Are Sri Lankan organisations lagging behind?
Every large organisation has around 200 terabytes of internal data – one terabyte is 1,000 gigabytes. In addition every organisation has access to significant amounts of external data.
Eighty per cent of data is unstructured or semi-structured. Blogs, tweets, Instagram pictures, human movements, etc. are all extremely valuable sources of data that are captured today by a plethora of digital-enabled devices such as sensors, point-of-sale scanners, digital cameras and the like. The proliferation of data in today’s world is a huge opportunity that organisations must exploit. Easier said than done!
This is the big challenge facing most organisations; firstly do they have the required data, and secondly do they know how to employ analytics to derive the insights that will help them gain a competitive advantage.
Many organisations lack the ambition, sophistication and leadership to use big data. A recent study of Australian organisations indicated that 90% are lagging in their use of data to improve their bottom line. Fifty-six per cent of such organisations have the opportunity to improve their bottom lines by over 50%. It was only in less than 10% of organisations that data and analytics were integrated into all business decisions, including real-time information.
If this is the Australian finding what then would be the Sri Lankan situation? A cursory observation of Lankan organisations is sufficient to indicate that the opportunities exploiting big data and analytics are significant.
Big data by itself does not deliver outcomes. Something must be done to the data in order to derive insight and generate value. Analytics is what enables data to produce insights. This is why one cannot talk of big data in isolation. Big data AND analytics is the combined formula for success.
Understanding big data is easy. Organisations have had some form and quantum of data for centuries. As we now recognise, the quantum and type of data has increased exponentially. While the basics – financial data, customer data, product data, etc. have always been available, today there are other forms of data such as sentiment data, location data, weather data, etc. that organisations are able to have access to.
How much and what type of data organisations have depend on their ability to capture such data and more importantly recognising what data they need in order to derive value and competitive advantage. What then should they do? This is where analytics comes into play.
Analytics is about the extensive use of data for identifying trends, patterns and projections based on analysing different types and categories of disparate data that should be used in fact based decision making.
For example, what will be the uptake of a new product? Which customers are likely to leave? How can external drivers be exploited to deliver value? These are vital questions that business leaders are seeking answers to for strategic decision making. The age of backward looking historic information is gone. Today is the era of forward looking insights. Predictive analytics is the need of the day.
There are a number of analytic tools and techniques, and today there are powerful software platforms that enable insights to be churned out at speed. It is these aspects that most organisations are struggling with; what analytic tool to use and what software platforms are best to use.
Of course there is the secondary challenge – do employees have the skills and competencies to understand the organisation’s business model, harness the data and identify the relevant analytic tool to use and then the competence to use the software?
How then do organisations go about transitioning to a data driven organisation? The first step is to recognise where they are positioned on the journey – in other words what is their analytical capability? Organisations go through various phases on their big data and analytics journey. An organisation is analytically impaired when it does not recognise the opportunities or does not have the data to progress.
The next level is where there are pockets of localised analytics across the organisation that may be driven by individuals who recognise what they can do in isolation. An organisation is at the stage of having analytic aspirations when it has begun to recognise the opportunities from going down the data and analytics journey on an enterprise scale and take steps to do so.
Organisations at the top of the pyramid are those that are analytical companies and analytical competitors. This is the world of the FAANG organisations – Facebook, Amazon, Apple, Netflix and Google.
Therefore, where do Sri Lankan organisations position themselves on the big data and analytics journey? Have business leaders recognised the huge opportunities they are missing out? Do they have a data strategy for their organisations? Are they encouraging their staff to develop skills and competencies in data and analytics? What investment are they making in technology to be ahead of the curve and beat the competition? These are strategic questions that senior leaders should be considering.
In an era where it is the survival of the fittest in the age of business disruption exploring the benefits of big data and analytics is not an option it is a must. This is where smart organisations – large or small – are moving towards. Smart managers are leading the way. Are Sri Lankan managers ready for the challenge?
[The writer, FCMA, CGMA, is a past Global President of CIMA (UK). He is a global trainer and presenter and works with large organisations on finance transformation initiatives. He also runs public and in-house workshops in Sri Lanka.]