CIOs Know That Analytics Are What Future Competition Is All About

by drjim on April 20, 2011

CIOs Are Learning That Number Crunching Is Critical To Their Company's Success

CIOs Are Learning That Number Crunching Is Critical To Their Company’s Success

Companies are all asking themselves one question: what’s it going to take to be successful? It turns out that a lot of the techniques that worked in the past won’t work anymore – lowering prices, etc. Going forward, the only thing that a modern company can complete on is their business processes. It turns out that the CIO plays a very big role in making a company’s processes the best that they can be…

Say Hello To The New Killer App: Analytics

Dr. Thomas Davenport has spent time studying how firms compete. What he has discovered is that the most successful companies have started to use analytics to move ahead of the pack.

Unlike in the past, these successful firms are using analytics across the entire firm – not just in one area. In order to do this, their IT departments are being asked to play a role that they’ve never had to do before. CIOs that are going to be successful in the future have got to understand what is going to be asked of them so that they can provide the company with the analytics support that it’s going to need.

The new use of analytics requires that the IT department be able to support the modeling and optimization that the firm will be doing. This requires building very large warehouses of data and then using it to dive deeper than just calculating average order size or average revenue per employee. Instead, now firms are going to want to know things like who their most profitable customer is, who has the most long-term profit potential, and who is most likely to cancel their account.

4 Sources Of Analytics Success

So what does a CIO need to do in order to create an IT department that will be able to support the company’s growing need for the answers that only analytics can produce? Simple, there are four steps that every CIO must take:

 

  • Focus On The Right Areas: analytics can be applied to a number of different areas of any company’s operations. However, the CIO needs to ensure that the company directs its analytics focus in the area that will yield the greatest reward for the company. This means picking between focusing on the company’s supply chain, its customer selection / loyalty / service, pricing, human resources, etc.

 

 

  • Hire The Right People: The IT department is going to have to reshape itself in order to provide the company with the analytical talent that it is going to need. This means that the CIO is going to have to work with the human resource department in order to teach them what kind of analytical talent you are looking for. Additionally, the staff that you hire need to not only be able to crunch numbers, but they also have to be able to clearly communicate to the rest of the company how they do their work and what the results mean.

 

 

  • Create The Right Culture: as the company evolves to use analytics to drive its business, the company’s culture is going to have to change also. This means that there will have to be a new respect for the processes of modeling, testing, and evaluating results that are produced by qualitative analysis. The IT department and the rest of the company will have to learn to make decisions based on facts, not gut feels.

 

 

  • Build The Right Technology: As much as having the right technology means having enough computing horsepower to process all of the data that needs to be crunched in a reasonable amount of time, it means more. It has a lot to do with having the right technology that will be needed to store and process the mountains of data that will be needed to feed the analytics engines that the company will now be running both day and night.

 

What All Of This Means For You

CIOs will play a significant role in their company’s success going forward. Optimizing business process through the use of analytics is going to be required by every company and the IT department is going to be responsible for supporting these analytics staff and tools.

The company is going to have to change the way that they do business in order to take advantage of the new analytics. These changes are going to impact the company’s focus, its culture, its staff, and its technology.

The CIO will be required to restructure the IT department. The new focus will be on processing the large quantities of information that have been collected and creating results. CIOs who are able to understand the changes that will be required and implement them will be the ones that will lead their companies to success.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: Do you think that the analytics experts should be part of the IT department or should they be somewhere else?

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What We’ll Be Talking About Next Time

It turns out that there are 3 different reasons why a CIO can end up making a bad decision. We’re going to take a look at each of these hidden decision making traps and show you how to identify them and, even more importantly, how to avoid them…

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{ 2 comments… read them below or add one }

Kyle Chastain CPA, MCITP April 21, 2011 at 3:36 pm

You make some great points and I agree with your description of the IT world of today and tomorrow. Job descriptions and responsibilities are changing faster than ever. The lines have blurred between what used to be the silos of IT, Finance, HR, Operations and Sales.

Now, IT departments need to be more nimble, faster, and bring more analytical horsepower to organizations. Business Intelligence that allows end users to take enlightened strategic actions in a timely manner is becoming the new norm. And because the end users are demanding more focused and refined data, IT departments will have to employ more financial, operations and marketing analyst if they’re going to keep up.

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Dr. Jim Anderson April 22, 2011 at 10:04 am

Kyle: You make great points. One of the key issues is that all too often gets overlooked is that the IT staff that will produce the results that the rest of the company needs will require that the IT staff really understand what the business needs. The old days of IT being able to live on their “island” and not interact with the rest of the company are long gone…!

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