Today, as the world globalises and the pace of change quickens, managers must make high-pressure decisions faster. In fact, 74 percent of the global executives SAS recently surveyed with the Harvard Business Review stated they "eel under pressure to achieve results in less time than ever before."
Savvy managers are increasingly turning to analysing data - on their customers, operations, risk and more - for guidance. They are bringing ever-larger amounts of "Big Data
" - from traditional databases as well as unstructured text from call-centre logs, social media and more - into their decision-making to achieve competitive insight.
Like the amount of data that organisations store, the value placed on data by firms has grown rapidly. According to new research by Dynamic Markets for example, one in five of the UK’s largest companies now quantify the value of corporate data on their balance sheets.
Are managers embracing the benefits of analytics?
The findings show that acceptance of analytics has grown and is delivering tangible improvements. Almost three-quarters of respondents said their division or department relies on data to make decisions today; forty percent felt that analytics have improved the importance and standing of their functional areas.
However, the general acceptance of data analytics conceals geographical disparities in the degree to which it is used for decision making. UK organisations are undoubtedly ahead of the pack, with 53 percent of UK, compared to 36 percent of global businesses, regularly employing analytics for decision making.
Furthermore, 40 percent of British companies say they have a formal data management process, compared to just 27 per cent of global companies.
Globally, one group of respondents stood apart in its use of data to inform decisions. This group has integrated analytics across the whole company, and is characterised by:
- A data-based decision-making culture.
- Decision-making transparency.
- Company-wide decision-making processes.
- Emphasis on managerial insights as a supplement to data.
- Continual refinement and testing of new ideas.
Eleven percent of the responding organisations have integrated analytics across the entire organisation, rather than using it ad-hoc. Strikingly, among all the benefits of analytics, respondents most frequently cited faster decision-making.
At Procter & Gamble, “Analytics accelerates our decisions because everyone is now looking at the same reality,” said Filippo Passerini, group CIO.
“Decisions come down to ‘what,’ ‘why’ and ‘how.’ Many organisations spent a lot of time debating the ‘what’ because different people had different data. Once everyone has the same version of truth, you can shift to the how—and you are able to do more and more, better and better.”
While moving beyond instinct alone is definitely gaining acceptance, the research shows that significant challenges remain:
- 37 percent of respondents said their managers relied on “gut feeling,” rather than data and analytics to make decisions.
- 44 percent think their organisations have little or no transparency into how key decisions are made.
- One-third of respondents believe their companies lack the skills to derive the benefits of analytics.
- A quarter have no formal decision-making processes.
Balancing numbers against instinct
Weighing quantitative insights against the experienced judgment of managers is difficult. Per Michael Pierce, customer service manager at Bosch Security Systems, “Personally, I run with analysis first, and during the research I will listen to my intuition. When my gut does not agree with my decision—and all analytics show it is the correct one—I pay closer attention to the results.”
Managers see that making the right decision in a timely manner is a matter of balancing data analysis with judgment and experience, not exclusively relying on one method over the other.
As the volume, variety and velocity of data increase, opportunities for firms that embed analytical insights into decision-making will continue to grow. But so too will the challenges. There is a global analytics skills shortage, with too few students graduating with degrees in maths, science and technology.
The effects are already being felt in the workplace: 52 percent of managers surveyed said they needed to re-train to be able to use analytics in their decision making. Furthermore, one-third of respondents couldn’t find the right skills mix at all.
As companies compete globally and technological change accelerates, decision-making windows become ever smaller. Businesses need to instill a culture of data-driven decisions, supported by the people, processes and technology - especially analytics - to ensure success. Otherwise, they’ll be left merely guessing.
Posted by Paul Kent, Vice President of Big Data, SAS