The Value of Business Analytics: Identifying the Path to Profitability

INTRODUCTION

In the previous chapter we covered the reasons behind the importance of business analytics as a path to competitive advantage. That it is a core enabler within a variety of strategic planning frameworks is not surprising; as we have already covered, business analytics is one of the few disciplines that can deliver incremental return with relatively minimal additional investment. However, even though it is broadly acknowledged that business analytics is both important and valuable, there is not as much guidance on why some teams are successful and some are not.

Davenport and Harris, through their research in Competing on Analytics, have shown that one of the key differentiators between organizations that are average or poor performers in their industry or segment and those that are considered leaders is their ability to make better decisions through applying business analytics.¹ However, it is important to distinguish between the actual use of analytics and an intention to apply analytics; reality is not kind enough to reward every company that announces a strong belief in business analytics as a competitive enabler.

In practice, not every team is successful. Even among those that are successful, the level of success varies significantly. Whereas some successfully transform the organization, others simply manage to stay afloat in what rapidly evolves into a highly challenging (and often frustrating) environment of firefighting with no strategic focus.

The reasons behind ...