Analysing the analytics

Many people do not realise the returns from data analytics projects. They lose money – that’s the truth. They lose money and CIOs are under the cosh.

 

Joint research by Capgemini and Informatica found that less than a third of big data analytics projects are considered profitable. The research suggested that the other two thirds of big data projects in the research are either losing money or only breaking even - 12 per cent of those cannot yet determine whether their big data projects are profitable.

 

The reality here of course, like any new hype technology, is that businesses have rushed out and invested in big data technology and systems with little planning or fore-thought. Their competitive pressures are so high that the chance to grab immediate insights and a quick fix has driven them to make risky investments. The vendors didn’t say stop, and why would they?  

 

Where businesses have gone wrong is a failure to analyse their operations before analysing their data. They’re running before they can walk. They’re using gut feel to decide what to measure with their new Business Intelligence (BI) system or analytics software.

 

This doesn’t need to be a perpetual task, but a small amount of pre-data analytics work could save businesses a lot of wasted money. I recommend customers consider six small steps before making an analytics technology investment.   

 

 

 

 

 

 

 

The vast majority of customers we work with are operating at only steps 1-3, which is an indication of how few firms are really ready to make a big data technology investment. When we help customers through these steps its often the case that organisations are simply too siloed internally to understand their KPIs, collate data and act upon it. Sometimes they don’t have the leadership to act upon the findings from an analytics project. Occasionally, when we apply our own business models to the data at step 4, the potential ROI isn’t great enough – although I’d argue even a 2x return and the chance to double your money is probably worth the investment needed.

 

For me, its absolutely essential that businesses apply these six steps before making an investment in technology to ensure a big data project will have a much higher ROI and chance of success versus the rest of the market.