Growing demand for analytics in business
A recent study by Gartner predicted advanced analytics as one of the top 10 strategic technologies for businesses in 2011.
IBM has invested over 15 billion dollars in the last 4 years to acquire more than two dozen companies in the field of business analytics.
And, IBM is not the only IT giant that is building its stake in analytics. Over the last few years, several big companies have all made sizable purchases in this field.
Oracle bought Hyperion for $3.3 billion; SAP acquired Business Objects for $6.8 billion; and Microsoft purchased Fast Search and Transfer for $1.2 billion.
There have been several other smaller deals too. Even Twitter admitted recently that analytics has become “an increasingly crucial part of improving our service” and acquired Smallthought Systems, the company behind an analytics service called Trendly that tracks real-time changes and user trends for website owners.
What can analytics do for businesses?
Analytics is enabling a shift in how businesses support operational decisions: from intuition to data-driven. It is becoming possible to run simulations or create models to provide insights and predict the future, rather than to simply describe what happened in the past, and to do this in real-time to support each individual business action.
Thus, analytics enables businesses to make better, more informed decisions and compete more successfully.
Why is analytics becoming popular now?
Though analytics is not a new field, it has shot up in popularity in the last decade or so.
Businesses have woken up to the power of analytics and more and more enterprises are moving to what is being termed as ‘fact-based decisioning’.
There are three main reasons behind this phenomenal shift in businesses towards analytics and reliance on data over intuition.
1. There is a lot more data now than there used to be. 1.2 trillion gigabytes of data was produced in 2010 and it will double in the next 18 months and double again in the eighteen months after, and so on. Wal-Mart, a retail giant, handles more than 10 million customer transactions every day. The data generated by these transactions feeds into Wal-mart’s gigantic databases that hold over 2.5 million gigabytes of information already. Google processes 1 million gigabytes of information every hour.
2. Lot more data is being collected and stored. Storage costs have gone down at an astonishing pace in the last 2 decades. In 1990, the cost of storing 1GB of data was around $9000. In 2010, this has come down to a mere 8 cents. Costs have gone down by more than 100,000 times in 20 years. This is what has really fuelled the growth in analytics, allowing businesses to store gigantic amounts of information at a reasonable cost. See this website that has captured the fall of storage costs since 1956.
3. Analytical tools have become more user-friendly and better at dealing with large data. With faster processing power and more sophisticated tools, users are able to sift through larger mounds of data and apply complex statistical techniques to draw insights enabling them to make better decisions on the fly.
More data is being produced. More data is being stored. More data is being analyzed by businesses using better tools and statistical techniques. All of these factors are leading to better predictions being made. Better predictions mean better results and hence the growing popularity of analytics in business.
Analytics and Academia
Business has recognized the power of analytics and it is time academia did the same. Today’s business managers need to learn how analytics can help them make better business decisions that can generate better business outcomes.
- They need to have an understanding of the statistical concepts that can help analyze and simplify the flood of data around them.
- They should be able to leverage analytical techniques like decision trees, regression analysis, clustering and association to improve business processes.
- Finally, it is important for them to have first-hand experience of some of the most widely used software like SAS, SPSS, COGNOS etc., and exposure to real-life business data.
Analytics programs in India
While India has become the global hub for analytics, there is an enormous shortage of programs offered by Indian universities to train students for this field. Some of the leading MBA colleges have started to offer courses in business analytics as part of the MBA curriculum. However, there are still very few specialized degree or certificate programs available in this field. IIM Calcutta, a rare exception, offers a 1 year course in business analytics for professionals with at least 2 years of experience. In the US, North Carolina based Institute for Advanced Analytics also offers a 1 year masters course in advanced analytics.
It is imperative that business education institutes recognize the emergence of business analytics as a powerful field that is changing the way businesses are run. It is also important to understand the crucial role India is playing as the global hub for analytic talent.
Education institutes, especially in the field of business administration, need to tailor their curriculum in recognition of the growing importance of analytics and the shortage of skilled professionals in the field.
Every business is unique in terms of the kind of challenges it faces, the information it possesses and the decisions it has to make. However, a manager who is aware of the scope of analytic applications for business is able to leverage the power of data to make better business decisions.