Software is entering the Age of Analytics. Buzzwords fly fast and furious: Predictive analytics. Enterprise reporting. Analytic applications. BPM, CPM, EPM. Metrics and dashboards. Three key performance indicators, two turtledoves, a scorecard and a few decision trees.
And if there aren't enough for you already, it's time to get ready for the next blazing software industry buzzword: "enterprise analytics," a catchall term describing analytic technology deployed across a whole enterprise. Enterprises want to whittle down their list of analytics vendors. Business intelligence (BI) vendors are racing to offer soup-to-nuts enterprise analytics product suites, application software vendors are trying to beat them to the punch, and Oracle claims to have occupied the high ground for years. If "enterprise analytics solutions" catch on, just about everybody will benefit.
Unfortunately, it won't be quite that easy. Very few organizations have ever deployed true enterprisewide analytics technology. Indeed, even the BI vendors themselves generally haven't rolled it out. And there are good reasons for this.
The major problems inhibiting enterprise adoption aren't in the technology itself, which on the whole is delightfully real and affordable. BI and other analytic technologies are much cheaper to buy and install than OLTP application suites. Recent BI-oriented advances in relational database technology make even huge data warehouses scalable. True, data integration and quality issues are often messy when you build or expand a data warehouse, and dealing with them isn't fun or cheap. But even when integrating analytical data gets expensive, it's usually still a lot cheaper than transactional application integration.
Instead, the main challenge is the one that stretched the adoption of transaction-processing applications across several decades: business process change. Enterprises employ people, and people generally don't like to change the way they do things.
Actually, the problem may be even worse than it has been for transaction-processing applications. Controlling and changing how your managers work is a lot harder than transforming the activities of your data entry operators, shipping clerks and other low-level transaction processors. If your CEO really hopes to create an enterprisewide culture of sober, rational, unbiased numbers-driven decision-making, that project could take decades.
There's another side to the problem: Many people just don't feel comfortable dealing with numbers. That's usually not a problem for MBAs or for engineers and other technically literate sorts. But too many other folks are instinctively resistant to anything that brings more mathematics into their lives.
Fortunately, none of this means that your organization can't introduce new and better analytical business processes. You just have to do it a chunk at a time. And there are several areas in which analytic technologies have already racked up success after success, transforming how enterprises do business. So I'll conclude on a happy note, by reviewing some of the areas in which the analytic technologies dream is being lived today.
Marketing executives have long been taught to test, test, test any element of a marketing campaign that they can. Over the past decade, sophisticated tools in data mining, profitability analysis and the like have taken marketing analytics to a whole new level. Success stories abound in a whole range of marketing-oriented industries: retail, consumer products, travel/hospitality, financial services, telecommunications and even charitable fundraising.
Vendors of corporate planning tools will tell you that they can transform your whole business planning process, with every line manager frequently and accurately updating corporate performance expectations. That transformation rarely happens. However, when these tools are given to finance and budget specialists, their work is changed for the better.
More generally, business processes of many kinds have been transformed by automated performance monitoring, in areas as diverse as manufacturing, service logistics, sales operations, recruiting and consumer loan performance. Sometimes the analytics are built into ERP or CRM systems, and sometimes they come from third-party BI tools. Either way, they're a big boost to profits and customer satisfaction.
Stakeholder reporting is a huge area of opportunity. Information self-service has transformed business processes, reaching all kinds of constituents: retailers' suppliers, credit card companies' sell-side customers and even citizens served by local governments. Meanwhile, regulatory compliance requires ever more careful analysis and reporting.
Finally, dashboards may be excessively hyped -- but the reality is pretty cool too. Most of the benefits from analytic technologies over the years have come from shoving reports in people's faces until they discover, often serendipitously, useful facts about their business. Dashboards provide a much more enjoyable way of consuming the same information -- especially if there's some pretext to include a clickable map -- and wider dissemination of information dashboards can only lead to better-informed business decisions.