Taking Analytics for a Test Drive

The goal of business analytics (BA) is to help organizationsmake better decisions. Whether management wants to know the next thousandcustomers the organization is likely to lose, or what location makes the mostsense for setting up a new distribution center, business analytics can provideactual answers to complex questions, as well as a path to improved performance.

Still, many companies are reluctant to start a BAinitiative. For some, the idea of unearthing the necessary data seems daunting.For others, the job of securing cross-functional buy-in and participation seemsnext to impossible. For most, the question, ?Where do we start?? looms large.

A pilot program is often the most manageable first step onan analytics journey. Effective pilots share several characteristics, includingminimal initial technology and infrastructure investment, simplicity in theapproach and involvement by a business owner who ?gets it.? Because a pilotprogram is a highly visible initiative, other parts of the organization willwatch to see if the benefits were worth the effort. So it?s critical to havethe proper focus from the start.

An analytics pilot program should:

? be important enough to matter, but focused enough tomanage;

? have goals that are achievable without the need for newinfrastructure or large technology investments;

? be simple in approach and refined in scope to preventdisruption to the business before, during or after the pilot;

? have support from a business owner with a vision for howimproved hindsight, insight and foresight can improve decision-making andoperations within that function; and

? address an area that is highly relevant and current, butwhich many enterprises may not have a ?data? handle on yet (cloud computing,social media and mobile analytics, for example) to offer immediate businessopportunities.

Choosing Your Route

Once these critical requirements are met, it is time toexplore the functional areas and project types that make good candidates for aBA pilot, such as customer analytics, supply chain management, finance, humanresources and risk assessment.

A customer analytics pilot can offer tangible benefitsquickly. For example, a large, national investment bank gained rapid resultsfrom its customer analytics pilot program. Looking to enhance its customersegmentation capabilities, the bank undertook an effort to reclassify customersinto segments that had the greatest potential for growth. The project teamsegmented customers by brand fit, revenue potential, potential growth rate,current accessibility and market fit.

As a result of the pilot, the bank was able to identify andtarget a new customer base and focus its marketing efforts on previouslyuntapped segments. The new segments were single female investors older than 35,risk-averse immigrants and middle-income customers that were atypicallyrisk-inclined.

 

Forming an Effective Team

A successful BA pilot leverages the skills of people in theappropriate areas and takes advantage of talents that may not be evident in anindividual?s current role within the company. For example, a business mayidentify people who are passionate statisticians and analytical by nature, givingthem an opportunity to participate in the pilot program. This approach buildsanalytics champions and makes efficient use of existing resources withouthiring from outside. These individuals can then take the good news of analyticsto their functional areas.

Here are other roles critical to a pilot program?s success:

? The executive champion is a senior-level executive who canestablish the vision, demonstrate the value to other senior-level staff,analyze and measure results, and celebrate the benefits.

? The business liaison can translate what is happening at ananalytical level into the language of business value.

? Analytics professionals are skilled architects, developersand visualization resources who work as troops ?on the ground.?

? Business partners are external resources experienced inthe business, process or technology aspects of analytics; they may be willingto put some skin in the game.