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An report by the Economist Intelligence Unit

Competing
smarter with
advanced
data analytics

Sponsored by
Competing smarter with advanced data analytics

Contents

Introduction 2

1 Companies take to the offense with data analytics 4

2 Focusing data analysis on competitors 5

3 External and internal data 6

4 Business challenges and data challenges 7

5 Satisfaction levels 8

6 Keys to success 9

Conclusion 10

1 © The Economist Intelligence Unit Limited 2015


Competing smarter with advanced data analytics

Introduction

In June and July 2015, with sponsorship by SAP, and external data. Competitor-focused initiatives
The Economist Intelligence Unit (EIU) carried out a are given the highest priority, with customer- and
survey of more than 300 executives who are familiar operations-focused measures comprising a
with their company’s data analytics practices. The significant number of initiatives.
goal was to assess trends in the use of market- The survey also found that the biggest technical
facing advanced analytics. The sample includes 50% challenge was the need to identify and integrate
C-level executives and represents companies from multiple data types from both internal and external
Asia-Pacific, North America, Western Europe and sources. When it comes to internal challenges
Latin America. All of the respondents are from within an enterprise, data and analytics silos stand
companies with at least US$500m in annual out, largely because market-facing advanced
revenue, with half of them reporting US$1bn or analytics initiatives tend be driven by individual
more. To add insights to the survey findings, the lines of business.
EIU conducted interviews with several advanced Despite these challenges, executives
analytics practitioners. This Executive Summary overwhelmingly rate these advanced analytics
describes the top findings of this research. initiatives as successful and point to multiple
The survey found that companies are moving simultaneous benefits. This broad success is driving
beyond first-generation big data applications continued innovation and experimentation, with
based on internal assets and are reporting technical challenges seen as minor obstacles
considerable success with innovative market-facing compared with the need to select the right
initiatives that use a wide range of transactional initiative and the right team.

2 © The Economist Intelligence Unit Limited 2015


Competing smarter with advanced data analytics

Competing in the hyperconnected economy

The EIU, with sponsorship from SAP, is hyperconnectivity for business is the creation of
conducting a major research programme on “The new fields of competition. Data are being
hyperconnected economy”. This describes the developed within companies, from public sources,
quantum leap in linkages among people and by third-party vendors that provide multiple
companies being driven by mobility, social media, linkages on products, pricing, branding and sales.
the Internet of Things and other emerging From proactive pricing to tracking the branding of
technologies. competitors’ products, hyperconnected data
One of the important outcomes of present a new basis for competition.

The ongoing research on The hyperconnected economy can be found here: www.economistinsights.
com/technology-innovation/analysis/hyperconnected-economy 

3 © The Economist Intelligence Unit Limited 2015


Competing smarter with advanced data analytics

1 Companies take to the offense with


data analytics

In version 1.0 of data analytics, most companies First, innovation in this space is typically driven
focused on internal initiatives such as operating by lines of business, each with its own needs.
efficiencies. But with increased computational Second, emerging big data tools are flexible and
power and new data sources, they are often cloud-based, making it easier for business
experimenting with “offensive moves”. The number users to experiment with new applications even
and variety of initiatives is very broad— and Ben when they can’t predict return on investment
Alves, Market Intelligence and Customer Analytics (ROI). And third, lessons learned from this
Manager at Autodesk, doesn’t find that at all experimentation accumulate, encouraging
surprising. “Everything comes back to big data,” he innovation in different areas. “It’s a very
says. “There’s more and more of it available, and innovative space and it’s early days yet,” says Mr
more and more companies are finding unique and Alves. “Whether companies are testing, evaluating
creative ways to create insights from those data. It’s or piloting, there’s a lot of innovation going on and
in their blood to be constantly pushing the limits.” you need to see if it’s the right fit for you.”
Proactive price optimisation stands out as the The interpretation that much of this activity
most common market-facing data analytics entails innovation and experimentation is
initiative, but seven others are cited by between supported by the fact that only 17% of respondents
35% and 44% of the respondents, with the median say they have developed ongoing competitor
number of initiatives being four. A number of intelligence programmes, indicating that they are
forces have combined to generate this diversity. not yet ready for comprehensive approaches.

Has your company launched any of the following market-facing advanced data analytics initiatives?
(% of all respondents)

External and internal data to support a proactive price optimisation 50


Data to track competitors’ brand performance, awareness and market share 44
Predictive analytics to support market demand forecasting 42
Social media to track trending of competitors’ products and brand 41
Data analytics to push point-of-sale offers 39
Data analytics or social media to target customers of competitors 37
Market and internal data to support product/service launches, etc. 37
Third party data to generate and track sales leads through the marketing funnel 35
Geospatial analytics to optimise outlets, manufacturing, distribution, etc. 27
Data analytics to support an ongoing competitor intelligence programme 17
Source: The Economist Intelligence Unit.

4 © The Economist Intelligence Unit Limited 2015


Competing smarter with advanced data analytics

2 Focusing data analysis on


competitors

A pattern emerges when respondents are asked to the competitive advantage’.”


cite the initiative that is the highest priority for On the other hand, there is also considerable
their company. The top three initiatives are all activity spread over several categories of
competitor-focused, including proactive price customer-/operations-focused initiatives, with the
optimisation, tracking competitors with social overall total nearly equally split between the two
media and tracking competitor brand performance types. The higher priority attributed to competitor-
and market share. facing initiatives may result in a greater allocation
“Competitor-focused initiatives are one of the of resources, which may partly explain the fact that
main drivers for organisations to integrate satisfaction is higher with competitor-focused
external data with internal data at the outset,” initiatives. The proportion of executives who report
says Dr Amy Shi-Nash, Chief Data Science Officer at being “somewhat” and “very” satisfied with their
DataSpark, Singtel’s analytics subsidiary. “There’s primary initiative is 93% for competitor-focused
an element of self-defence to it—the thinking is, initiatives and 78% for those that are customer-
‘If I can use data better than my competitors, not and operations-focused.
only will I not be left behind, but I can also seize

Please select the primary initiative—the one that you believe is the highest priority for your company
(% of respondents who designated a primary initiative)
Competitor focussed Customer and operations focussed
External and internal data to support a proactive price optimisation 18
Social media to track trending of competitors’ products and brand 17
Data analytics to track competitors’ brand performance, awareness and market share 14
Predictive analytics to support market demand forecasting 11
Third party data to generate and track sales leads through the marketing funnel 11
Geospatial analytics to optimise outlets, manufacturing, distribution etc. 10
Market and internal data to support product launches, promotions, and offers 9
Data analytics or social media to target customers of competitors 6
Data analytics to push point-of-sale offers 3
Data analytics to support an ongoing competitor intelligence programme 1
Source: The Economist Intelligence Unit.

5 © The Economist Intelligence Unit Limited 2015


Competing smarter with advanced data analytics

3 External and internal data

The survey finds that companies are combining speed and computational power without
many types of data to carry out their advanced overburdening the organisation with enormous
analytics initiatives. Most of them mix multiple hardware and storage costs,” says Amy Gershkoff,
types of internal and external data. The survey Chief Data Officer at Zynga. “But those that
found that the average initiative uses three successfully capture the wide array of available
internal and two external data sources for a total of data—integrating it into a unified, easy-to-use
five. Moreover, every type of internal and external database, hiring terrific analytical talent and
data included in the survey is being used by a empowering that talent to uncover actionable
significant number of respondents, the lowest insights—have a crucial competitive advantage.”
being sensor-based data with 19% and aggregated The survey confirms that the need to access and
third-party tracking data with 21%. integrate internal and external data from multiple
While the power of advanced market-focused sources and technologies are the principal
analytics is greatly enhanced by this ability to challenges confronting advanced data analytics
integrate disparate data sources, this is also the initiatives. The top four challenges all involve
root of the most important challenges. “There’s an either identifying or integrating different types of
overwhelming amount of internal and external data and are cited by between 37% and 43% of
data available for analysis, and companies are respondents. Accessing, cleaning and integrating
struggling to capture and process all of this data data from different technologies are also
into a format that balances analysts’ need for significant hurdles.

Which of the following transactional data sources did Which of the following external data sources did your
your organisation use to support this initiative? organisation use to support this initiative?
(% of all respondents) (% of all respondents)

Customer data 56 Social media data 46


Sales transaction data 44 Third-party marketing analytics 39
Pricing data 36 Data from public/government databases 35
Supplier/Supply chain data 33 Credit rating data 33
Ecommerce data (internal) 31 Geolocation data 33
CRM data 29 Aggregated tracking data from 3rd parties 21
Manufacturing data 26
Mobility analytics 24
Sensor-based data 19
Source: The Economist Intelligence Unit.

6 © The Economist Intelligence Unit Limited 2015


Competing smarter with advanced data analytics

4 Business challenges and data


challenges

When asked which business-related challenges are intelligence tools to quickly analyse current
the biggest obstacles to the successful execution of operations data and facilitate new strategic
advanced analytics initiatives, executives most planning, while IT personnel maintain clear lines of
frequently point to data and analytics silos within communication and supplement missing data.” And
their organisations (43%). Other top challenges finally, the expected cost of initial forays into big
include gaining sufficient executive support, data is generally low enough that line-of-business
analysing data across silos to develop a holistic owners do not need to demonstrate ROI for an
view, and lack of personnel with sufficient data experimental initiative. In fact, demonstrating ROI
expertise (all 41%). All of these challenges appear is the least important challenge, cited by only 10%
to stem from the fact that new and innovative data of executives.
analytics initiatives are most commonly driven by The situation can change once experimental
lines of business, which is not where data analytics innovations have proven successful, since at this
expertise usually resides. point proponents have an interest in broadening
Several factors are behind this trend. Line-of- support and resources and this generally requires
business owners are often the first to perceive needs support from enterprise leaders. There is
and the first to recognise the benefits of innovation. substantial reason for optimism on that front. “By
Moreover, a range of new tools gives them access to using relevant marketing analytics, we can find
advanced analytics independent of their enterprise hidden and unforeseen patterns among large
IT functions. “Sales units can use both big data and amounts of internal and external data to build our
data-mining tools to categorise customers and initiatives,” says Mr Lu. “Our hope is that the
develop new products to maximise profits,” says relevant personnel can use this method to examine
Atlas Lu, Vice President of China Airlines Information current market and sales strategies, developing new
Management division. “Managers can use business ones to improve service quality across the board.”

What were the most significant business-related challenges that your organisation faced in the
execution of this initiative?
(% of all respondents)
Data and analytics silos within the organisation 43
Analysing data across analytics silos to develop a holistic view 41
Sufficient executive support 41
Using personnel with sufficient data expertise 41
Engaging business users, through self-service functions or otherwise 33
Sufficient financial resources 33
Providing decision-makers with analytics-based insights 32
Finding the right analytics software 16
Demonstrating sufficient ROI on the project 10
Source: The Economist Intelligence Unit.

7 © The Economist Intelligence Unit Limited 2015


Competing smarter with advanced data analytics

5 Satisfaction levels

Survey respondents report high levels of behaviour and increase corporate earnings on a
satisfaction with their big data analytics initiatives. basis of increased customer loyalty-reaching our
Overall, 80% say they are satisfied, including 23% long-term goal of corporate sustainability. Cost
very satisfied and 57% somewhat satisfied. These reductions are not our main concern.”
results are supported by a broad range of specific Aside from cost-savings, respondents point to
benefits that executives report. Reduced costs are multiple benefits from both competitor-focused
the most frequently cited benefit-surprising, as and customer-focused efforts. New business
reduced costs were not among the top objectives of opportunities (33%) and increased revenues from
respondents’ advanced analytics initiatives. To existing lines of business (26%) are ranked second
some extent this may reflect unexpected cost- and third, but additional customers and increased
savings from parallel actions such as moving to market share are also cited by more than one in five
cloud-based analytics platforms. Another respondents. “Competitive advantage is about
consideration is that reduced costs are easy to more than just sizeable increases in bottom-line
recognise while other benefits can take time to revenues and top-line cost reductions-even though
appear. one or both of those goals is usually the primary
But China Airlines’ Atlas Lu cautions that impetus for organisations to undertake large-scale
seeking cost reductions can be a distraction. “Our data integrations,” agrees Amy Gershkoff of Zynga.
goal [with data analytics initiatives] is to find “It provides seismic strategic benefits to the
hidden information with potential for results that organisation, including the ability to forecast shifts
surpass all imagination,” says Mr Lu. “Through data in the industry, determine the optimal new
analytics we can identify our customers’ products to develop, identify the need to shift
consumption habits, stimulate purchasing brand positioning and much more.”

What were the greatest benefits achieved by the initiative?


(% of all respondents)

Reduced costs 41
New business opportunities 33
Increased revenues from existing lines of business 26
New, additional customers 25
Increased market share 21
Improved operations 19
Increased customer satisfaction 13
Deeper market or competitive insights 7
Source: The Economist Intelligence Unit.

8 © The Economist Intelligence Unit Limited 2015


Competing smarter with advanced data analytics

6 Keys to success

The high degree of satisfaction with past and “There are two main talents you need from [your
current analytics initiatives has engendered team],” says Ben Alves of Autodesk. “First, they
optimism about the future. More than 90% of need to be able to understand what’s being done
respondents say that they are likely to pursue with the data at a high level and to figure out ways
further market-facing advanced analytics of how it can be beneficial to the pilot, group or
initiatives. company—and communicate that business strategy
The executives surveyed have clearly learned to the data scientists. Second, you need someone
from their experiences and are now ready to to encourage buy-in, capable of explaining how
innovate further. They report that selecting the these tools can be beneficial not to a single group
right data-driven initiative—and assembling the but to the whole organisation.”
right team to execute it—are the most important Priorities for market-facing advanced analytics
success factors. over the next 12-18 months are just as varied as
This is another indication that considerable they have been in the recent past. Various
experimentation is still ongoing. Collaborating, competitor-focused initiatives are anticipated by
garnering senior executive support and choosing between 36% and 41% of respondents, followed
the right technology are also important success closely by customer-/operations-focused projects
factors cited by at least one-third of respondents. ranging from 30% to 36%.

Which of the following factors are most important in determining the success of market-facing data initiatives?
(% of all respondents)

Selection of the right data-driven initiative 42


Having a team with the right skills 38
Selection of best technology/software 34
Obtaining senior executive support 33
Collaboration of data specialists with business stakeholders or lines of business 33
Access to suitable internal data 27
Access to suitable external data 23
Skills and patience in integrating data 18
Sophisticated analysis and interpretation of data 9
Source: The Economist Intelligence Unit.

9 © The Economist Intelligence Unit Limited 2015


Competing smarter with advanced data analytics

Conclusion

First-generation big data applications focused on The initial benefit is cost-reduction, as data
internal initiatives such as supply-chain enables more efficient approaches and as the move
optimisation or customer segmentation—because to cloud lowers direct costs. But users cite further
that was where the data were and could be used. benefits, including increased revenue, new
As companies gain expertise, and as software business opportunities and the ability to cross-sell
grows more sophisticated, industry leaders are now existing products to customers. In sum, data are no
expanding their data priorities to include market- longer just about analytics, they are about creating
facing initiatives. These are external analyses, a whole new enterprise.
sometimes leveraging external data sources that The keys to success are finding the right
are used to undercut competitors’ pricing, build initiative, mobilising qualified personnel and
new business opportunities and increase revenues. selecting the right software and technologies.
However, these more complex initiatives create High levels of satisfaction are found in these
commensurate challenges. Data and analytics early users, with four out of five satisfied with their
silos, multiple data sets and the integration of current initiatives, and nine out of ten planning
externally curated data are the primary problems. market-facing data initiatives in the near future.

10 © The Economist Intelligence Unit Limited 2015


Competing smarter with advanced data analytics

Whilst every effort has been taken to verify the accuracy of this
information, neither The Economist Intelligence Unit Ltd. nor the
sponsor of this report can accept any responsibility or liability for
reliance by any person on this report or any of the information,
opinions or conclusions set out in the report.
Cover: Shutterstock

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