Why Business Transformation Cannot Be Achieved Without Data Analytics

“Without data, you’re just another person with an opinion” – W. Edwards Deming

Almost all companies today are on a journey of digital transformation. The objective of this journey is to leverage digital technologies to dramatically reduce costs and drive efficiencies. While the buzz around digital transformation increases, we need to ask ourselves, is digital transformation only about the digital tools? I believe that in this journey, many focus only on getting the right technology in place without realizing that digital transformation is meaningless unless it brings about a business transformation.

Business transformation is more than the driving of discontinuous change in the enterprise in response to external influencers. Harvard Business Review defines business transformation as “making fundamental changes in how business is conducted in order to help cope with a shift in market environment." And to me, in today’s dynamic environment, to achieve business transformation, organizations have no option but to rely heavily on data analytics.

Data and business transformation – an unavoidable relationship

We have all heard the metaphor “data is the new oil”. Most equate ‘oil’ to monetary value. However, oil by itself has limited value. It has to be converted to gasoline and other products to become valuable. Similarly, data by itself has little tangible value. To be of any real value, this deluge of data must be refined into information that delivers quantifiable business insights – and that cannot be achieved without data analytics.

As I have said, business transformation is more than technology applications. It is more than the latest digital platform or the newest Machine Learning-driven application. Business transformation is about understanding how business processes can be improved, efficiencies optimized, productivity drains eliminated, new business opportunities identified, and competitive advantage gained. It is about having flawless execution. As the business user’s need for information has increased multi-fold, to close the gap between expectations and what a business delivers, decisions must become data-driven.

Because business transformation cannot be achieved using gut-feeling

Companies like Rolls-Royce are using data to fuel innovation, improve operations, and generate new service revenues. Walmart is another example where data analytics has been used efficiently to streamline their business, manage inventory, and eliminate risks.

Business transformation is also about identifying process and productivity impediments. How do we know which processes are working efficiently? How do we identify which processes need improvement? Are the employees satisfied with the technology applications they are working with? Are there any gaps in processes that are causing lags in output? Can the supply chain be improved? Is there a better technology for the job? These and many such questions form the crux of business transformation initiatives. The question is, how are you finding answers to these questions? Organizations embarking on business transformation initiatives have a long list of such questions that are very hard to answer.

Business has always been a bit about relying on that gut-feeling, but it’s now time to leverage advanced analytics to get concrete and evidence-backed answers to some of the most pertinent business questions.

So, business transformation is about adopting an ‘analytics-first’ culture

Business transformation is always about business growth. And, with a well-designed analytics approach, businesses can witness sustained growth. They can increase their data analytics footprint to facilitate a wider array of business improvements. When organizations take an analytics-first approach, analytics can become a key driver of a well-thought out strategy. This analytics-first culture helps in driving incremental value creation across the business. Starbucks depends heavily on data analytics across its business operations – be it in understanding customer preferences or identifying new store locations. If there is a decision to be taken, it will most likely be based on data analytics. Decision-making based on data permeates the culture of the organization.

Measure and then manage

When it comes to business transformation, tracking progress is the key. Transforming a particular business does not happen overnight. It is also not a finite or templatized process. Organizations embarking on the business transformation journey must continuously measure their progress, assess how they are progressing against their KPIs, understand what’s working and what’s not, and evaluate where they need to slow down and where they need to speed up. With so many data points, measuring quickly, efficiently and effectively cannot be done unless analytics becomes ingrained in the DNA of the organization.

IDC says, “71% of the big data innovators use advanced analytics tools that have high-level forecasting and real-time visualization capabilities”. Such technologies give enterprises the tools to adopt a more customer-centric approach and gain a competitive advantage. It is only when organizations employ analytics that they can become more agile and responsive. They can keep pace with changing business requirements and customer demands. This will enable business transformation in its truest sense.

Peter Sondergaard of Gartner sums up the importance of analytics in today’s information-driven economy. He says, “Information is the oil of the 21st century and analytics is the combustion engine.” And when it comes to business transformation, this couldn’t have been truer. What do you think?