Operational.Business.Analytics.jpgGiven that digitization had such a transformative effect on customer behavior and relationships, it is perhaps not surprising that many organizations focused their digital transformation efforts on the customer experience front-end. 
However, in the race to focus on the customer, it was all too easy to ignore operations.

In its 2013 research with MIT Sloan Management Review, the digital research team at Capgemini Consulting found that while 40 percent of digital initiatives were focused on the customer experience, this dropped to 26 percent for operations. 

Now, a new report conducted by MIT Sloan Management Review and Capgemini Consulting’s Digital Transformation Institute reveals the extent to which the search for competitive advantage has driven organizations to shift the focus of their analytical efforts away from customer facing processes to back office operations, over the last three years. 

Going Big: Why Organizations Need to Focus on Operations Analytics maps organizations based on the extent to which their analytics initiatives were integrated with core operations processes and their success rate with initiatives, identifying four stages of operational analytics maturity:   

  • Game Changers. 18 percent of organizations: Integrated most of their analytics initiatives with their business processes and have realized the anticipated benefits from their analytics initiatives.
  • Optimizers. 21 percent of organizations: Typically realized early benefits from their analytics initiatives in a limited number of areas within their operations but have not yet scaled up to more complex initiatives.
  • Strugglers. 20 percent of organizations: Integrated analytics in most of their business processes but struggle to realize the benefits.
  • Laggards.41 percent: Introducing analytics initiatives in their operations. They have mostly implemented proof of concepts, lagging behind in terms of deriving benefits.

In this recent survey of more than 600 executives from the US, Europe and China, findings reveal more than 70 percent of organizations now put more emphasis on operations than on consumer-focused processes for their analytics initiatives.

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Analytics In Operations

Analytics in operations is increasingly seen as a strategic priority for organizations. Over 80 percent of respondents agreed that analytics in operations plays a pivotal role in driving profits or creating competitive advantage. Capgemini Consulting’s Digital Transformation Institute applied the four stages of operational analytics maturity to build up a geographic picture of adoption and success rates around the world.

  • US companies are not only the most advanced with their analytics initiatives but also the most successful. 50 percent have successfully realized the desired benefits from operational analytics compared to only 23 percent of Chinese respondents, despite China ranking highly for level of implementation.
  • A strong contributing factor of the success of US companies is their focus on setting up effective data and governance processes. 47 percent  of US-based companies have made analytics an integral part of their decision-making process compared to just 28 percent in Europe.
  • The prominence of US organizations tallies with a recent resurgence in US manufacturing and will drive US manufacturing competitiveness in the coming years.
  • European companies are falling behind their US counterparts, with German firms lagging behind in operational analytics compared to not only the US but also the UK and the Nordics. This is surprising given the initiative in Germany towards Industry 4.0.
  • In the UK, nearly 41 percent of companies had operations analytics initiatives led by C-level executives; in the US this figure stood at 33 percent. By comparison, in Germany, only 14 percent of initiatives were led by key executives.

Read Also: 4 Stages of Analytics Adoption

What To Take Away?

Big data has the great potential to transform the operating effectiveness of organizations across all markets. The winning organizations will be the data enablers - those that optimize their operations with data management. Additionally, many companies today are only scratching the surface of operational analytics - and moreo and more components of the demand chain, from manufacturing to distribution and sales, are becoming connected .... and producing data. Cognitive computing is helping organizations to make sense of all of this data. Unfortunately, today very few organizations are truly well set up to take advantage of these great data technology developments - diminishing their competitiveness.

What does competitiveness look like today?

GE has bet on the Industrial Internet, the convergence of industrial machines, data, and the Internet. The company is putting sensors on gas turbines, jet engines, and other machines, connecting them to the cloud and analyzing the resulting flow of data. Why? GE wants to identify ways to improve machine productivity and reliability, according to MIT Sloan Management Review. GE, a traditional manufacturer, is remaking itself into a modern digital business. 

What is your plan to be competitive in leveraging operational business analytics?