Drivers for adoption of Business Analytics

 

As the time advances and complexity in the business processes increase there in an increasing need of automation for the business management and there is an increase in the need for better governance systems, intelligent decision support systems

First Generation Drivers

• Transaction Automation Processes
• Billing and Accounting Systems
• Sales Automation Systems
• Management dashboards       

These first generation drivers are purely focused on task and function based automation and had a bit of passive involvement

Second Generation Drivers

• Enterprise Resource Planning (ERP) systems,
• Customer Relationship management (CRM) systems 
• Supply Chain Management (SCM) systems

These second generation drivers were focused on business automation, aggregation of multiple functions and business efficacy improvement along with providing a consolidated one stop solution to the business needs

Third Generation Drivers

• Data Warehousing
• Business Intelligence
• Business Process Re-engineering

These third generation drivers took a quantum leap and took the area of analytical thinking to a totally new realm. Focus on cross-functional integration, vision based pro-active improvement steps and a capability to quantify and measure business performance and growth were the key factors

According to Dan Vesset, IDC vice president of business analytics research and IDC analysts in “Worldwide Business Analytics Software 2010-2014 Forecast and 2009 Vendor Shares,” there is a predicted expansion in business intelligence and analytics markets by about 3 percent from a similar review from 2008. However, mainstream acceptance of analytics as a business tool, particularly by top-level executives, has kept the industry in the black during the recession.

Recently, with emerging shifts in business toward cloud computing and SaaS – industries which are expected to register about 20 percent in annual growth through 2014 – related analytics needs should put the BI market in good shape for the next decade, Vesset says. “The fundamentals of demand continue to be the same [for analytics] and, in fact, it is increasing because of awareness of these technologies, especially at the top level of organizations where top executives are more aware. They’re asking people who work for them to look into [BI solutions] and for expansions” of spending and research, Vesset says. Advances in data warehousing and high profile use of customer analytics by companies like Amazon and Google are recent examples that businesses are pointing to as connections between initial investments in analytics and better BI to financial reward

A few of the drivers for adoption of business analytics are given below

Financial institutions and financial focus driving BA adoption

Large enterprises across Banking and financial institutions witnessed a hit and high decline in both the trust and the financial market investments during the recession. The revenues and the turn over of world’s largest financial institutions got hit. Revenues were at rock bottom. But what helped some of them survive through the crucial and difficult timings was a careful and in depth investment on the Business Analytical capability of these institutions.

Revenues of banks, investment corporations and financial institutions have been on a slow and steady rise due to usage of business intelligence and a careful approach in customer retention, customer value management, customer life cycle management and selective investment approach. Analytical applications for Banking solutions can provide crucial process support on integrated tools for financial accounting, cost controlling, risk management, asset-liability management, and profitability analysis. These applications can also help banks address legal compliance challenges. Investment portfolio management, market analysis, competitor analysis, reporting and compliances with national specific and international accounting standards

One of the companies Ramco has shown a great diagram on variety of solutions using BA for financial institutions

 

Manufacturing sector driving BA Adoption

Manufacturing has been one of the core sectors in the development of BRIC nations and other nations that have been listed as one of the top developed nations and now rule predominantly as service driven economies. Even though the services and other skills may be on a rampant growth and IT reining the current job scenario still the core manufacturing sector is what will always govern the existence of these other sectors. Manufacturing sector can have a stronger and multifold involvement in the business analytics since there Analytics is spread across areas like

• Process modeling
• Production planning and performance analytics
• Production scheduling
• Plant operations
• Procurement and ordering management
• Supply chain management
• Vendor management
• Inventory management
• Work force management
• Customer relationship management
• Product development
• Quality control
• Predictive maintenance
• Financial management

After the recession leaner processes and smarter production has been the mantra for all leading to cost reduction in the manufacturing processes and savings for the manufacturing unit

Aggressive Marketing by Major Vendors for SMB driving the BA adoption

All the major BI and Business analytics software vendors are aggressively targeting the large and medium enterprises in all countries. Since the larger conglomerates are already on the saturation and maturity of their IT and strategy operations breaking a piece of pie from that market segment would be difficult or rather not possible. The BI/BA vendors understand that the small and medium enterprise market holding immense potential for enterprise applications, BI/BA software and enterprise portals. The large and medium enterprises in India also invest significantly in budgetary allocations for technological adoption since they are more concerned in a strategic focus of their efforts to gain better and faster returns. Many of the vendors conduct seminars, shows and marketing campaigns to increase the awareness level and attract new small and medium enterprise customers showcasing benefits to their business across multiple domains. These aggressive promotional activities by the vendors are expanding the BI/BA software market across the world

Need for a better corporate governance model and compliance management system driving BA Adoption          

Industry compliance initiatives, ISO, CMMI, Sarbanes-Oxley and Basel II, have placed need a systematic, self evolving and continuous learning centralized governance and management systems. This creates a demand with the business executives to have a efficient and centralized BI/BA system to facilitate reporting. The need for a cleaner and more systematically organized data which can be governed using role based dashboard not only helps in better governance but also is helpful for matrix based organizations. The integrity and accuracy of data set for reporting and analysis is validated at multiple levels. Also rather than allowing each department to have ownership of separate, unreliable data BI/BA systems sets a centralized mechanism that helps in uniform end to end flow of data. Although a standard package of solution for a single BI/BA platform may not solve this problem and the organization will need integration of more than one systems across various departments to solve this problem. Thus companies needing a strategy for addressing compliance and governance issues find a savior in the form of a BI/BA solution.

There may be many drivers for Business Analytics being adopted but one also needs to understand that there are also many constraints and limitations for adoption and implementation of Business Analytics. Based on the cost and benefit analysis a smart business corporation thus will be able to Redefine their Strategy on the adoption of Business Analytics