Business Analytics for the Mid-Market (Part 1 of 4) “Business Analytics and Competitive Advantage”

February 18, 2012 — Leave a comment

In conjunction with a webinar that I am participating in on 2/29 ( ZD & IBM – “Get More from your Data: How Business Analytics Gives You a Competitive Advantage”), I am going to post a series of four blogs entitled “Business Analytics and the Mid-Market“.

(To attend my webinar on 2/29, Register at: http://b2b.ziffdavis.com/webcasts/improve-performance-your-data-business-analytics/?tfso=10480 )

This is installment Number 1 in that series; ” Business Analytics and Competitive Advantage”

In the world of business strategy there is one term that is is continuously  referred to by nearly everyone, but is only well understood by a few. That term is “Competitive Advantage”. In the early 1980’s a young professor, Dr. Michael Porter, began to espouse the concept of Competitive Advantage, based upon his research findings at HBS. Central to his new concept in Management Theory was the notion of “differentiation” (versus “disruption”, which came along years later from his colleague, Dr. Clay Christensen ). Numerous case studies have been formulated and books written on Competitive Advantage by Dr. Porter and many, many others since then. When I was getting my MBA at Wharton the study and analysis of Porter’s theories and early work were a central theme to the course work on Strategy altogether. For businesses to succeed they must clearly differentiate themselves in both tangible and intangible ways from their competition. The most used (but most fleeting) method of differentiation used today is Price (or perceived value by the customer). Advantages based upon price alone are short lived and very difficult to sustain over the long term, without core cost structures being inherently lower than all other competition. Pursuit of this lower cost of goods and services has fostered wave-after-wave of investment in new technologies and processes that promise to “change the game cost-wise” Little empirical evidence exists as to just how successful these investments were as competitors were quick to follow with similar investments of the own e.g. ERP, CRM, HRM, et However, what has resulted from these endeavors is the vast wealth of data that until just recently was not well leveraged due to poor Information Management practices and architectures. Enter the role and influence of the concept of “Business Analytics”. Business Analytics (BA) is “the use of data & analysis techniques to understand your business in a a way that facilitates better decision making”. BA is “fact-based decision-making in real-time based upon a 360 degree view of the business. It portends to offer the highest potential for competitive advantage of any strategic enabler (much less tactical or operational) available in the business leaders portfolio today, much less the future. We have had comprehensive Information Management and Business Intelligence solutions for many years now. IM ha provided a rich framework for collecting and organizing vast amounts of information from complex systems and unstructured sources (ala Big Data), and BI has provided a means to report and display both historical and current state information in numerous ways, but neither of  these have created true competitive advantage for most organizations (large or small). To achieve true competitive advantage one must embrace the notion of Business Analytics  in a holistic fashion in order to create “a pervasive culture of analysis and numerical literacy”. Business Analytics is not an elitest sport for Geeks or so-called “Data Scientists”, but must be regarded as part of the core fabric of the organization. It must be woven into every part of the enterprise;

  1. The People (everyone from the CEO to the front-line Knowledge Worker must embrace analytics as a source of competitive advantage and exploit it for the good of the business)
  2. The Proceses (every aspect of running and measuring the performance of the business, and governing the use & exploitation of all the information assets)
  3. The Technology (an Information-driven enterprise requires inordinate investments in the health & welfare of the entire information infrastructure)
  4. The Culture must be made numerically literate, analytics capable and driven by the desire to use information as a strategic weapon.
  5. The Data must be robust and represent all facets of the business. It must be characterized and organized for successful exploitation by the entire analytics-driven culture.

Once your Analytics-driven enterprise is firing on all cylinders, you will then realize the cumulative effect of your competitive advantage in such a fashion that no one can easiely mount a meaningful competitive threat against you or your partners without you being able to “pull the levers of differentiation” to counter it. In my next Installment ( “Where to use Business Analytics to Create sustainable sources of Competitive Advantage”) I will dig into the specifics of how Mid-Market organizations can successfully apply BA to their business.

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