Insurance & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

News & Commentary

07:55 AM
Gerald Shields, The Nolan Company
Gerald Shields, The Nolan Company

What is the Key to Maturity in Business Analytics?

It is not uncommon to meet with business leaders who show a litany of metrics, but they often cannot tell you how the metrics add value.

The rise of the Internet and social media have changed the face of business analytics for companies around the globe. Information that used to be in short supply now comes in an ongoing gusher as companies retrieve, access, process and store more data in a day than they used to in a month. With the wealth of information now available, it's not uncommon for a company to process 1,000 times more data today than they did just a decade ago. How much of this flood of information is useful, and how much is processed into valuable information? That depends on the maturity of the company's business analytics.

I recently wrote about the need for businesses to achieve a level of maturity in business analytics. As I stated, the three key practices in analytics maturity are:

1. Measure: the processes to establish metrics, report metrics and utilize metrics

2. Extract business value: the processes to transition business questions to analytics questions, prioritize analytics activity, execute analytics requests and confirm business value

3. Support: the processes associated with how an organization supports the infrastructure and the care and feeding of the analytics organization

When you consider the first practice, "measure," businesses should determine the metrics that add value to the business. In today's world of data overload, it is easy to get sidetracked on producing "WOW metrics" - metrics that are surely impressive, yet add no value to the business.

It is not uncommon to meet with business leaders who show a litany of metrics, but they often cannot tell you how the metrics add value. When asked what decisions are being made based on the metrics, or how have these metrics improved customer service or product development or profitability, organizations often struggle to draw a line from the metric to action. Metrics are often labeled "cool" or "interesting." That's great, but if they're not being used to add value to the business, what's the point?

We all remember the quality programs of the '80s and '90s. Quality improvement programs firmly entrenched the idea that measurement is supposed to improve the business. You measure that which needs to be improved. As obvious as it seems, companies and analytic areas forget that business analytics and metrics need to add value to the business by adding insights to move the company forward. It is easy to get enamored with the latest analytic tools and chase the next metrics for their own sake, without asking whether they truly bring value to the company.

Business analytics capabilities should be utilized with an eye on the mission and objectives of the organization. This is to say, examining metrics reporting is a key component to business analytics. Analytic mature organizations understand who needs to know what, and how metrics should be disseminated. The timing of metrics reporting is crucial to deriving value. A metric may have one meaning on a daily basis, yet present a different picture in a monthly view. Clearly understanding the dimension of time allows for better business value.

At a previous job, I found out the company I was working for produced more than 10,000 monthly reports. As an experiment, I started to hold back a few reports to see if anyone would ask for them. No one asked for the reports. After a few months I stopped producing the reports and asked the user community if we could turn them off. Invariably the answer was "no, we need those reports." This is beginning to be the same with all the metric reports. Users get the reports, yet never use the metric in their operations.

Business analytics maturity starts with an approach to establishing the metrics that add value to the business. Getting the organization on the same page in using metrics for improvement and for measuring the right things is key to maturity. How, when and to whom business analytics is reported is strategic to getting the return on the investment in business analytics – analytically mature organizations have mastered this aspect of metrics reporting.

No matter how many metrics the organization produces and regardless of the amount spent on analytics, an analytic mature organization knows how to use metrics for management. The winner is not the organization that cranks out a ton of analytics reports and metrics – the winner is the mature organization that learns how to extract business value in using metrics to improve the business.

About the author: Gerald Shields is Practice Director, Healthcare IT for The Nolan Company. Gerald has over 30 years’ experience managing enterprise scale IT functions, with a focus on enabling the business through effective automation. At Aflac, he served as CIO and in senior IT management for over ten years, and is a respected thought leader and innovator in the areas of IT management systems, technology strategy, and mobile technology.

Register for Insurance & Technology Newsletters