Analytics and the Power of 100%
Sure, you can buy a $14,000 Apple Watch to set an alarm and wake you up in the morning. But investing in that new technology to only do this is missing the point. I always get the same feeling about Data Analytics articles explaining the benefit is saving 1% of something. You see it a lot. Shaving pennies off the margin was the key message of an article on Big Data in an Economist article in the Schumpeter section back in 2014. Try and get a CEO fired up about using Big Data to save 1% on cost.
But go to CEO’s of the major payment companies out there who didn't think of Square, and you'll get their attention. Talk to the taxi companies having to deal with competing against Uber, which came out of nowhere to have a valuation of $40 billion in under 6 years. That will get their attention. Or take a look at how NetFlix were able establish themselves not only for video distribution, but now also content creation. The large video rental chains are now out of business. They certainly noticed. All those new companies have a key capability: Analytics. And all are showing the established players how fragile their position is by creating a completely new approach to serving customers.
In a stable market, it's understandable to use analytics to optimize activities. That one percent to the CEO might be 10% for the product line or service you are working in and make you a star. Keep going. But don't forget that that might be a fragile 10% because someone else is using the same analytics technology and infrastructure to enable a completely new business model that will eat yours up. So if you are going to invest into that new technology, don’t miss the point – the real value isn’t in the 1%. The real value of a digital transformation isn’t just to set a smart alarm. The real part is how to incorporate it into new ways of thinking and not just save 1% in an existing thing, but get 100% of a new thing.
This is one of the key reasons why in Journey 2018 we have put Analytics and Visualization in the Realization Challenges section. Right now, analytics and Big Data are vibrant areas with lots of changes in technology and focus. But because there are so many bright people working in this area, lots of the IT problems will be solved over the next few years. We expect a lot of shake-out in the industry allowing companies to focus on fewer technologies and be more comfortable with the scaling that will be needed for the vast amounts of data being stored and processed. But this is still just part of the big picture. In 2018, the successful companies are the ones who are able to integrate agile decision making processes based on the results coming out of advanced analytics. And they’ll be doing it in multiple departments – operations, marketing, sales, HR – just about everywhere in the organization. Big Data Analytics is inherently an IT-based capability, but the most successful organizations will be the ones finding the best way to share their data and analytics results between all the parts of the business and take the IT for granted.