More types of businesses are using analytics to improve the way they operate, the way they serve customers, and the way they approach new product development. In many companies, traditional business intelligence (BI) has shifted from the information technology group (IT) to end users in the form of self-service.

Hungry for new types of analytics, business units and departments are purchasing their own solutions because they have the need and the budget. Many of them are purchasing cloud-based services because they're available on a subscription basis, and usually a credit card is all that's necessary to get up and running.

For the same reasons, cloud solutions are popular among entrepreneurs and small businesses. If you don't like what you're using, cancel your subscription and get something else. It's that simple. Or not.

"The tricky part about these cloud solutions is that if you choose 'the wrong solution,' it may be hard to migrate to something else, not because the vendor offering makes it hard, but because people in your organization have become accustomed to it," said Daren Orzechowski, a partner at law firm White & Case.

But, businesses and the functional units within them have to start somewhere. If you're serious about using analytics to improve your business, you're wise to think about why you need them and whether a vendor's claims are actually true.

Why Businesses Crave Analytics

Most businesses do not consider data their core competency, but that's changing over time. For example, manufacturers are augmenting physical products with software and analytics that reveal exactly how customers use their products, how products are performing in the field, and what products they should build next.

Moreover, some of the data they're collecting is of value to customers or partners, which translates to new revenue streams. Other organizations are using analytics in ways that are specific to their business and industry, such as optimizing in-store merchandising or improving restaurant operations.

"You have to understand what metrics [will] measure the pulse of your business and really understand which ones are actionable," said Vineet Misra, chief information officer at audio, web, and videoconferencing solution provider Lifesize. "[Identify] the three things that make or break your business."

One Size Does Not Fit All

There are many different types of analytics solutions aimed at different audiences -- different verticals, different skill levels, and different business processes. The number of choices can be disorienting, especially if you're not thinking about what you want to accomplish and who will be using analytics.

"Analytics is a category, so we recommend segmenting individuals," said Mike Gualtieri, VP and principal analyst at Forrester Research. "There are business intelligence people who want reports and answers to questions, data science is creating models, and sometimes engineering is building products based on analytics."

In other words, tools should be matched with roles, objectives, and skills.

Buyer Beware

Tools aimed at business users may be oversimplified. Some vendors will say that if one simply presses a button, magic will come out the other end. Other vendors will explain there is more involved to ensure success.

Which is true? It can be hard for a layperson to understand the difference between fact and fiction.

"Beware of silver bullets, something that fixes all your problems. If you're not doing analytics and you're moving into it, it's easy to think it will change your world, and in certain aspects in may. The reality is you have to go into it with both eyes open and understand what you want to accomplish and have reasonable expectations of what you could pursue," said Ted Ross, chief information officer, City of Los Angeles, which uses Amazon Web Services (AWS).

Staying focused on business objectives can be hard when there are so many things an analytics solution is capable of doing. A common mistake is to let the art of the possible overshadow what's practical.

"This is where many companies struggle. They see a demo from a vendor that provides impressive analytics and improves the bottom line but they may not explain the level of expertise that's required to execute some of those more advanced features," said Tim Herbert, senior vice president, research and market intelligence at information technology industry association CompTIA.

IT professionals can be valuable allies when it comes to tech purchases, because they understand things laypeople don't including the limitations of various analytics offerings, what they actually require, whether it's a problem accessing the data you want, and what you need to do to protect sensitive data.

Many analytics purchases are made outside the IT department because IT failed to deliver the same capabilities itself, because IT people are slow to respond, or because one fears IT will stand in the way.

"IT is badly outnumbered by end users, and the only way to keep up with the volume of requests is to enable governed self-service capabilities for data exploration and analysis," said Mala Anand, President of Analytics at global software provider SAP. "Organizations that most effectively enable business users with data are those where a close partnership exists between IT and the lines of business. IT acts as a facilitator rather than a gatekeeper."

The circumventing-IT trend is exacerbated by cloud-based vendors who say, "You don't need IT." Maybe, but you may need someone more skilled at analytics, someone who ensures the quality of the data, or someone who can provide access to the data.

"You want to make it so that the analyst [gives you] the fundamental pieces you need to answer the question. [You] take that from the analyst and ask finalizing questions without having to go back to the analyst," said Bret Gunderson, director of product management for Adobe Analytics.

Bottom Line

Today's organizations increasingly rely on analytics to improve business performance. If you're not there yet, you will be eventually just to keep pace with the competition, regardless of industry.

But before you brave the jungle that has become the universe of analytics solutions, understand what you want to accomplish, who will use the tool, and what else may be involved in the decision.

Got questions or comments based on the experience? I'd love to continue the discussion.

Published on: Jan 23, 2017