Just getting hold of the right information can be a challenge in itself. Think of it like fishing. There are all kinds of different data swimming around in that lake. Like the best fishermen, you need to know where to look and hopefully expend an appropriate amount of effort to ‘catch’ the insight you need. If you’re looking for just a few small fish to take home for dinner, you shouldn’t be trawling the whole lake and picking them out of a net of thousands. Unfortunately that’s effectively what happens with a lot of enterprise information.
Priorities around enterprise data have become skewedIt’s now been over two years since the Harvard Business Review told us that being a data scientist was the sexiest job of the 21st century. Notwithstanding all this hyperbole, how well are you working with the data available to you? Is the result you get from your analytics just more noise? I asked my team to carry out some analytics on analytics itself. I wanted to determine where the money is being spent and what value it has.
We found that analytics spending can be split into two: roughly $60bn is spent annually on IT, data collection and applications that spit out reports, but just $6.9bn – or about 10 per cent – goes on 'the last mile', determining what those reports mean and assessing the next steps.
Such a big gap suggests that something is wrong. One reason for the difference might be that it's easier to collect the data and generate masses of reports than it is to decide what it all means. Plenty of companies will sell you software and reports but very few are able to combine this with the specific business process expertise that allows them to make recommendations as to what to do next. I would argue that analytics that doesn't lead to action is a waste of time and money.
The value of focusing on actionable insightAt Capgemini BPO we use analytics all the time to better understand performance and to improve efficiency. We want to know where our hard work will have the most significant benefits for our clients.
For example, if you run analytics on the collections part of your business then you want to identify more than just the bad payers, you want to know where to take action to change this. If you know what to look for in that data, you can uncover ways to improve your processes so that you have fewer bad payers overall. Perhaps your billing system needs to be optimised or maybe your accounts staff need to be better prepared to answer certain questions. This is the kind of change that is simple but can make a real difference.
When we did exactly that work with a major consumer goods client, using our Insight 360 plan, we were able to suggest actions that could increase working capital by as much as $55 million.
Another client, a leading agribusiness company, asked us to help optimise their cash outflow and review their Days Payable Outstanding (DPO). In this case, interpreting the numbers meant that we were able to revise payment cycles and make changes that reduced unnecessary early payments, cutting cash outflow by $121 million. Renegotiating terms with more than 2,000 vendors in nine countries resulted in a working capital release of $37 million.
A virtuous cycleTo ensure that we have a steady supply of insight and take action accordingly, we approach our business process engagements as a continuous cycle.
It starts with extracting the data from the processes and using this to generate reports. The next step is to identify the meaningful information in those analytics reports and, from there, make a plan of action. This is where you need to marry your analytics capability with particular business expertise so you can really understand the data in context and focus on the right areas.
Once we’ve taken action and made changes, we’ll pay close attention to the outcomes. This means critically examining another wave of data and reporting, to see what’s worked and where we can further improve – and so the cycle begins again.
It’s a fairly simple model on the surface, but it’s a highly effective way of staying focused on what really matters.
Why am I passionate about this? Because I know that when it's done well, analytics can make a real difference to a company's bottom line. It's another reason why I want people to expect more from BPO: we can offer transformative insights into your business that will pay off now and build the foundations of future value.
Alternatively, we can all just continue to spend 90% of budgets on being busy and just 10% on driving action.