fines would hit the company.

In order to help the client gain a better understanding of where, how, when and what these small delays occur, Amey Consulting looked to demonstrate the value of data-led consulting, with a significant reduction in delays within the first month of rolling out changes to key stations. The consultants embedded themselves in Network Rail’s team, helping them learn the key skills needed to support and apply data-driven solutions.

Agile transport

This involved the deployment of the Quartz tool. The system utilises to-the-second train movement data to present the performance of individual stations across the South-East route. It allows users to effortlessly understand station performance with a high level of detail, and use this information to identify losses caused by small-minute delays. The granular data allows for targeted actions to drive efficiency savings and performance improvements. More importantly, it allows users to understand the impact of small process changes on performance. 

Steve Dyke, an Executive Partner at Amey Consulting, said of the project, “We looked to identify the physical root cause on the infrastructure, building a case for change then managing that project implementation and tracking the benefit/value.  In doing so we are working to define a data performance improvement service to the operational and infrastructure owners.”

Just as important for the project as the technology, however, was teaching the Network Rail team how to leverage it after the consultants were gone. The Amey Consulting team worked to develop an agile working culture within Network Rail’s South-East division, helping staff to be confident in using data to improve the journeys of millions of people per year by attacking the problem from the ground up.

Dyke concluded, “This is less about the tools and about the approach to managing performance.  It meant using by-the-second analysis, data science, and then agile development to visualise and identify areas where improvements can be made.  We then worked with NR to change the way they approached the management of the infrastructure changes.  So rather than pass the information down the value chain, any of which could have been missed, we managed the change end-to-end.”

The project was so successful that Amey Consulting was also among those honoured at the recent MCA Awards. The firm scooped the Performance Improvement in the Public Sector prize for its work with Network Rail, at the 2019 ceremony in London.