Analytics do matter

By Thomas Davenport

Organisations are competing on analytics not just because they can — business today is awash in data and data crunchers — but also because they should. Today when firms in many industries offer similar products and use comparable technologies, business processes are among the last remaining points of differentiation.

Analytics competitors wring every last drop of value from the processes. Like other companies, they know what products their customers want, but they also know what prices the customers will pay, how many items each will buy in a lifetime, and what triggers will make people buy more.

Like other companies, they know compensation costs and turnover rates, but they can also calculate how much personnel contribute to or detract from the bottom line and how salary levels relate to individuals' performance.

Like other companies, they know when inventories are low, but they can also predict problems with demand and supply chains, to achieve low inventory and high perfect-order rates. And analytics competitors do all the things in a coordinated way, as an overarching strategy championed by top leadership and pushed to decisionmakers at every level.

Employees hired for their expertise with numbers or trained to recognise their importance have the best evidence and the best quantitative tools.… Analytics competitors are the leaders in their fields: consumer products, finance, retail and travel among them.

From "Competing on Analytics"