Why Are Australian Companies Failing at Data Analytics?
Based on a recent study, Australian companies have fallen behind when it comes to measuring and analysing their data. The survey, conducted by the Melbourne Business School and A.T. Kearney, found that Australian organisations are failing against their international counterparts in leveraging data analytics to improve business functions.
The survey’s results were generated from more than 400 companies in 34 countries and a dozen industries, with average annual revenue of $1 billion, of which 50 businesses were Australian based. The study was carried out between January and July 2018.
Known as the Analytics Impact Index, the study was conducted to determine the impact analytics can have on a company's profitability and identify the areas that hold the most substantial opportunities for improvement, according to the authors of the study.
Companies are producing so much data daily that many have started to use it to their advantage, to improve current processes, become more efficient, and generate higher revenue.
So why are Australian companies falling behind?
Experts point to a lack of appropriate skilled in-house analytics resources, as well as a lack of leadership in the area as the main reasons Australian companies are falling behind in the analytics space. As a result, many Australian organisations have relied on external specialists to collect and assess their data.
Currently, Australian businesses are extracting 12% less value from analytics than the rest of the world, and they are 14% less mature than their overseas counterparts.
Australian companies ranked as “laggards” in both the maturity and impact of their data and analytics capabilities. According to the study, laggard companies are where analytics are limited to descriptive analysis of the data and generally backward-looking reporting on performance. Most don’t have a clearly defined analytics strategy and lack the culture needed to move forward.
In contrast, Chinese businesses emerged as leaders in analytics as they integrate analytics into all decision making to help fuel successful business outcomes and drive innovation.
The authors of the study claim that rising in the rankings to become analytics leaders can take between two to five years per stage (of which there are four, with laggards on the lowest end and leaders on the highest end). Only 8% of companies surveyed met the criteria to be leaders in analytics.
Several key components need to be in place to derive the most value out of data and analytics, according to the study. Generally, technology is the first thing that comes to mind when analytics are discussed; however, leadership and organisational structure are more critical. C-suite and board-level buy-in are necessary, as analytics should be a long-term priority. Interestingly, companies that invest in the technology side of data without leadership may see negative impacts in the short to medium term.
The organisations that are most successful with analytics not only have strong leadership, but they also have documented analytics strategies and a culture of data-driven decision making.
Businesses without this investment in all facets of analytics are inhibiting their growth potential because companies who accurately leverage data and analytics could boost profits by as much as 60% each year.
At the moment, oil and gas, industrial and technology are the most sophisticated industries when it comes to using data and analytics. Following behind are government, energy and utilities, mining, and more.
Inside Info work with mid-sized and large enterprises to equip them to become more data-driven. If you’d like to know more, get in touch with our consulting team today or download this Qlik report on how to drive data literacy in the enterprise.
Daily Bulletin
