Adding analytics to your buzzword lexicon

Software is entering the Age of Analytics. Buzzwords fly fast and furious: Predictive analytics. Enterprise reporting. Analytic applications. Sarbanes-Oxley compliance. BPM, CPM, EPM. Metrics and dashboards. Three key performance indicators, two turtledoves, a scorecard and a few decision trees.

And if there aren’t enough for you already, it’s time to get ready for the next blazing software industry buzzword: “enterprise analytics,” a catchall term describing analytic technology deployed across a whole enterprise. Enterprises want to whittle down their list of analytics vendors. Business intelligence (BI) vendors are racing to offer soup-to-nuts enterprise analytics product suites, application software vendors are trying to beat them to the punch, and Oracle claims to have occupied the high ground for years. If “enterprise analytics solutions” catch on, just about everybody will benefit.

Unfortunately, it won’t be quite that easy. Very few organizations have ever deployed true enterprise-wide analytics technology. Indeed, even the BI vendors themselves generally haven’t rolled it out.

The major problems inhibiting enterprise adoption aren’t in the technology itself, which on the whole is delightfully real and affordable. BI and other analytic technologies are much cheaper to buy and install than OLTP application suites. Recent BI-oriented advances in relational database technology make even huge data warehouses scalable. True, data integration and quality issues are often messy when you build or expand a data warehouse, and dealing with them isn’t fun or cheap. But even when integrating analytical data gets expensive, it’s usually still a lot cheaper than transactional application integration.

Instead, the main challenge is the one that stretched the adoption of transaction-processing applications across several decades: business process change. Enterprises employ people, and people generally don’t like to change the way they do things.

Actually, the problem may be even worse than it has been for transaction-processing applications. Controlling and changing how your managers work is a lot harder than transforming the activities of your data entry operators, shipping clerks and other low-level transaction processors. If your CEO really hopes to create an enterprise-wide culture of sober, rational, unbiased numbers-driven decision-making, that project could take decades.

There’s another side to the problem: too many other folks are instinctively resistant to anything that brings more mathematics into their lives. Fortunately, none of this means that your organization can’t introduce new and better analytical business processes. You just have to do it a chunk at a time.

Over the past decade, sophisticated tools in data mining, profitability analysis and the like have taken marketing analytics to a whole new level. When corporate planning tools are given to finance and budget specialists, their work is changed for the better.

More generally, business processes of many kinds have been transformed by automated performance monitoring, in areas as diverse as manufacturing, service logistics, sales operations. Sometimes the analytics are built into ERP or CRM systems, and sometimes they come from third-party BI tools. Either way, they’re a big boost to profits and customer satisfaction.

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