Survey: Irish companies miss strategic edge through low use of analytics

22 Jun 2010

Irish companies’ use of analytics remains low and only 10pc of them use it to influence business strategy, despite evidence suggesting it can significantly improve their performance.

The problem is not confined to Ireland: a recent Accenture survey of 600 senior managers in more than 500 blue-chip organisations in the US, UK and in Ireland found that more than half the firms’ current structure prevents data and analytical talent from generating enterprise-wide insight.

The survey results also showed Irish companies’ main priority for analytics is getting their data in order. Accenture said this indicates they are some way from fully exploiting analytics capabilities within the business.

Using data for upturn

Brian McCarthy, executive director of strategy for Accenture’s analytics practice, said the survey results were not a surprise. He suggested Irish firms were missing an opportunity by not taking a closer look at the data they produce, to make better decisions. “Analytics is a competitive differentiator for companies – they can leverage it to create their own upturn.”

That gap between haves and have-nots is already becoming apparent, McCarthy said. “The innovators and high performers, who tend to be 15-20pc of companies, are ahead. We looked at the S&P 500 and found that those with strong analytics outperformed others over the long haul,” he said.

As organisations become more sophisticated and the economic situation more complex, businesses need to ask more demanding questions about their performance, McCarthy added. These trends have forced some changes in how analytics is adopted, such as being driven by the business rather than the IT department.

“It’s something that was in the CIO’s purview but is now on the CEO’s table,” said McCarthy. Another development is that costly long-term projects have given way to speedier implementations with fast return on investment.

“The old way [of BI projects] involved a multi-year approach to get at a single version of the truth. We’re seeing an orientation towards analytics with a more near-term focus,” he said.

Analytics as a service trend

A related trend is the emergence of analytics as a service, which McCarthy said is a more flexible approach to providing analytics to the business that can deliver value in the short term while also contributing to a company’s long-term strategy.

According to the research, Irish firms currently use analytics most in the finance department (37pc of cases), followed by operations (34pc). Only one in 10 Irish organisations use it to influence strategy, compared to 27pc in England and Wales.

Irish companies most commonly cited the finance function as first department earmarked for future analytics investment. Supply chain was next, followed by sales, marketing and CRM in third place.

Almost three-quarters of Irish organisations analyse data to predict market growth, whereas 87 of English and Welsh organisations do so. Irish respondents are much less likely to use analytics to forecast market trends or to influence product development, the survey found.

At a global level, the survey found that 45pc of respondents said data is housed in isolated parts of their organisation. Some 30pc of US respondents and 13pc of UK and Ireland organisations do not have any staff with analytics roles.

Overall, four out of 10 respondents said their current IT resources and systems greatly hinder the effective use of enterprise-wide analytics in their organisations.

Commitment to analytics

Despite an apparent dearth of analytics capabilities in many companies, the survey did suggest a commitment to improve, with 71pc of respondents saying their organisation’s senior management is “totally” or “highly” committed to analytics and fact-based decision-making. 

Almost one in four Irish companies (23pc) said they are not as comfortable as their UK counterparts with current levels of spending on analytics and more than half (55pc) feel an increase is necessary.

They will be spoiled for choice: most of the major enterprise software providers now offer some business intelligence or analytics capabilities. Even at the mid-level market, some financial software vendors now claim their products include similar features. Gartner said the worldwide market for BI platforms, analytic applications and performance management software was worth US$8.8bn in 2008, having grown by more than 25pc.

Business intelligence is also moving away from intended exclusively for certain departments – finance, in particular – and senior managers. According to many market observers, access to such data is being provided more widely throughout many organisations to improve decision making at all levels.

Some industry commentators are sceptical that over-reliance on analytics could make managers slaves to the data at the expense of personal observation and instinct. McCarthy acknowledged such concerns, saying: “Fact-based decision making is definitely a trend. However, you don’t get rid of management intuition and experience built up over 20 or 30 years. It’s the combination of the two. What the very best companies do – and they do this well – is to combine fact-based scientific rigour with the experience of senior leaders and that is both an art and a science.”

Gordon Smith was a contributor to Silicon Republic