Cloud Analytics Where CFOs, CMOs and CIOs Need to Move To

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1 Cloud Analytics Where CFOs, CMOs and CIOs Need to Move To IN PARTNERSHIP WITH

2 Analytics and the Speed Advantage Introduction Three recent workplace trends the growth of the mobile revolution, the emergence of social media, and the mass digitalization of business have all had a massive impact on the world of business in recent years. Organizations have never had to be so quick to respond to such rapid and deep-rooted change. These trends were all at the time of their arrival branded disruptive. But in many ways, these events are already yesterday s news. To stay competitive and to get ahead of their rivals, CMOs, CIOs and CFOs not only need to know what s happening now but also what s going to happen next. This is where the world of data analytics comes into play. Due to social, mobile and cloud applications all contributing to an exponential growth in data so called Big Data analytics is the key tool needed to extract insight from that overload of data. Analytics has been described as the provider of the speed advantage giving CMOs, CIOs and CFOs in particular the different organizational data they need to make smarter decisions. A survey by IBM in 2014, questioning 1,000 businesses from 60 countries finds the different business functions are now benefiting from efficiencies they could never previously have expected. The research found 31% now use analytics to improve customer acquisition, while 22% use it to improve customer experience (CMO responsibilities); 40% use it for operational efficiencies (CFO responsibilities); while 7% also use it for risk management (CIO responsibilities). All these benefits come quickly. Most organizations (63%) now realize a return on their investments within a year. 73% of CEOs realize they need to make customer insight a priority. What s clear from this research is that analytics provide different answers for different groups. IBM s own research finds 73% of CEOs realize they need to make customer insight a priority, while 74% of CIOs say mobile is crucial to increasing market competitiveness. But despite overall analytics needs varying, the unifying fact is that they provide businesses with the return they need for their big data investments. This is done by pooling together trends and threads of information and turning this into real business. In short, analytics is where big data efficiencies are coming from. It describes how all these previously disruptive forces are now coming together to form insights that converge to create progressive outcomes ones that can be used as an unstoppable force for change.

3 Meeting the Different Needs of the Business As already indicated, (and according to IBM s own Institute for Business Value studies), CMOs, CIOs and CFOs all demand and require better solutions to help them understand which data tells them what. Big Value from Analytics The key, it seems, is realizing what analytical power is needed for what job (pulling together both structured and unstructured data), whilst being aware of different types of analytics. Descriptive analytics, for example, tell businesses what has already happened, but it s predictive analytics (telling data holders what is likely to happen), that is arguably more powerful. Cloud analytics increasingly enable users to interrogate big data without the need for complex IT infrastructures. Marketing Marketing leaders key aims are to grow, retain and satisfy customers. Analytics spots those likely to churn, uses sentiment analysis to cross-sell and up-sell, and determines people s propensities to buy or not buy. Finance Finance leaders need to anticipate the future and shape business outcomes which drive profitable growth. By applying analytics in management decision-making, they are able to drive finance efficiency, deliver stronger foresight in real-time and steer business performance more effectively. This might sound difficult, but cloud analytics increasingly enable users to interrogate big data without the need for complex IT infrastructures, or without the need for extra complex cluster management data streams. Big data can at last be turned into big value. Analytics and the Cloud Intelligence firm Gartner calls this convergence the Nexus of Forces - the convergence and mutual reinforcement of social, mobility, and cloud. If the cloud has been crucial to do this, it is analytics that is ready to take this to the next stage using data to drive new business intelligence and making talentbased decisions. Information Technology IT leaders must always find new ways to improve operational efficiency and minimize costs. Analytics can identify quality issues early, optimize routes for more effective transportation, improve customer service and post sales support, and optimize inventory and other supply chain processes.

4 The Power of Analytics It was back in 2001 that Doug Laney first articulated the now mainstream view of Big Data the Three Vs : Volume, Variety and Velocity. Put simply, data is multiple, in varying formats, and keeps coming faster and faster (social media updates are just one source) such that analytics is now needed in real-time. As a result of this growth of data it s now commonly accepted that there is now a fourth V needed one that is most relevant now: Veracity. This is all about minimizing (or removing if possible) uncertainty in data. For instance: Are there multiple customer IDs that could be polluting the 360-degree view of customers past, present and future behaviours? Or is data still relevant six, 12, 18 months down the line? CMOs in particular need to feel this element is being catered for. When analytics is structured correctly, its potential is almost limitless. Businesses are able to target messages to customers most likely to be receptive to them. The cost of acquiring new customers can be slashed, while predicted life spans of new and existing customers can be dramatically improved. All of this The Four Vs VOLUME VERACITY VARIETY VELOCITY can be done at the same time as segmentations of customer needs for more effective growth and crossselling purposes. Cloud Analytics Drives Competitive Advantage To learn more about business outcomes organizations are realizing through cloud and how they re achieving those results IBM s Centre for Applied Economics and Oxford Economics conducted a survey in 2014 of more than 800 cloud decision makers and users. Based on their level of cloud adoption and whether they were reporting competitive advantage from cloud computing, organizations were divided into pacesetters, challengers and chasers. Pacesetters have deployed cloud on a broad scale and are gaining competitive advantage over their rivals through cloud. Challengers are on par with Pacesetters in achieving greater efficiency through cloud, but still lag on differentiation and market responsiveness. Chasers, on the other hand, are more cautious about cloud. They re in early stages of adoption and are not yet using cloud to drive competitive advantage. According to the results of this research, better business results are happening right now amongst organizations at the forefront of this new science in analytics. These are the pacesetters, the top 18% of organizations that are recording better competitive advantage in absolute (gross profit) numbers, as well as other measurements such as improved response time to market. These companies differ dramatically from the other two types of businesses identified the so-called challengers, and chasers. They are building competitive advantage in three primary ways through strategic reinvention, better decisions and deeper collaboration. According to the survey, more pacesetters than challengers say they have realized major improvements in organizational efficiency through analytics. But where pacesetters really pull away is in their self-reported improvements in market responsiveness. The research shows they are ahead of challengers by 40%, and ahead of chasers by a huge 80%.

5 Functional Needs Of course, the different functions in organizations all need analytics for different reasons. For CFOs, their critical task is measuring and monitoring enterprise performance. For CMOs their data needs are to treat customers as individuals and create and foster stronger relationships. For CIOs, data needs to be thought of in terms of how it is organized and managed. But it is through cloud-based analytics that each of these audiences can interrogate the same data to meet their own needs. According to the IBM Institute for Business Value s, Pushing the Frontiers: CFO Insight from the Global C-suite Study, analytics moves CFOs from being Value Integrators to so-called Performance Accelerators. Put simply, those with access to the right knowledge will experience higher compound annual growth rates in earnings and revenue as well as a higher average return on invested capital. Marketers too have been proven to be able to unlock greater customer value through analytics. Social media means marketing is now a two-way street. Customers are talking back, and that involves establishing new Marketers too have been proven to be able to unlock greater customer value through analytics. partnerships with IT directors too. Marketers need to be so far ahead of the analytics curve that they almost need to give customers what they haven t expressed yet. Crucially, marketing today is not about forcing customers to come to businesses, but making businesses come to customers when they want them to. It s estimated there could be four times more digital data than there are grains of sand on the earth by Analytics gives the power to leverage this, to move from what just happened, to what could happen. IT s role is to be change leaders in this.

6 As change happens faster, deeper and more pervasive than ever, those that resist change will be those who ll let their competitors gain the edge. Thanks to analytics, all functions within the business can potentially exist as pacesetters if they really want to. In strategic reinvention of customer relationships (the role of marketers), pacesetters have been proven to surpass chasers by 136% though cloud analytics. In terms of making data-driven, evidence-based decisions (the Finance Director s role), pacesetters outperform chasers by 117%. And when it comes to making it easier for people to collaborate across the organisation s eco-system (the IT director s role); pacesetters outshine chasers by 71%. The majority of pacesetters (52%) and even challengers (51%) are using analytics to innovate their products and services more rapidly. Unsurprisingly perhaps, more than half of pacesetters say they ve revamped their business model through the cloud. With access to more data and expertise (and fewer capacity constraints) organizations are more easily creating new revenue streams. To Stay Competitive: Analytics Is Where Business Is Moving Too As with any exciting period of technological change, there will always be those that prefer to wait until a critical mass of other businesses take the first step before they do. Without doubt, there are still significant barriers to the broad adoption of analytics. These include perceived system costs and complexity. Moreover, it is still the case that 70% of most IT budgets are spent on operational maintenance (so-called keeping the lights on functions), rather than technology that moves into predicting future needs. But, as change happens faster, deeper and more pervasive than ever, those that resist change will be those who ll let their competitors gain the edge. Analytics is where business is moving to. Businesses can t get left behind. 52% of pacesetters and 51% of challengers are using analytics to innovate their products and services more rapidly. References IBM Industries White Paper: Business analytics in the cloud. Driving business innovation through cloud computing and analytics solutions. April 2012 Acquire, Grow & Retain Customers: The Business Imperative for Big Data & Analytics. December 2013 IBM Institute for Business Value. Pushing the frontiers: CFO insights from the Global C-suite Study. February 2014 IBM Institute for Business Value. Under cloud cover: How leaders are accelerating competitive differentiation. October 2013

7 About IBM is the largest global technology and innovation company serving clients all over the world. IBM is making markets by transforming industries and professions with data. We are remaking enterprise IT for the era of cloud. We are enabling systems of engagement for enterprises. IBM offers a wide range of technology and consulting services; a broad portfolio of middleware and the world s most advanced servers and supercomputers. IBM annually invests approximately $6 billion for R&D, focusing on high-growth, high-value opportunities. CorporateLeaders is an exclusive independent network that inspires business and leadership by providing a trusted forum for executives to network, exchange ideas, share lessons learned and drive business forward in an ever changing environment. We focus on providing exclusive membership services, intimate and content rich networking events, research, content, leadership development and advice on business transformation with the executive needs and experiences at its core. For more information about analytics and cloud: Connect with us CorporateLeaders info@corporate-leaders.com - Tel: Fax: Web: