The Untapped Value of Analytics

Professor Ujwal KayandeAssociate Dean (Academic)

Director, Centre for Business Analytics

1998

“Man, I’m trying to throw the game back to 1998.”

“There’s a stack of analytical da-ta, or day-ta, however you want to say that word, that people don’t even know how to read it.”

“So I’m not going to rely on GPS’s and all the modern technology”

“I will certainly have some people that are professional that can help me in that regard.”

Jon Gruden, February 2018

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According to the Worldwide Big Data and Analytics Spending Guide from IDC 2018

AUSTRALIAN COMPANIES ARE ESTIMATED TO SPEND $2.7B ON BUILDING ANALYTICS CAPABILITIES

11

WHAT IS ANALYTICSREALLY WORTH?

HOW CAN COMPANIES BEST EXTRACT THAT VALUE?

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Cover 12 Industries

Top 3: Consumer Goods & Services (21%), Tech(14%),

Healthcare (14%)

Industry Coverage

400+ respondents

43% C-Suite, 17% Directors,

28% Managers

Executive Respondents

Median participant generates

$1B USD revenues

Revenue ranges from $1.5M to

$247B USD

Company Size

EMEA

23%APAC

62%Americas

15%

13Two complementary indices are used to measure analytics practices (Maturity Index) and impact on profit (Impact index)Maturity and Impact Indices

Provides a comprehensive assessment

of a company’s practices and

processes

Provides an objective assessment of

return of analytics as a proportion of

total profit

Maturity

Index

Impact

Index

1

2

Holistic assessment of

analytics in terms of both

performance and profit

14

Impact

Index

Provides an objective assessment of

return of analytics as a proportion of

total profit

Two complementary indices are used to measure analytics practices (Maturity Index) and profit (Impact index)Maturity and Impact Indices

Provides a comprehensive assessment

of a company’s practices and

processes

Maturity

Index1

2

Holistic assessment of

analytics in terms of both

performance and profit

15

Explorers

Followers

Leaders

Laggards

States of Excellence: Laggards, Followers, Explorers, and LeadersStates of Excellence

Maturity Index: participants are benchmarked & categorized into 4 stages according to their analytics maturity

10%

46%

36%

8%

16

Our framework brings together four dimensions to comprehensively measure analytics maturity of a firm

Analytics Impact Index Framework

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Laggards Vs Leaders

33%

42%

33%

Analytics driven culture

Defined Org Structure

Strategy in place

Defined Data leader

<1% 88%

100%

100%

86%

Strategy &Leadership

Culture &Governance

Data Ecosystem

Talent & Skills

Strategy in Place

Defined Data Leader

Defined Org Structure

Analytics Culture

Sophisticated Ecosystem

Real time data

External contractors

Skilled Talent

18Two complementary indices are used to measure analytics practices (Maturity Index) and profit (Impact index)Maturity and Impact Indices

Provides a comprehensive assessment

of a company’s practices and

processes

Provides an objective assessment of

return of analytics as a proportion of

total profit

Maturity

Index

Impact

Index

1

2

Holistic assessment of

analytics in terms of both

performance and profit

19

Total Profit Attributed to Analytics

Baseline ProfitTotal Profit

Impact Index Elements and ExamplesProfit ($M)

How is the Impact Index calculated?It is a proportion of profit attributed to analytics and then presents as a multiplier of the baseline profit

Calculated

20As a company progresses its maturity, the more financial impact analytics has

Imp

ac

t In

de

x

Impact Index vs Maturity Index

x xx

x

21Laggard companies stand to increase their profit by ~60% on average if they embrace analytics to the same extent as Leaders

% profit differences between maturity levels

1. Potential refers to the increase in profit if a company were to increase its maturity to level 4 at the current point in time.

Explorers

Followers

Laggards

+60%

+55%

+15%

Leaders

22Leadership, strategy and talent are key drivers of value while the over-investment in data ecosystem can be detrimental to gaining value

4. Data Ecosystem

3. Culture & Governance

2. Talent

1. Leadership & Strategy

Positive & Negative drivers of value1

1. The results have been calculated using a System of Equations, Step-wise Linear Regression, Ridge Regression and Maximum Likelihood estimation (MLE)

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Source: Melbourne Business School & A.T. Kearney

Leader State

Talent & Skills

Data Ecosystem

Culture & Governance

Strategy

Leadership

It starts with the senior leadership…

24Analytics Impact Index next year…. What you will learn from doing it?

You can still join this year’s

Analytics Impact Index:

Go to analyticsimpactindex.mbs.edu and follow the link

Year on Year

Growth Index

Causal

01

02

03

Further insights:

The Untapped Value of Analytics

Professor Ujwal KayandeAssociate Dean (Academic)

Director, Centre for Business Analytics