Analytics: The Widening Divide

In collaboration withRESEARCH REPORT FALL 2011 FINDINGS FROM THE 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECT Analytics: The Widening Divide

MIT SLOAN MANAGEMENT REVIEW 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECTFIGURE 1: Creating aCompetitive AdvantageThe ability of organizationsto create a competitiveadvantage with analyticshas surged in the past 12months. 2011 58% 2010 57% 37% increase Percentage who rated as “substantial” or “signiﬁcant” (4 or 5 on a ﬁve-point scale) the level that information and analytics is able to create a competitive advantage for their organization within their industry or market © Massachusetts Institute of Technology, 2011

MIT SLOAN MANAGEMENT REVIEW 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECTFIGURE 2: Analytics Sophistication AssessmentAnalytics competencies can be assessed by analyzing keyattributes as they relate to the organization, including leaders’reliance on fact-based decision making. © Massachusetts Institute of Technology, 2011

MIT SLOAN MANAGEMENT REVIEW 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECTFIGURE 3: Increasing Competitive AdvantageThe ability of organizations to create a competitiveadvantage with analytics has surged in the past 12months. 2011 80% Transformed 2010 65% 23% increase 2011 63% Experienced 2010 38% 66% increase 2011 37% Aspirational 2010 39% 5% decrease Percentage who cited a competitive advantage using analytics © Massachusetts Institute of Technology, 2011

MIT SLOAN MANAGEMENT REVIEW 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECTFIGURE 4: Increasing Analytic Integration Into Strategy and OperationsThe rate at which Transformed and Experienced organizations have integratedanalytics into their core business strategies and operations during the past yearindicates that the competitive and performance gaps between these organizations andAspirational organizations will continue to widen. Transformed 70% Experienced 55% Aspirational 34% Percentage who reported their organization had increased the level to which analytics and information was integrated into the business strategy and day-to-day operations in the past 12 months © Massachusetts Institute of Technology, 2011

MIT SLOAN MANAGEMENT REVIEW 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECTFIGURE 5: Reliance Customer Enhance customers’ overall experience Percentage whoon Analytics indicated theirThe majority of Optimize the match of organization relies sales reps to customers on data andorganizations rely on analytics to execute Define marketing these activities (4 oranalytics to make campaigns 5 on a scale ranging from 1=Intuition/decisions about Identify target Experience to customers 5=Data/Analytics)financial andoperational activities, Human Allocate employees’ time and efforts Resources Transformedbut even Transformed Experienced Evaluate employeeorganizations have performance Aspirationalroom to increase the Strategic Establish organizational strategic objectivesuse of analytics in Develop/refine newother areas. products or services Majority of Respondents Operational operational Streamline processes Manage supply chain or logistics Allocate Financial annual budget Establish financial forecasts 0 20% 40% 60% 80% Percentage of respondents © Massachusetts Institute of Technology, 2011

MIT SLOAN MANAGEMENT REVIEW 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECTFIGURE 6:Focused on theNeed for Speed inDecision MakingAn intense level offocus on the speedof makingdecisions is one Transformed 72%area whereTransformed 49% Experiencedorganizations areusing analytics. Aspirational 22% Percentage who exhibited an intense level of focus on the speed of decision making, assessed by analyzing a series of questions © Massachusetts Institute of Technology, 2011

MIT SLOAN MANAGEMENT REVIEW 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECTFIGURE 7: Focused on Identifying andManaging Enterprise RisksThe vast majority of Transformedorganizations are intensely focused onusing analytics to better addressenterprise risks. Transformed 86% Experienced 6% Aspirational 0% Percentage who exhibited an intense level of focus on using analytics to better understand and manage enterprise risks, assessed by analyzing a series of questions © Massachusetts Institute of Technology, 2011

MIT SLOAN MANAGEMENT REVIEW 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECTFIGURE 8: Focused on CustomersTransformed organizations are intensely focusedon using analytics to create personalizedrelationships with customers. Transformed 62% Experienced 49% Aspirational 34% Percentage who exhibited an intense level of focus on using analytics to better understand and connect with customers, assessed by analyzing a series of questions © Massachusetts Institute of Technology, 2011

MIT SLOAN MANAGEMENT REVIEW 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECTFIGURE 9: Analytics CompetenciesOrganizations must master three analyticscompetencies to achieve competitive advantage. © Massachusetts Institute of Technology, 2011

MIT SLOAN MANAGEMENT REVIEW 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECTFIGURE 10: Key Characteristics of a Transformed OrganizationTransformed organizations rate themselves as highly eﬀective at each ofthe key characteristics, represented by the percentages. Ability to analyze data 78% Ability to capture and aggregate data 77% Percentage of Transformed Culture open to new ideas 77% organizations rating themselves Analytics as a core part of business strategy and operations as highly 72% effective at each Embed predictive analytics into processes of the key 66% characteristics Insights available to those who need them 65% 0 20% 40% 60% 80% 100% Percentage of Transformed organizations © Massachusetts Institute of Technology, 2011

MIT SLOAN MANAGEMENT REVIEW 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECTFIGURE 11: Paths to TransformationExperienced organizations take eithera data-centric enterprise-driven pathor a skills-and-tools centric path ontheir journey toward analytictransformation. Enterprise High Transformed driven Collaborative path Information Data-oriented management Experienced culture proﬁciency Specialized path Line-of- Low Aspirational business driven Low Analytic skills and High tools proﬁciency © Massachusetts Institute of Technology, 2011

MIT SLOAN MANAGEMENT REVIEW 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECTFIGURE 12: Observed Competency LevelsEach path to transformation has unique strengths andweaknesses in the three competencies, which pinpointareas for improvement and investment. Observed competency levels Information management Specialized Collaborative Solid information foundation Standardized data management practices Insights available and accessible Analysis skills and tools Skills developed as a core discipline Enabled by a robust set of tools Delivers action-oriented insights Data-oriented culture Fact-driven leadership Analytics used as a strategic asset Strategy and operations guided by insights Rudimentary Minimal Moderate Signiﬁcant Mastery © Massachusetts Institute of Technology, 2011

MIT SLOAN MANAGEMENT REVIEW 2011 NEW INTELLIGENT ENTERPRISE GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECTFIGURE 13: Respondents Who Rate These Challengesas Extremely Diﬃcult to ResolveChanging the way people behave and interact with oneanother within an organization poses a more diﬃcultchallenge than changing their tools or technologies. Organizational challenges 44% 1.8x Technology 24% more challenges difficult Percentage who rate these challenges as extremely difficult to resolve © Massachusetts Institute of Technology, 2011

Analytics: The Widening Divide

by MIT Sloan Management Review

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