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Will Business Analytics Deliver the Big Payoff That IBM Anticipates?

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A new study reveals that successful companies are already using sophisticated business intelligence solutions to overcome both the economy and their competitors.

 

IBM is getting into business analytics in a big way, and apparently so are its customers. It's no wonder really, given that companies that use analytics appear to make better decisions and are more likely to stay even with—or get a jump on—their competitors. Eventually, it could wind up that companies in competitive industries that don't use analytics may not survive.

 

Fred Balboni is IBM's Global Leader for Business Analytics and Optimization within IBM's Global Business Services. His group recently completed a study that strongly supports what CIOs have been trying to tell business leaders for some time: if you want to enhance your organization's competitiveness, you'll get on board the business-analytics train.

 

Business leaders have been somewhat reluctant to buy a ticket on this train for fear that the fare might increase after the train departs the station. It wasn't so long ago that just about every data warehouse or business intelligence project IT put its fingers on either overran its budget or failed in one way or another. More than a couple probably did both.

 

Times have changed, however, and whether it has become easier to implement a successful business analytics solution or not, competitive pressures have increased so much that it's becoming essential to do so. IBM acknowledges that to implement a successful BI project, business leaders will need to drive support across their organizations. Their key allies? The CIOs who already have seen the writing on the wall and are quietly working to get it done. In a recently released study, IBM notes that 83 percent of all CIOs identified business intelligence and analytics as their number one priority to enhance their organizations' level of competitiveness. Mind you, the study didn't have CIOs placing BI as number two or number three but the topmost priority to achieve enhanced business competitiveness. To view the study, click here.

 

What is all the urgency about BI, anyway? Well, it's the economy, really, in case you hadn't noticed. Balboni says that over the past 18 months, top-performing businesses have excelled at applying analytics. The poor economy, in effect, has super-charged the drive to do BI. "We expect these organizations will emerge from the current economic condition with a huge head start over their competitors," says Balboni. "A flood of information has created an entirely new set of assets just waiting to be applied to clients' toughest challenges," he says.

 

The most recent study from IBM shows that top-performing companies are 15 times more likely to apply analytics to strategic decisions than their counterparts who don't seem to do as well in the marketplace. They are also ready and willing to take the insights gleaned from their analyses and apply them to actual business. Top-performing companies were 22 times more prepared to "challenge the status quo" in their organizations, rethink how things are being done, and dive forward into actually doing something.

 

One interesting side note is that these same organizations are also willing to push decision-making down to a lower level in the organization and empower workers at the department level to effect the changes they feel are necessary based on the insight that they derive from the analytics-based information.

 

Steve LaValle, a strategy leader in the Business Analytics and Optimization group and author of the newly released study, is quick to point out that having the information available from a business analytics solution is only half the answer. "A critical part of this success is that these organizations were able to drive change by having the right management systems, tools, and culture in place, creating, in effect, an organization that seeks and evaluates and is ready to act on new opportunity."

 

Having the skills and knowledge in-house to manage information was also a consideration among top-performing companies, according to the study. What IBM calls "data governance" (having policies in place that ensure that data definitions are clear, relevant, and accepted) was also deemed important, if not critical, to the success of top-performing companies. By a factor of three to one, the study found that top-performing companies were quite sophisticated when it came to governing organizational information compared to lower-performing companies, according to IBM.

 

Not surprisingly, perhaps, IBM says that if you want to play in the game, you have to have the right tools. Companies will need to concentrate on predictive analytics, information visualization, and content management tools.

 

Using the data that you develop is essential. Companies will have to connect the information directly to business objectives and across business functions. Last, it's push, push, push—someone is going to have to drive the changes necessary to make things happen. This will mean placing a focus on people and alterations in their behaviors or the processes they use to do their jobs—governance and possible shifts in organizational alignment that may be necessary to implement new analytics projects.

 

IBM is highly aware of the difficulty such projects can pose, particularly in larger organizations, but it is convinced of the soundness of the trend toward greater reliance on BI and believes business leaders will come on board in droves. To support this anticipated growth business, the company has announced it will either hire or retrain some 4,000 analysts to staff a network of seven Analytics Solutions Centers in North America, Europe, and the Far East. It has recently opened centers in New York, Dallas, Washington, London, Berlin, Tokyo, and Beijing to provide business analytics support services to a variety of organizations.

 

The IBM Institute for Business Value provides strategic insights and recommendations that address critical business challenges to help clients "capitalize on new opportunities." The institute's consultants conduct research on no fewer than 17 industries around the world in various functional disciplines, including human capital management, financial management, corporate strategy, supply chain management, and customer relationship management.

 

The most recent corporate study on business analytics was discussed earlier this week in a new video blog dialog (diavlog) that you can view at http://livestream.com/newintelligence.

Chris Smith

Chris Smith was the Senior News Editor at MC Press Online from 2007 to 2012 and was responsible for the news content on the company's Web site. Chris has been writing about the IBM midrange industry since 1992 when he signed on with Duke Communications as West Coast Editor of News 3X/400. With a bachelor's from the University of California at Berkeley, where he majored in English and minored in Journalism, and a master's in Journalism from the University of Colorado, Boulder, Chris later studied computer programming and AS/400 operations at Long Beach City College. An award-winning writer with two Maggie Awards, four business books, and a collection of poetry to his credit, Chris began his newspaper career as a reporter in northern California, later worked as night city editor for the Rocky Mountain News in Denver, and went on to edit a national cable television trade magazine. He was Communications Manager for McDonnell Douglas Corp. in Long Beach, Calif., before it merged with Boeing, and oversaw implementation of the company's first IBM desktop publishing system there. An editor for MC Press Online since 2007, Chris has authored some 300 articles on a broad range of topics surrounding the IBM midrange platform that have appeared in the company's eight industry-leading newsletters. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

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