Analytics enables employees and their managers to out-think and out-execute the competition, according to Jeanne Harris, director of research at the Accenture Institute for High Performance Business. During a breakfast presentation sponsored by the Harvard Business Review and Microsoft in Boston in June, Harris defined and explained the analytics phenomenon and how the tools are successfully incorporated into existing infrastructures and cultures.

“Analytics fundamentally change the way people behave and make decisions,” Harris noted. “Analytics are the extensive use of corporate and external data, statistical and quantitative analysis, and explanatory and predictive models to drive decisions and actions. Business intelligence and performance management technologies empower people to develop new insights and outmaneuver the competition.”

The combination of software and data produces predictive models that managers and individuals can use to find and exploit distinctive market strategies, identify the right customers and the right pricing, minimize inventory, and otherwise close the gap between strategy and execution. Essentially, analytics enable fact-based decision-making, which in turn leads to improved performance.

Providing workers from the shop floor to the executive suite with the appropriate analytics enables them to increase revenues and profitability, along with market share and customer satisfaction gains, Harris said to a group of approximately 50 senior executives from financial services, healthcare, and high-technology organizations.

While the use of analytics is not widespread yet, the success of early adopters has led to tremendous interest from a wide variety of industries and companies around the world, according to Harris, who is the co-author, with Thomas Davenport, of the Harvard Business School Press book, Competing on Analytics: The New Science of Winning . The book lists dozens of organizations that have profited from adopting analytics throughout their enterprises.

In fact, more than 30 percent of senior managers polled in a 2006 Accenture study said they use their enterprise systems for “significant decision support or analytical capability.” Four years earlier, only 19 percent agreed with that statement.

And those who have implemented analytics and an analytics culture in their organization were much more likely to have outperformed their industry peers, according to an Accenture revenue growth, profitability, and shareholder return analysis of almost 400 large companies that had adopted analytics. As the chart below shows, the high performers were much more likely to have implemented analytics. “These high-performance businesses substantially and consistently outperform competitors over the long term,” Harris noted.

These organizations were able to embed analytics into their operations and processes because the entire enterprise embraced a fact-based decision-making culture that relies on data and statistical analysis, not gut instinct. “There’s a new generation of business leaders who are comfortable with analytical tools,” Harris noted.

She added that one CEO interviewed as part of her and Davenport’s research has this sign on his desk: “In God we trust; all others must bring data.”

Establishing a culture of fact-based decision-making among executives, managers, knowledge workers, and everyone else in an organization is one of the prerequisites for success with analytics. Other prerequisites for successful adoption and implementation of analytics are:

• Broad access
• Easy to use
• Accurate and trustworthy data
• An enterprise-wide analytical architecture
• Business and IT collaboration

“Ultimately, analytics is not about software or hardware, but about people,” Harris said. “It is absolutely critical that the leadership team works together to develop and adopt an analytics culture. “

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