The ‘value’ of data analytics

Danny McConnell, Partner at Deloitte, explains how to assess the value of data and some of the strategic questions that it can answer within an organisation.

Every organisation depends on reliable data. Managed well, it will drive revenue, reduce costs and manage risk.

So what’s the key to maximising your business’s data?

You may have read about “data analytics” when browsing through technology articles and journals but what does it really mean in practice, particularly in a Northern Ireland context?

“Data analytics is the process of using a combination of statistical methods, computational tools and business domain expertise to obtain insight from the data assets within or available to an organisation,” says Danny McConnell.

With the growth of the internet, developments in technology and increasing participation in social media, the volume, variety and velocity of data that businesses are faced with is growing daily. Mastery of the sheer expanse and complexity of this data is important but critically, the analysis of the data and the insight needed to drive better decision-making and business outcomes is king.”

In 2012, the Deloitte Technology Predictions report forecast that 90 per cent of Fortune 500 companies would kick off a data-related initiative in that year, boosting the industry’s revenue to between £650 million and £1 billion. As businesses realise the market advantages this technology can deliver, analysts at Deloitte expect to see this figure increase rapidly.

In Northern Ireland, already the public and private sector are realising the potential of smart analytics:

For example, our Belfast analytics team have been working with a number of universities across the UK to help them maximise student-related revenues, which is a particular challenge now that many higher education institutions have increased their tuition fees to the maximum of £9,000 per annum. This involves analysing different types of data held by the universities, such as:

• Student data (each student, past and present, of the university);

• Staff data (each member of staff);

• Finance data (all aspects of the university’s finances);

• Estates data (building and space usage);

• Timetabling data (lecture schedules, tutorials and laboratory work); and

• Identity and access management data and logs (the movement of staff and students within the university estate).

These internal data sets can be combined (or ‘mashed’) with data from external sources (for example data from Geographic Information Systems, government open data or other data available for a fee) and analysed to provide new insight. For example, enabling the university to answer questions like:

• Which students are most likely to leave before completing their chosen course of study?

• What factors are contributing to students leaving before completing their chosen course of study?

• How can the university maximise the return on investment in their estate?

• What is the cost of each course provided by the university, and which courses make a loss?

“The use of data analytics is not confined to the public sector only,” Danny comments. “We are seeing widespread examples where organisations in the private sector are drawing on the power of data analytics to add significant value to their businesses.”

For example, in the pharmaceutical sector, forward-thinking organisations are using data analytics to get more from digital investment by (i) making sure that regulatory requirements are met, (ii) understanding how their brands are used online, and (iii) understanding what people think about their brand or products using a technique called sentiment analysis. The analytics approach involves:

• Crawling the web, searching and retrieving information relating to the organisation or its products;

• Collating, augmenting, analysing and presenting the information to provide insight into their digital footprint; and

• Using content analytics techniques to identify information that may present a compliance risk.

By accessing this application as a service (rather than the more conventional approach of commissioning a software tool), organisations can obtain value in a number of ways, including:

• Averting expensive compliance failings and the high costs of manual compliance testing;

• Reducing costs by identifying low value (low impact, low use and poor searchability) channels that could be closed down; and

• Obtaining a single consolidated view of their online presence.

Danny continues: “Analysing behaviour to drive sales is also a key element of data analytics as illustrated by an example from the retail sector.”

One of the key challenges faced by retailers relates to gaining an understanding of when to discount (or mark down) their goods to either maximise profits or to clear stock. Their traditional process relied on decisions based largely on instinct and experience. However, leading organisations are looking to explore the potential for gaining insight from their past performance data and, in particular, help them to evaluate the effectiveness of their current discounting process. In particular they are looking to:

• Analyse the sales behaviour arising from the current process;

• Identify the potential for either increasing profit margin or clearing stock quicker; and

• Optimise the depth, timing and number of price changes.

Organisations are now looking to use an application to automate this process on a managed-service basis. This enables retail organisations to upload information relating to their products’ SKUs, and then optimise the depth, timing and number of price changes to either increase the profit margin or reduce stock in a timely manner.

“These recent examples are just a brief insight into the power of analytics and the significant value to be derived from gaining insight into your business’s data,” remarks Danny.

“The exploitation of data to deliver value to our clients is one of the key growth platforms for Deloitte. We have developed a broad range of services to deal with industry-specific data issues, designed to help transform data from a corporate liability to a corporate asset, and we would welcome the opportunity to discuss how we can add value to your organisation.”

Danny McConnell is a partner in Deloitte Analytics, currently leading the development of the analytics services to be provided through the Deloitte Technology Studio, Belfast. Danny can be contacted on 028 9053 1169 or at dcconnell@deloitte.co.uk