Data Analytics A Cornerstone Of Business - Business Media MAGS

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Data Analytics A Cornerstone Of Business

What the evolution of data analytics can teach us about business success. By Dr Yudhvir Seetharam, head of Analytics, Insights and Research: FNB Business.

While data analytics has gained massive importance as a vital business tool in recent years, it’s not exactly a new concept. Some date the beginnings of the formal analysis of data for business use back to the 19th century with Frederick Winslow Taylor’s time management exercises. Others argue that it has been around for as long as businesses have existed, it was just called “consulting”. Some go further back claiming that the use of data, albeit not on the technological scale of today, can be traced to the early Egyptians who used it to build the pyramids.

Dr Yudhvir Seetharam

Irrespective of one’s belief in the origins of data analysis, the rapid and massive evolution and broadening of the science, particularly over the past 60 years or so, is beyond question. The arrival of computers in the late 1960s was the primary catalyst for this rapid increase in evolutionary momentum. Then, as recently as 2005, the evolutionary process exploded with the advent of big data, enhanced data warehousing capabilities, and the Cloud.

As quickly as the software and hardware used in these analytics evolved, so too did their use, and possibly more significantly, the expectations of what they should be doing for businesses. For most businesses, those expectations also evolved from wanting to leverage data and analytics to improve efficiencies to requiring the analysis and application of data to ensure a competitive advantage. Inevitably, this caused the evolution of data analysis to speed up exponentially and the development of analytical techniques to meet the expectations, giving rise to disciplines like predictive analytics, data mining and machine learning. However, the pace at which actionable insights have been unlocked by such analysis has been a lot slower, mainly due to a lingering shortage of qualified and capable analysts, the prohibitively high costs of tools, resources, and infrastructure, and a lack of insight by many organisations into the real value of investing in the science to answer business questions and catalyse business growth.

Adding to this gap between potential and actual outcomes is that recently we witnessed another step-change in the rationale for data analytics in business. Unfortunately, this was a result of many organisations effectively bypassing the optimisation potential of the science by automating as many business functions as possible and building bigger and better robots.

The major problem was that, in their rush to show that they are doing things better than their competitors, many businesses lost sight of the real value of data and the science of analysing it – to understand customers so as to give them added value. And in so doing, build more sustainable, robust, diversified and growth-oriented businesses.

Have checks and balances

Data analytics can, and should, be a cornerstone of business success and growth. But there are a number of checks and balances that every business needs to have in place to ensure that it doesn’t get ahead of itself and focus more on being at the cusp of the ongoing evolution of data analytics, and less on unlocking its real value for them and their customers.

Be savvy about the roles you choose to automate. While automation can, and must, be harnessed to automate certain functions – like checking the accuracy of client data against existing information – trying to shoehorn total automation into areas that require creativity, subjectivity and empathy is an undertaking that’s doomed to fail. These functions can most certainly be augmented by artificial intelligence, but we have a long way to go before robots are solely responsible for these roles.

Don’t put the cart before the horse. Before you rush off to automate a process, build a robot or undertake machine learning, make sure you have the data and analytics ability required to fuel that process and maximise its likelihood of success. Data science, in all its iterations, will always be in a process of evolution and to maximise the benefits of the science in business, we need to understand that evolutionary process and follow it, at least to some extent, ourselves. In other words, businesses must learn to walk before they try to run.

Don’t disrupt for the sake of disruption. The idea that you have to be disruptive to be successful or to compete with other organisations, is fundamentally flawed. Disruption alone doesn’t ensure success. Rather, that requires optimisation, transformation, and an ability to respond quickly to disruption when it happens.

Check your motivation. The socioeconomic challenges facing South Africa mean that there has never been a greater imperative for businesses to be motivated by more than profit. The triple bottom line is more relevant and important than ever before, which highlights the need to be purpose-driven and motivated by societal needs. Investors know it. So do shareholders. If businesses are approaching data analytics, disruption and automation from a purely financial angle, they are out of alignment with all their stakeholders. And that is not conducive to survival or long-term success.

Ironically, the very nature of technological advancement has created something of a Catch 22 situation for businesses. These advances have served to democratise data, make its collection more effective and accessible to analysts for the purpose of business development. However, these change catalysts are available to all businesses, which means that leveraging them for competitive advantage is actually becoming progressively more difficult.

The key to successfully leveraging data and enjoying the benefits of its ongoing analytics evolution doesn’t necessarily lie in striving to always be at the cutting edge, no matter the cost. Rather the business that will win through its analytical competitiveness is the one that stays clear of a “first-at-all-costs” mindset and instead balances the science with nontechnical success components, including a culture that embraces the human development potential of a data-driven business.

In their rush to show that they are doing things better than their competitors, many businesses lost sight of the real value of data and the science of analysing it.

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