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The Information-Driven Enterprise
 

The Information-Driven Enterprise

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Businesses Are Increasingly Driven by Analytics, But Disconnects Can Sabotage the Best Intentions, Forrester Consulting paper commissioned by HP

Businesses Are Increasingly Driven by Analytics, But Disconnects Can Sabotage the Best Intentions, Forrester Consulting paper commissioned by HP

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    The Information-Driven Enterprise The Information-Driven Enterprise Document Transcript

    • A Forrester Consulting Thought Leadership Paper Commissioned By Hewlett-PackardThe Information-Driven EnterpriseBusinesses Are Increasingly Driven By Analytics, But Disconnects Can Sabotage The Best IntentionsNovember 2012
    • Forrester ConsultingThe Information-Driven EnterpriseTable Of ContentsExecutive Summary ................................................................................................................................................................................. 2Businesses Have Big Plans For Data..................................................................................................................................................... 3Localized Approaches Miss Enterprise Synergy ................................................................................................................................ 5A Unified Approach Unlocks More Value ......................................................................................................................................... 7Key Recommendations ......................................................................................................................................................................... 10Appendix A: Methodology................................................................................................................................................................... 11Appendix B: Demographics ................................................................................................................................................................. 11Appendix C: Endnotes .......................................................................................................................................................................... 12© 2012, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources.Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and TotalEconomic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additionalinformation, go to www.forrester.com. [1-KDNC5E]About Forrester ConsultingForrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging inscope from a short strategy session to custom projects, Forrester’s Consulting services connect you directly with research analysts who applyexpert insight to your specific business challenges. For more information, visit www.forrester.com/consulting.Page 1
    • Forrester ConsultingThe Information-Driven EnterpriseExecutive SummaryInformation is emerging as the new currency of business as well as the basis for Eight in 10 executives aretrue differentiation and value creation. However, traditional disconnected planning to use moreinformation management approaches limit potential. In June 2012, Hewlett- data for analytics in the next 12 months, with onePackard (HP) commissioned Forrester Consulting to study how firms were in three planning for aprogressing in the quest to become information-driven. We believe that substantial increase in data volume, databusinesses are pursuing analytics using more data and new tools because these velocity, or the types of analytics performed.lead to both efficiency and new business opportunities. However, obstacles exist.To test this assertion, we conducted a survey of 154 business technologyexecutives and interviewed four North American companies in the financial services, business-to-consumer,manufacturing, and agriculture verticals. We found that while firms are generally looking to data for more insight,organizational misalignments, lack of trust, and talent gaps are significant issues that firms must overcome by 1)aligning business and IT objectives; 2) investing in systems that can integrate structured and unstructured data in ascalable, cost-effective manner; and 3) creating partnerships to fill critical talent gaps.Key FindingsForrester’s study yielded five key findings: • Businesses are letting data guide their strategic decisions. Seventy-six percent of firms we surveyed believed that digital data was critical to their business. Our interviews reinforced this by revealing business leaders who were focused on improving the quality and quantity of data available for decision support. We found firms combing through data looking for insight and using that insight to act rapidly and prepare for market shifts. In order to become data-driven, firms must overcome important cultural issues, starting at the very top. • Disconnects and misalignments inhibit enterprise benefits. Fifty percent of firms stated that their data policy was to treat it as a corporate asset, but only 38% of firms said that actual behaviors reflected this. Furthermore, we found differences between how IT and business respondents view big data opportunities. These are examples of misaligned objectives that result in slow progress. Firms must take a hard look at how IT and the business are incentivized to work together toward common business goals. • Big data will play a significant role in lowering the cost of data at extremes of scale. Our study probed the role that advanced analytics and big data solutions will play in enterprises. Sixty-two percent of respondents believe that big data will lower costs; the top use cases involved integrating structured and unstructured information. Firms expect cost to be lower because 1) big data solutions are more cost-effective at integrating highly diverse data sets at extreme scale; 2) big data solutions are scalable, allowing firms to acquire only what they need; and 3) big data technology costs are being pressured downward by open source. • Trust is an issue that context helps overcome. Eighty-five percent of respondents said that trusting the analysis of advanced analytics was a critical or significant challenge for them. Seventy-nine percent said that trusting the data was an issue as well. Trusting the data and analysis requires building on experience, which can be difficult to acquire. Firms can get a jump-start by using various unstructured, human-generated sources to provide context in number-crunching analytics. For example, one executive told us about a social media analysis that confirmed a predicted influx of new business.Page 2
    • Forrester ConsultingThe Information-Driven Enterprise • Talent gaps are widening with big data. While firms generally believed that they had or could hire sufficient talent, gaps were identified. Only 13% believed that they had sufficient data science talent, and only 22% believed that they had the personnel to deliver big data solutions. Firms are leveraging centers of excellence (CoEs) to leverage limited talent. Additionally, interviewed executives confirmed that partners were helpful in getting up to speed with big data. However, they also warned us to be careful. Firms must select partners that understand the business need and data, not just the technology.Businesses Have Big Plans For DataFueled by the increasing competition and the relentless commoditization of products and services, firms are activelylooking for new revenue opportunities (see Figure 1). Our study found firms turning to advanced analytics as part oftheir strategy to identify new business opportunities, deepen customer engagement, and become more efficient.Specifically, we found that: • Firms view data as critical, not just important. In our study, we asked firms to tell us about their data management philosophy and found that 76% thought that data was critical to their business, while the remainder thought that it was just important (see Figure 2). Moreover, our interviews backed this up. “Data has given us a strong competitive advantage — we are a lot smarter than our competition because we are much more nimble and able to test out what might work and find out what does not.” (Director of eMarketing, consumer rental company) “We have a lot of information on our product, but buyers are not confident. To get our new products adopted in the market faster, we turned to advanced analytics to improve confidence and shorten sales cycles.” (Business IT systems lead, agricultural firm) • Leaders are becoming more dependent on real-time data. The executives we spoke with reflected a common theme — transforming their organizations by using more comprehensive and real-time data sets for effective decision-making. “We are very much setting our strategy based on market data. We have planning processes, and the amount of data provided to those processes by our analytics team is mind-boggling . . . . We have hugely benefited from competing on analytics.” (Vice president of applied analytics, US-based insurance company) “We are always looking at data to optimize our strategies . . . . We dig through data in our [tool] and look for patterns across the market.” (Director of eMarketing, consumer rental company) • The top use cases involve a variety of structured and unstructured data. We asked our survey participants about how they planned to use big data as part of their overall strategy to become information-driven (see Figure 3). The top new use cases required the most diverse data sets including a significant amount of unstructured data — these included market microsegmentation, customer next-best action, and sentiment analysis. Furthermore, quick and dirty is often preferred over precise and expensive when conducting analysis. “[People are] being forced to realize that things are a bit dirtier in the real world. Good enough may be good enough for some things.” (Business IT systems lead, agricultural firm)Page 3
    • Forrester ConsultingThe Information-Driven Enterprise • Firms are turning to big data for lower costs and improved efficiency. Sixty-two percent of our survey respondents indicated that they expected big data technologies to have lower costs. We believe this is because 1) traditional extract-transform-load-based systems cannot effectively deal with a wide variety of different formats at extremes of volume and velocity; 2) big data solutions can scale, so firms can buy only what they need; and 3) open source alternatives are exerting downward cost pressure.Figure 1Firms Are Actively Looking For New Revenue Opportunities Base: 154 IT and business professionals involved in data analytics decisionsSource: A commissioned study conducted by Forrester Consulting on behalf of HP, June 2012Figure 2Data Is A Critical Component Of Firm’s Plans Base: 154 IT and business professionals involved in data analytics decisionsSource: A commissioned study conducted by Forrester Consulting on behalf of HP, June 2012Page 4
    • Forrester ConsultingThe Information-Driven EnterpriseFigure 3New Big Data Use Cases Require Diverse Data Base: 154 IT and business professionals involved in data analytics decisionsSource: A commissioned study conducted by Forrester Consulting on behalf of HP, June 2012Note: Respondents who answered “no plans” and “don’t know” were not included.Localized Approaches Miss Enterprise SynergyBecoming information-driven means having an enterprise view and being able to act on data both tactically andstrategically across machine, human, and sensor data. “It’s hard to predict how folks are going to need information; you can see it at a strategic and tactical level.” (Global manufacturing manager, manufacturing company)Our study revealed organizational issues that can defeat the best intentions. For example: • Disconnects exist between what firms say and what they do. Fifty percent of respondents indicated that their firms’ data management philosophy is managing data like a corporate asset, but only 38% said that people in their firms actually behaved that way (see Figure 4). This is because firms are trying to be information-driven, but they use data in an intuitive, subjective manner that under-delivers on insight. • IT is too narrowly focused on data that it can most easily access. In our survey, we asked respondents about the types of data on which they plan to use big data analytics (see Figure 5). The results indicate that IT focused more on structured data available from internal systems, while business people’s interests were more evenly distributed. We think that one of the primary benefits of big data is the integration of structured transactional data andPage 5
    • Forrester ConsultingThe Information-Driven Enterprise unstructured, human-generated data, and our interviews confirmed our point of view. This narrow IT view can lead to missed value. • Frustration exists with and within IT. IT is often frustrated because it has a view into data at an enterprise level and often takes the brunt of blame when solutions take too long or cost too much. The business executives we interviewed reinforced our assessment. “We try to avoid IT projects if at all possible. It is very painful and we don’t like it.” (Director of eMarketing, consumer rental company) “The problem with most IT systems is they assume that nothing ever changes, but the manufacturing process is all about constant change to optimize and become more efficient.” (Global manufacturing manager, manufacturing company)These issues result in distrust that further fuels division, when working together will yield the best results.Figure 4What Firms Say About Data And What They Do Are Different Base: 154 IT and business professionals involved in data analytics decisionsSource: A commissioned study conducted by Forrester Consulting on behalf of HP, June 2012Page 6
    • Forrester ConsultingThe Information-Driven EnterpriseFigure 5IT Is Focusing On Internal, Transactional, And Structured Data Base: IT and business professionals involved in data analytics decisions in each roleSource: A commissioned study conducted by Forrester Consulting on behalf of HP, June 2012A Unified Approach Unlocks More ValueEnterprise information management has been a concept for years. However, it is often driven by IT because IT dealswith data at an enterprise level every day.1 Businesses, on the other hand, are disillusioned. For example, our surveyrevealed that 62% of business respondents thought that funding for big data solutions that required new technology wasan inhibitor to their analytic strategy, while only 18% of IT respondents thought this. This huge difference underscoresthe basic problem — businesses are tired of spending money on new technology when IT is involved.Overcoming disconnects and misalignments will unlock more value through: • Sharing information and insights to empower your business. One executive stated the problem clearly. “Our biggest challenge is being able to share data across the organization. For example, if somebody at one plant has a good idea, how do we ensure that everyone benefits?” (Global manufacturing manager, an equipment manufacturing company)Page 7
    • Forrester ConsultingThe Information-Driven Enterprise One company we interviewed had it figured out. It used social media monitoring and sentiment analysis to complement hard data in developing sales forecasts. Because it could share insights easily, it could react very quickly to market changes. • Holistically addressing more than cost savings with big data solutions. Both business and IT respondents in our survey agreed that cost savings was the No. 1 driver for investigating big data. However, IT is also concerned about volume, velocity, variety, and variability issues (see Figure 6). For example, the figure illustrates that 42% of IT respondents were looking at big data solutions to address high-volume problems, while only 23% of business respondents said the same. • Providing context that improves data trust. Our survey indicated that trust was a particular concern with advanced analytic solutions. Eighty-five percent of respondents said that trusting the analysis was a critical or significant challenge for them. Also, 79% said that trusting the data was an issue. We believe that trust is improved when context from various human-generated, unstructured sources can be combined with hard number-crunching analytics. One executive we interviewed reinforced this point. “The key to understanding the insights is having the context; you need to look across channels to understand what the customer is doing.” (Director of eMarketing, consumer rental company) • Creating analytics CoEs to leverage talent. In our survey, 53% of firms indicated that they either have or plan to have a data analytics CoE to centralize talent, while 31% employ or plan to employ a hybrid model with both central and line-of-business teams (see Figure 7). We think that this is logical given that 85% of respondents told us that gaps exist in the quantitative data analyst/scientist role. • Building an ecosystem of partners to accelerate time-to-value. Our survey indicated that talent gaps were a significant issue to realizing value from more data. Only 13% believed that they had sufficient data science talent, and only 22% believed that they had the personnel to deliver big data solutions. For both of these gaps, our survey also revealed that firms were most likely to look to partners. Several executives who had leveraged partners reinforced the important of finding the right one. “Having a trusted partner is very important to achieving our vision . . . . Those who try to adapt your problem to their solution du jour aren’t helpful.” (Global manufacturing manager, equipment manufacturing company) “We haven’t played in this data space before. Having a partner has been critical, but you need to understand what’s real and who’s not.” (Business IT systems lead, agricultural firm)Page 8
    • Forrester ConsultingThe Information-Driven EnterpriseFigure 6Everybody Cares About Cost, But IT Also Sees Volume, Velocity, And Variety Benefits Base: IT and business professionals involved in data analytics decisions in each role (multiple responses accepted)Source: A commissioned study conducted by Forrester Consulting on behalf of HP, June 2012Figure 7Firms Leverage Analytics Talent By Creating CoEs Base: 154 IT and business professionals involved in data analytics decisionsSource: A commissioned study conducted by Forrester Consulting on behalf of HP, June 2012Page 9
    • Forrester ConsultingThe Information-Driven EnterpriseKEY RECOMMENDATIONSKey recommendations for organizations on the path to becoming information-driven, based on the findings of our study,include the following: • Start with your culture. One executive put it poetically, “Success with data means changing hearts and minds of your people.” We see this over and over again in our research. Effective data management begins with organizational culture, and big data is no different. If the CxO level is not thinking “information-driven,” all of the big data technology in the world will not help. In this case, work tactically to prove the value in small chunks with the aim of influencing a change in attitudes. • Stay focused on business problems. One of our interviewees told us, “I’ve never seen a better partnership between the business and IT. Our IT team is really focused on the business objectives, not focused on [its] own agenda by doing all kinds of things that only [IT is] interested in.” Realigning IT with business objectives for an information-driven enterprise is critical and starts at the top. Ask yourself, why is IT doing what it’s doing? What business problems are being solved? • Make enterprise analytics a team effort, but let your business lead. Funding new technology for big data investments is a difficult issue for business due to eroded relationships, and most firms in our survey plan to establish an analytics CoE and leverage line-of-business teams. Clearly IT has a role to play in supporting a big data and an advanced analytics infrastructure. However, we think that the bulk of the analytics workload should be put in the hands of business teams. Giving the business control will rebuild trust and establish IT’s position as an enabler and not an inhibitor. • Use human-generated data to add context. IT’s top interest for big data lies in improved processing of transactional data at extremes of scale. However, business is also interested in human-generated data such as unstructured scientific and social. We believe that the best solution integrates these data sets to provide a contextual overlay to deep analytics insights that will improve trust. Since integrating extreme-scale, multisource data to provide both context and insight requires hard-to-find skills, create relationships with partners that have experience in both the breadth of technology and your particular industry.Page 10
    • Forrester ConsultingThe Information-Driven EnterpriseAppendix A: MethodologyIn this study, Forrester conducted an online survey of 154 IT and business professionals involved in data analyticsdecisions for their organizations to better understand the needs and perceptions of big data in the enterprise. Responseswere collected across a broad range of industries and across four countries. Forrester also conducted four follow-upinterviews with decision-makers who responded to the survey. In both the online survey and follow-up interviews,respondents were asked a series of questions about their organizations’ current practices and challenges concerningdata management as well as the analytics tools and solutions in use or planned for use in the future. The study beganand was completed in June 2012.Appendix B: DemographicsFigure 8Organizations By Headquarters Location And Number Of Employees Base: 154 IT and business professionals involved in data analytics decisions (percentages may not total 100 because of rounding)Source: A commissioned study conducted by Forrester Consulting on behalf of HP, June 2012Page 11
    • Forrester ConsultingThe Information-Driven EnterpriseFigure 9Organizations By Industry Base: 154 IT and business professionals involved in data analytics decisionsSource: A commissioned study conducted by Forrester Consulting on behalf of HP, June 2012Appendix C: Endnotes1 According to Forrester’s 2011 MDM survey, 36% of firms have IT-driven enterprise data governance efforts, while44% have a low all-around maturity. Source: August 2011 Global Employee Master Data Management Online Survey.Page 12