Good News! Executives have high hopes for their data and analytics programs.
In a new survey, executives say senior-leader involvement and the right organizational structure are critical factors in how successful a company’s analytics efforts are - even more important than its technical capabilities or tools.
As demonstrated in the McKinsey article The need to lead in data and analytics, large majorities of respondents to a recent McKinsey Global Survey on the topic expect their analytics activities to have a positive impact on company revenues, margins, and organizational efficiency in the coming years.
To date, though, respondents report mixed success in meeting their analytics objectives. For those lagging behind, a lack of strategy or tools isn’t necessarily to blame. Rather, the results suggest that the biggest hurdles to an effective analytics program are a lack of leadership support and communication, ill-fitting organizational structures, and troubles finding - and retaining - the right people for the job.
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On the whole, responses suggest that company leaders are less involved in business analytics efforts than they are in digital activities.
In McKinsey’s latest survey on digitization, 38 percent of respondents said their CEOs were leading the digital agenda for their companies; in this survey, just one-quarter say their CEOs lead the data and analytics agenda. But even when analytics are top of mind for company leaders, many of them don’t seem to be communicating a clear vision throughout their organizations. Thirty-eight percent of CEOs say they lead their companies’ analytics agendas, but only 9 percent of all other C-suite executives agree.These respondents are much more likely to cite chief information officers or business-unit heads as leaders of the analytics agenda.
McKinsey points out that just as companies pursue varied objectives with their analytics activities, they also differ in how they organize around this work. There is no consensus on a single structure — centralized, decentralized, or a hybrid model — that most companies use.
However, the executives who report using a hybrid structure — a central analytics organization that coordinates with employees who are embedded in individual business units — say analytics has a greater impact on both cost and revenue than other respondents do, according to McKinsey research.
Beyond more active CEO involvement, executives at high-performing companies report other practices that differentiate their analytics activities.
Most executives, according to McKinsey research, report their organizations have established some analytics capabilities. They have tools and expertise to work with unstructured and real-time data. Plus, they are nearly twice as likely make data accessible across their organizations.
While there is still debate over which operating model works best for analytics, the McKinsey research suggests that companies using a hybrid approach often see greater impact from analytics than companies with either a strictly centralized or decentralized model.
Regardless of how an enterprise decides to organize its analytics initiative, enterprise leaders must ensure that they have the right balance of technical and domain expertise, that resources are being used efficiently, and that all analytics resources align closely with the goals and targets of the business units they support.