Copyright 2011 Accenture All Rights Reserved.

d. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
Will OR/MS Professionals Help Put
Analytics to Work?
Jeanne G. Harris
Executive Research Fellow
[email protected]
Copyright 2011 Accenture All Rights Reserved.
Analytics: The extensive use of
data, statistical and quantitative
analysis, explanatory and
predictive models and fact-
based management to drive
decisions & actions.
Analytics, statistics, and fact-
based decisions are not new to
businesses
DSS, ESS, BI, OR, etc were
important and provided value,
but were often marginal to the
mainstream of the business
With firms that compete on
analytics, the capability moves
to center stage.
Analytics are changing the way people
learn, make decisions and compete.
Copyright 2011 Accenture All Rights Reserved.
Research Background
2000 study of 20 companies and how they built
analytical capabilities
2005 study of 32 companies with business
intelligence initiatives; resulted in Competing on
Analytics article in HBR
Additional interviews with 50+ companies for
book research
Accenture surveys of 217 and 402 companies in
2002 and 2006 to determine frequencies of
analytical activity among large companies with
enterprise systems
A year of research with the business research
consortium of 27 companies
Talent Engagement, Attitudes and Motivations
Survey of 1367 US respondents, including 799
analysts
Copyright 2011 Accenture All Rights Reserved.
How do companies compete and win
with analytics?
These high performers have discovered the power
of analytics to out-think and out-execute the
competition.
Copyright 2011 Accenture All Rights Reserved.
Analytically oriented companies are found in
every industry around the world.
Hospitality and
Entertainment
AC Milan
Caesars Entertainment
Marriott International
St. Louis Cardinals
Financial Services
Wellpoint
Progressive Insurance
Barclays Bank
Capital One
Royal Bank of Canada
Pharmaceuticals
Astra Zeneca
Solvay
Vertex
Industrial Products
CEMEX
John Deere &
Company
Retail
Amazon
Best Buy
Tesco
Wal-Mart
Transport
FedEx
Schneider National
United Parcel Service
eCommerce
Google
Netflix
Telecommunications
O2
Bouygues Telecom
Consumer Products
Anheuser-Busch
E&J Gallo Winery
Mars
Procter & Gamble
Copyright 2011 Accenture All Rights Reserved.
Analytical Capabilities Can Create
Sustainable Competitive Advantage.
Executives increasingly recognize
that the power of IT is not just to
improve operational efficiency but to
help make better decisions.
One time analytical initiatives can be
valuable but they rarely create a
lasting market advantage.
A robust analytical capability is how
these firms routinely out-smart, out-
maneuver and out-execute the
competition.
Embedding analytics into core
business processes creates
sustainable competitive advantage.
Copyright 2011 Accenture All Rights Reserved.
The benefits of analytics are more
important than ever.
Identify and seize new opportunities for competitive advantage and
differentiation.
Cut cost/improve efficiency. Optimization techniques and predictive models
and anticipate market shifts, enable companies to move quickly to slash costs
and eliminate waste.
Manage Risk. More precise metrics and risk management models will enable
managers to make better decisions, reduce risk and monitor changing business
conditions more effectively.
Know what is really working. Rigorous testing and monitoring of metrics can
establish whether your actions are really making desired changes in your
business or not.
Leverage existing investments (in IT and information) to get more insight,
faster execution and more business value in business processes.
Invest to emerge stronger as business conditions improve. High performers
take advantage of downturns to retool, gain insights into new market dynamics
and invest so that they are prepared for the upturn. Analytics give executives
insight into the dynamics of their business and how shifts influence business
performance.
Copyright 2011 Accenture All Rights Reserved.
I'm not interested in data; I'm interested in translating data into
information for decision making. . . . So you take data, you turn
it into information, you apply it, and you make better decisions
because you know more than anybody else. I think that's real
powerand that was our hidden advantage for years.
-- Leonard Schaeffer, Retired CEO, Wellpoint
Having analytical capabilities and the best data in the world
doesnt create competitive advantage. Changing the way the
business uses it is the only way to create advantage.
-- Steven Udvarhelyi, MD, Senior Vice President and Chief Medical Officer,
Independence Blue Cross
Executive Perspectives
Copyright 2011 Accenture All Rights Reserved.
C
o
m
p
e
t
i
t
i
v
e

A
d
v
a
n
t
a
g
e
Optimization
Predictive
Modeling
Forecasting/
extrapolation
Statistical analysis
Alerts
Query/drill down
Ad hoc reports
Standard Reports
Whats the best that can
happen?
What will happen next?
What if these trends
continue?
Why is this happening?
What actions are needed?
What exactly is the problem?
How many, how often, where?
What happened?
Predictive
Analytics
Bridging the gap between technology
and business decisions
Source: Competing on Analytics: The New
Science of Winning (Davenport / Harris)
Descriptive
Analytics
Sophistication of Intelligence
Business Mix Optimization
(Product, Geography, etc.)
Price sensitivity by consumer
segment
Customer Behavior Modeling
Performance/profitability
analysis
Product shortage by market
Vendor spend by category
Brand health by market
Periodic trend analysis
Periodic P&L; Financial
Reports
Potential Examples
Copyright 2011 Accenture All Rights Reserved.
Analytics at Work:
Smarter Decisions, Better Results
Not every company is going to use
analytics as a means of competitive
differentiation.
But every organization can benefit by
improving how they:
use data to gain deeper insights
make smarter decisions
execute decisions more consistently
get better results.
Analytics at Work shows analytically-
oriented managers how to guide their
organizations toward greater analytical
maturity.
Copyright 2011 Accenture All Rights Reserved.
Stage 5
Analytical
Competitors
Stage 4
Analytical
Companies
Stage 3
Analytical Aspirations
Stage 2
Localized Analytics
Stage 1
Analytically Impaired
Analytical Maturity Model
Copyright 2011 Accenture All Rights Reserved.
The Analytical DELTA to Building an
The Analytical DELTA to Building an
Analytical Capability
Analytical Capability
Data . . . . . . . . . . . . . . . . breadth, integration, quality
Enterprise . . . . . . . .approach to managing analytics
Leadership . . . . . . . . . . . . .passion and commitment
Targets . . . . . . . . . . . . . . . . . . . first deep, then broad
Analysts . . . . . . . . . . . . .professionals and amateurs
DELTA = change
Copyright 2011 Accenture All Rights Reserved.
Role of Top Leadership
Do we think or do we know?
It is not my job to have all the answers, but it is my job
to ask lots of penetrating, disturbing and occasionally
almost offensive questions as part of the analytic
process that leads to insight and refinement.
Vision and analytics are not mutually exclusive
paradigms.
Gary Loveman, Chairman of the Board,
President and CEO
Copyright 2011 Accenture All Rights Reserved.
To increase their analytics capability,
companies need to harness analytical talent
Can you count on your
analytical talent to help you
make better decisions?
Are they working on your
most important problems?
Are they generating real
insights from your data?
Are they helping expand
your analytical capabilities?
Analytical talent = The people that use statistics, rigorous quantitative or qualitative
analysis and information-modeling techniques to shape and make business decisions.
I ke
e
p
sa
yin
g
th
e
se
xy jo
b
in
th
e

n
e
xt te
n
ye
a
rs w
ill b
e

sta
tisticia
n
s

H
al V
arian, C
hief E
conom
ist, G
oogle.
Copyright 2011 Accenture All Rights Reserved.
5-10%
Analytical Professionals
Can create algorithms
Analytical Semi-Professionals
Can use visual and basic statistical
tools, create simple models
Analytical Amateurs
Can use spreadsheets
15-20%
70-80%
Analysts Across the Enterprise
* percentages will vary based upon industry and strategy
Copyright 2011 Accenture All Rights Reserved.
Quantitative and technical skills
these are the foundation.
Business insight analysts
need a good understanding of
company strategy and
operations.
Relationship and consulting
skills analysts need to be able
to communicate the value of
analytics.
Coaching and development
skills analysts need to share
skills and best practice.
Quantitative &
Technical
Skills
Business
Insight
Develop
Analytical
Talent
Relationship &
Consulting
Skills
Coaching &
Development
Skills
Copyright 2011 Accenture All Rights Reserved.
How companies organize analytical talent
Attributes
Analystsworktogetherinacentralgroupbut
actasinternalconsultantswhochargeclients
(businessunits)fortheirservices
Allowsforenterprisewidecoordinationof
analyticalactivities
Lackofdirectionfromseniorleadership
Attributes
Analystsarelocatedinthefunctionswhere
themostanalyticalactivitytakesplace,but
mayalsoprovideservicestotherestofthe
corporation
Allowsanalyststomigrateasanalytics
projectsarecompleted
WhereApplicable
Complex,autonomousbusinessunites
Unevenanalyticscapabilityinfunctions
Analyticsanddatanotstrategic/moderate
priorityforsomegroups
Squeakywheelpaysforservices
WhereApplicable
Straightforwardbusinessstructure
Localizedreportingandanalyticscapabilities
Viewdatatactically
WhereApplicable
Complexbusinessstructure
Immaturereportingandanalyticscapabilities
Usingdataasatooltobuildbusinessbutnot
yetleveragedasanadvantage
Consulting
Functional
Business
unit
Businessunit Function
Function
Corporate
Corporate
Decentralized
Corporate
Businessunit Function
Attributes
Analystsarescatteredacrosstheorganization
indifferentfunctionsandbusinessunitswith
littletonocoordination
Difficulttosetenterprisewideanalytical
prioritiesandtodeploystaffeffectively
Keepsanalystsclosetothebusiness
Analytics
group
Analytics
group
Analytics
group
Analytics
group
Analytics
Project
Analytics
Project
Analytics
Project
Analytics
Project
Analytics
Project
Analytics
Project
Copyright 2011 Accenture All Rights Reserved.
How companies organize analytical talent
Attributes
Analystsresideincentralgroup,wherethey
serveavarietyoffunctionsandbusinessunits
andworkondiverseprojects
Analyticunitsetstheanalyticaldirectionofthe
entireorganization
Analystscanbedeployedtoprojectswith
strategicpriority
Centralized
Business
unit
Business
unit
Function Function
COE
Corporate
Corporate
Centerofexcellence
Attributes
Analystsareallocatedtounitsthroughoutthe
organization,buttheiractivitiesare
coordinatedbyacentralentity
Analystsshareknowledgeandbestpractices
atthecorporatecenterofexcellence
Thecentercandoubleasaproject
managementoffice,lookingacrossanalytical
initiativesanddeterminingprioritiesand
staffing
WhereApplicable
Straightforwardbusinessstructure
Maturereportingandanalyticscapability
Limitedresourcesmustbeappliedtostrategic
priorities
WhereApplicable
Moderatelycomplexbusinessstructure
Maturereportingandanalyticscapabilities
Viewdataasacompetitiveadvantage
Analytics
group
Business
unit
COE
Corporate
Analytics
group
Analytics
group
Analytics
Project
Analytics
Project
Analytics
Project
Analytics
Project
Corporate
Business
Unit
Function
FederatedModel
Analytics
group
Analytics
group
Analytics
Project
Attributes
Analystsareinstalledineachbusinessunit
Corporategroupofanalystsdriveenterprise
initiativesandcoordinatesallgroupswithclear
guidelinesoffederation
CombinesadvantagesofcentralizedandCOE
models
WhereApplicable
Autonomousbusinessunitsorcomplex
businessstructure
Advancedanalyticsneedspecializedknowledge
Dataandanalyticsareacompetitiveadvantage
Dataembeddedinapplicationsandacross
processes
Copyright 2011 Accenture All Rights Reserved.
A federated model may offer the best approach as
companies reach analytical maturity
Corporate
Business
Unit
Function
Federated Model
Preferred model to get to Stage 5
Mix of on-shore/off-shore/co-sourced analysts
Analysts are assigned to each business
unit/decision-maker
There is a centralized group of advanced
analysts which are strategically deployed to
enterprise-wide initiatives, as well as
coordinating/ coaching the other analyst groups
This model allows companies to drive
centralized analytics efforts while keeping
analysts close to the business, combining the
advantages of the centralized and COE models
Copyright 2011 Accenture All Rights Reserved.
The train is leaving the station. Are you
aboard?
Analytical Maturity
What stage of analytical
maturity is your organization?
How high does top
management aspire to reach?
Are you part of the leadership
team building the organizations
analytical capabilities?
Which factor is the biggest
obstacle to achieving greater
analytical maturity?
Data/Technology
Enterprise Perspective
Leadership/Culture
Targeting/Prioritization
Analytical Talent
The train is pulling out of the station.
Will you be on board?
Copyright 2011 Accenture All Rights Reserved.
Building an Analytical Capability Doesnt
Happen Overnight . . . So Start Now.
Takes a while to put data and IT in place, and even
longer to develop human capabilities, a fact-based
culture, and success stories
The question for your executive team:
This is your moment:
What will you do?
In business, as in baseball, the question isnt
whether or not youll jump into analytics. The
question is when. Do you want to ride the
analytics horse to profitabilityor follow it with a
shovel?
Rob Neyer, ESPN
Copyright 2011 Accenture All Rights Reserved.
To learn more . . .
Competing on Analytics: The New Science of
Winning (HBP, 2007)
Analytics at Work: Smarter Decisions, Better
Results (HBP, 2010)
Competing on Talent Analytics, Harvard
Business Review, October 2010
What People Want (and How to Predict It) and
Prediction Lovers Handbook, Sloan
Management Review, Jan 2009
How to turn data into a strategic asset,
Outlook Journal, June 2010
Counting on Analytical Talent, Accenture
Research Report, March 2010.
More research and insights at
www.analyticsatworkbook.com and
www.iianalytics.com