Game Changer

Data analytics has already shaken virtually every industry to the core, and it is just the beginning. While the concept of data analytics is not new in business, the explosion of vast amounts of data – from consumers, all corners of the enterprise, audio and video content, telematics and sensors – have created an opportunity for deeper insight and, by extension, competitive advantage.

Add to the equation much more affordable computing power, and data analytics has evolved into what it is today: a force to be reckoned with.

Many Canadian businesses have invested in analytics capabilities and tools to reap the enormous business benefits. In fact, a new report developed by Forbes Insights in co-operation with EY, 2015 EY/Forbes Insights Data & Analytics Impact Index: Don’t Forget the Human Element, shows almost 60% of polled Canadian businesses are making data analytics a strategic priority.

Canada is leading the way, but there is much progress to be made. Many organizations are still struggling to derive value from the data analytics initiatives they have in place.

Survey results show there is a segment of executives whose enterprises have achieved higher levels of maturity in becoming analytics-driven organizations. These leading organizations are seeing a competitive advantage as a result of their efforts, and their experiences, practices and results provide a road map for other organizations to consider on their own analytics journeys.

The impact of data analytics reaches beyond sectors and markets. While regulations, strategies and approaches may vary from industry to industry, the overarching best practices outlined in the survey will be applicable to an insurance company as much as a manufacturing or retail organization and even the public sector, in many respects.

Those who fail to get on board will be left behind in Canada’s slower-growth economy, which is expected to continue at least for the next couple of years.

DRIVING VALUE THROUGH ANALYTICS

In order to fully embrace analytics, it needs to be incorporated into every aspect of a business.

The survey found that 54% of leading analytics organizations (or the top 10% of companies polled) have embedded their analytics strategy into their overall business strategy. And it is these executives who report seeing tangible results in meeting competitive challenges.

Canada stands out in this aspect. Already, 31% of Canadian executives report feeling that analytics has better-prepared their organizations to meet today’s competitive challenges, compared to 20% of their counterparts in the United States and 26% globally.

However, that means that 69% of Canadian executives have not been able to reap benefits from analytics yet.

Many may have hired data scientists and analysts or identified targets for analysis, but truly leveraging analytics is about more than introducing programs. It is a continuous process that requires an analytics plan that is tied in with the rest of the business, as well as buy-in from employees across the organization and a strong leader.

Close to two-thirds of executives in the top 10% of enterprises indicate they have a dedicated C-suite executive to oversee their data analytics programs, with a title such as chief analytics or chief data officer. This ensures that the organization’s data analytics strategy has the attention and the champion it requires to be successful.

While effective data and analytics initiatives are inherently an enterprise-wide endeavour, the centralization of such efforts requires an executive-level position or team that can lead the effort. That top-level executive must work to secure organizational resources and commitment, as well as elevate analytics to the board level.

THE FOCUS ON PEOPLE

The winning formula for achieving analytics success is a combination of strategy, leadership, production and consumption. While the production aspects of analytics (technology, tools, data and advanced analytic skills) have drawn a great deal of attention, the analytics consumption side is what, ultimately, delivers business value.

Analytics consumption takes place at two levels – within the organization, where insights help decision-makers understand their markets, product or service positioning and operations; and individually, where analytics help employees at all levels improve their business processes.

In the insurance business, the focus on analytics has traditionally been squarely actuarial in orientation. Increasingly, analytics is being used to improve customer experience, prevent fraud, drive operational effectiveness and manage portfolio risk.

That means everyone in an organization, from the chief executive officer to the business analyst, needs to have an analytics mindset. Therefore, the focus of any analytics program needs to be on the human element – the analytics-based decisions and business processes of end-users.

The people management aspect of data and analytics, however, is an Achilles heel, with less than half (39%) of the top 10% of survey respondents defining their employees’ analytics skills as recognized, effective, efficient, monitored and clearly used to support decisions. That creates a gap between the insights analytics provide and the business value that can be derived when those insights are applied by trained staff.

Encouraging employees to become better consumers of analytics will require investment in training programs, incentives and opportunities for advancement. A majority of the top 10% of enterprises surveyed award bonuses or rewards for new recommendations derived from insights, and more than 40% also offer greater opportunities for promotion and advancement to individuals.

Canadian companies are leading the way in this area, too. Forty percent of Canadian executives surveyed offer bonuses or rewards for new recommendations derived from insights, compared to 27% of their U.S. counterparts and 35% globally. In addition, 40% of Canadian respondents are willing to help employees expand their opportunities for promotion and advancement through the use of data analytics on the job, versus 27% of their counterparts in the U.S. and 33% globally.

This is an encouraging start, but these best practices are still exemplified by less than half of Canadian organizations taking part in the survey.

The research strongly suggests that all Canadian corporations, including insurers, need to integrate analytics into the core of decision-making in order to compete effectively in Canada’s slow-growth economy. Those that do so will have a competitive advantage; those that do not risk getting left behind in an environment where their competitors are better-equipped to execute their strategy, respond to competition and manage risk.

Now is the time for Canadian businesses to speed up their commitment to building an analytics culture. As others embrace analytics, remaining competitive will only become more difficult.

A greater focus on people will help Canadian businesses transform the way their organizations make decisions and, in doing so, will drive incremental value for shareholders and the economy as a whole.