Are you ready for ROI?
Is analytics an expense item or profit center?
Everyone knows the key to the future of any business is the ability to analyze data and take actions on the insights discovered. Analysis of data or "analytics" has been around for ages in some industries. It's been called organizational research, statistics, business intelligence, analytics, and data science. Now, it seems, everyone is catching on to the potential value.
You have, or should have, an analytics group too. Where does the analytics group belong on the income statement of your company? Is it an expense? Or, is it a profit center?
We have learned that support for new or continued spend in the area of analytics always wanes over time when it does not include ROI. Let's face it. Every business for-profit or non-profit exists to make money, not lose it. Some profit for the mission, others for the owners. The team responsible for analyzing data is rarely able to demonstrate the value they bring to the organization... in auditable dollars and cents. Not enough data. Ironic, right?
Company leadership sometimes makes wild guess assumptions about the value of analytics initiatives. If pressured to "show me the money" most could not do so with a high degree of confidence that any results could be directly attributable to the analytics team. They are doing it by "gut feeling."
An analytics team should always and only be a profit center for a business... but in most cases is, and will continue to be, an expense doomed to suffer the pains of failure to prove its worth.
It's not at all uncommon for the data science group to discover and report an incredibly valuable insight to the business only to result in "no action taken." What is the return on investment when no action is taken? You don't need an advanced math degree for that one! It will always be a negative number. That is the guarantee that your analytics group is an expense item.
What if action is taken, yet results specifically tied to it are never tracked? One of two things; the "gut feeling" that it did some good or "it never happened because it was not measured." In either case, the analytics group is an expense item.
Some analytics groups are making the transformation to profit centers. By following a process focused on end-to-end value, they are producing high-return results. They have an effective Analytics Platform and an ROI Framework to both deliver insights and prove their value as actions from insights are executed.
You may have caught the keywords "prove" and "executed." Without action and proof... analytics will be an expense. Make the transition to taking action and measuring results and analytics can and should quickly become a profit-center in your organization. My competitive side tells me it should be the highest-ranking profit center. What do you think?
The WebbMason Analytics ROI Framework is a process with communication and data collection techniques and presentation guidelines necessary to deliver and communicate value.
Define Use Cases | Estimate ROI | Agree on Implementation | Develop Insights | Implement | Track | Report, Report, Report
The Framework helps pick the projects, execute successfully and tell the story.
WebbMason Analytics is truly a one stop shop for all analytics projects strategy, implementation, and execution services.