Discovering Data in Unusual Places
By To the Point
While the idea behind business analytics has been around for a long time, the struggling economy has encouraged companies to take another look at how they can use and apply them to their business in order to ensure they not only survive, but emerge even stronger in the future. Business analytics generally refers to the process of using decision-support systems, business intelligence, statistics, executive-information systems, and predictive models to give companies a clear, single version of their data resulting in a competitive edge. Research is providing proof that proper use of business analytics will drive more new opportunities, provide for better risk management and leverage of existing investments.
Jeanne Harris, who does executive research for Accenture Institute of High Performance, co-wrote a book with Thomas H. Davenport and Robert Morison called, Analytics at Work. In it he cites some very insightful findings from their 10 years of research of companies in 35 countries and 19 industries. As the keynote speaker at a CFO’s Corporate Performance Management conference in New York, he said, “It’s critical to identify what data is key to a company’s profitability,” and went on to provide several examples.
Best Buy studied the effect of “employee engagement” with customers and found that when the time spent increased by one-tenth of a point the company’s operating income rose by $100,000!
California winemakers E&J Gallo, previously known for their inexpensive wines were able to use analytics to determine that the ‘taster’ for Wine Spectator magazine had a very large influence on the sales and price opportunities of wines. They found that wine rated at 90 or better would sell for more than a bottle rated at 80. They then used this information to ‘reverse-engineer the taste buds of the taster’ to figure out exactly the kind of wine they tended to prefer, and to discover the most profitable type of wine. They then changed their grapes, and re-worked their process to create wines over 90.
Ultimately business analytics can have a dramatic impact on companies that use them properly. Better decisions and insight can help companies not only withstand a tough economy but re-build a strong foundation and gain better profitability for the future.
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