Enterprise data analytics strategy: A guide for CIOs
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Workers at First Tech Federal Credit Union used to send new customers the standard stack of pamphlets: information about savings accounts, mortgages, car loans and the like -- whether they needed the pamphlets or not.
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Today, however, the credit union tailors its pitches, sending new customers the information most related to their individual needs -- an approach that's leading to higher levels of engagement with its members.
Naveen Jain, the credit union's vice president of digital analytics, credited the institution's use of data analytics for the positive results.
Other smaller-sized organizations have similar success stories. In fact, Capital One Spark Business' Small Business Growth Index, released in April 2017, found that small businesses using data analytics were 11% more likely to see improved sales during the prior six-month period than their counterparts not using analytics.
Despite such successes, the use of data analytics among small businesses is not widespread. The same report found that only 39% of small businesses (defined as those under $10 million in total annual revenue) use data analytics tools to make business decisions.
"Those who aren't using data know that there's an advantage in using it, but there's a bit of a wall to get over," Yumi Clark, Capital One's vice president of new product development, said during an interview about the survey results.
John Myers, a senior analyst of business intelligence at Enterprise Management Associates Inc., said small to medium-size businesses understand how critical data analytics is for their operations and strategies.
He cited his firm's data, which shows that 84% of SMBs surveyed believe an analytics strategy is either extremely (39.2%) or very (44.8%) important.
"In our research, we've found that the importance of analytics to these midsize organizations is almost exactly the same as it is to large organizations," Myers said.
Although SMBs acknowledge the value of analytics, they face barriers getting there -- some of which are tied to the size of their organizations, a fact that separates their challenges from their larger corporate brethren, experts said. SMBs often have a mishmash of systems that tend to keep data in siloes. They don't have the infrastructure needed to support robust data programs. Nor do they have big IT or data teams skilled at starting up such programs.
Naveen Jainvice president of digital analytics, First Tech Federal Credit Union
Moreover, they sometimes think the cost of investing in data programs is prohibitive, experts said.
But SMBs have advantages, too, according to Myers and other business leaders.
Some SMBs are starting from scratch, so they have the opportunity to start with clean data, experts said. Similarly, because they have a smaller infrastructure, they're often able to more quickly and easily move into modern technology -- in particular, the cloud, which Myers credits for giving SMBs access to the same analytics capabilities as larger companies at a cost they can afford. SMBs are also more nimble, letting them move forward more quickly with analytics efforts as well as react more quickly as they start to leverage data for insights.
"Small and midsize businesses can be more agile in what they do and how they do it. They don't have to go through all these hoops to do something," Myers said.
Tableau, Oracle Eloqua
Jain said First Tech Federal Credit Union faced those challenges and opportunities as it started on its data program about three years ago.
He said data existed in silos, and the credit union's various departments were each doing its own work around analytics without any coordination.
As a result, he said, they were just getting reports and not really any insights.
Jain headed up the credit union's efforts to become industry leaders in the use of data analytics, first building an enterprise data warehouse and establishing a data governance program -- work that he said is ongoing.
Then, in summer 2014, the credit union invested in Tableau software to handle analytics and produce the reports and dashboards that could provide insights to drive business decisions. That step, Jain said, "put the power of the data in the hands of the business leader."
A few months later, Jain's team deployed a marketing automation tool, Oracle Eloqua, to automate engagement with credit union members. This allowed the credit union to better target its marketing efforts; it could identify, for example, new members who did not sign up for mobile banking and send information about the service to them.
"In our new world, we integrated systems so our new members would get emails tailored to their unique situation, and we're seeing higher levels of engagement with those members [as a result]," Jain said.
The credit union also uses its new analytics environment to make more informed decisions around operations and financial strategies, he added.
New ERP jump-starts use of data analytics
Jeff Karan, director of IT at G&W Products, a Fairfield, Ohio, company providing custom metal fabrication, oversaw a similar evolution of his company's use of data analytics.
Karan said the company had been working on legacy technology, preventing company leaders from seeing any data that could help it run more efficiently -- let alone strategically.
"There was no information you could pull to see performance, inventory and things like that," he said. The company had been using spreadsheets and manual work such as inventory counts, which Karan said was not only inefficient, it was ineffective.
So, four years ago, executives invested in an ERP system from Plex Systems Inc. to modernize its infrastructure and collect the data needed to fuel an analytics program. Karan said the company also opted for Plex because it offered analytics capabilities as part of the package. It also invested in supplemental technologies, such as barcodes and scanners used to track inventory.
Karan said the software gave the company access to data it had never had before, so business leaders started their analytics efforts by first targeting simpler items to study, much of it around the company's inventory figures.
Those efforts had big yields, he said. The company reduced its overall inventory by 25% "because we could finally see it," and it cut inventory turns from 90-plus days to just 40 -- improvements that freed up cash for more strategic investments.
Karan acknowledged that its analytics program required investments into Wi-Fi infrastructure, new software and new hardware, including workstations, tablets and scanners for shop floor employees; he did not have figures available to share on what it cost. It also required workers to act and think differently -- a cultural change that needs ongoing training to support.
"Really what it was about was changing [the] way our operators interface with the system," he added.
Additionally, Karan said he and the company's only other IT employee must constantly ensure the data going in is clean by implementing the right protocols and governance models.
And the business leaders had to commit to learning how to best make use of it.
"If you don't have the right personnel, the best system in the world isn't going to save you. You have to have good people with good buy-in," Karan said, noting that the executive team meets biweekly to analyze how they're doing against established key performance indicators.
But, buoyed by positive results so far, Karan said he and the executives now are considering how to move to the next level: prescriptive analytics.
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