Data Analytics as a Strategy

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Learn about data analytics as a strategy

Competitive advantage entails various aspects in a company, from its governance to the  HR competitiveness, all should be aligned and integrated to generate a great market positioning. Among all sorts of competitiveness like technology, lean manufacturing, IoT, etc. organizations are competing on analytics not just because they can, but because they should. It is virtually impossible to differentiate from competitors based on products alone. The rivals sell similar products and/or services, like large manufacturers are all benefit from cheap offshore labour, you’re hard-passed to beat overseas competitors on product cost.

Among different ways to differentiation as source of competitiveness, becoming an analytics competitor is one way to pull ahead of the pack. It means to use sophisticated data-collection technology and analysis to wring every last drop of value from all the business processes. With analytics, one discerns not only what the customers want but also, how much they’re willing to pay and what keeps them loyal. Costco is using its membership card to navigate its sales, customer purchases, seasonal items, etc. The data that Costco collects and processed are definitely part of its competitive advantage in the retail space. The data are used to order the right volume at the right time and in the right place. The large volume will reduce the cost of goods sold, which is another way to pay off investments in the data analytics technology. It is clear that Costco makes data analytics part of the overarching competitive strategy, and pushes it down to decision makers at every level in its organization.

Davenport offers a practical analytics competition framework that is useful to the organizations to apply:

Champion Analytics from the Top:acknowledge and endorse the changes in culture, processes, and skills that analytics competition will mean for much of your workforce.

Create a Single Analytics Initiative: place all data-collection and analysis activities under a common leadership, with common technology and tools. You’ll facilitate data sharing and avoid the impediments of inconsistent reporting formats, data definitions, and standards

Focus on Your Analytics Effort: channel your resources into analytics initiatives that most directly serve your overarching competitive strategy.

Establish an Analytics Culture: instill a companywide respect for measuring, testing, and evaluating quantitative evidence. Urge employees to base decisions on hard facts. Gauge and reward performance the same way- applying metrics to compensation and rewards.

Hire the Right People: pursue and hire analysts who possess top-notch quantitative analysis skills, can express complex ideas in simple terms, and can interact productively with decision makers.

Use Right Technology: prepare to spend significant resources on technology such as customer relationship management (CRM) or enterprise resource planning (ERP) systems. Present data in standard formats, integrate it, store it in a data warehouse, and make it easily accessible to everyone.

Overall, data analytics integration is strategic to a business regardless of its size and operation’s volume. Small businesses can apply this framework to collect the customers’, services’, and products’ information all the time to decide wise about market trend, demand and competition.