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What are analytics? And whose job is it, anyway?

4 min read


I’ve been fortunate to work with several Fortune 500 companies, as well as some innovative manufacturers and retailers. One of the hottest and most controversial topics in this competitive marketplace is “analytics.” There are two questions every company needs to address regarding analytics.

  1. What should be the focus of the analytics?
  2. Whose job is it?

Analytics is a broad term that encompasses a variety of tools, techniques and processes. In general, analytics can be defined as the science of analyses. It typically involves systems that organize masses of data so tools, metrics and statistics can be applied to derive fact-based information. Business analytics can include applications such as:

  • Customer segmentation and purchase patterns.
  • Predictive metrics to identify trends and forecasts.
  • Market basket data to identify purchase relationships.
  • Store or unit performance to identify critical success factors or differentiators.
  • Marketing metrics to measure impact and return on investment.

We are drowning in data — we need fact-based intelligence!

In this day and age, companies don’t lack data — they are drowning in them! In the case of retail, the point-of-sale system keeps track of every SKU sold, what else was in the shopping cart and if it was purchased by a consumer using a loyalty card. Subsequently, the system generates mountains of data daily. The question for business leaders: How can we turn all of those numbers into something we can use to compete more effectively?

Analytics: Whose job is it, anyway?

Harvesting the treasure trove of data requires a system, skills and competency. The C-suite expects analytics from such functions.

  • The IT department is expected to compile and analyze data into “cubes” of information.
  • Logistics and the supply chain apply analytics to understand patterns, make forecasts and reduce risks.
  • Marketing is to apply analyses to measure effectiveness — a real challenge with social media.
  • Finance is charged with analyzing key business metrics and producing “balanced” scorecards.

Depending on the nature of data and analyses required, there can be various people chasing down and reporting numbers. Beyond analyzing the right data to yield critical metrics, C-suite leaders must understand who is churning the data, how they are interpreting them and that they are aligned to answer critical questions from an overall business perspective.

Why leaders must proactively engage in analytics

There are at least three major problems with all data crunching.

  1. Garbage in, garbage out.
  2. More data do not lead to better answers.
  3. Just because numbers are run through a computer doesn’t make them any smarter.

All too often, individual departments are mining mountains of data to address their functional issues and metrics. The key to successful, practical analytics is who does it, the nature of the system, technique or statistic. What makes analytics strategically valuable is the ability to answer the right questions with reliable, predictable intelligence. The best analytics is not a random search to find a golden nugget. They should be driven by business questions focused on trade-off decisions that can be made to optimize results that count.

The key to analytics is asking the right questions

The purpose of a leader is to guide, direct, create vision and purpose. Said another way, it is the leader’s job to ask strategic questions that should drive analytics. The most talented statistical analyst or IT guru is worthless without a leader to ask critical questions that should be the basis for analyses. Far too many business leaders passively wait for reports to be delivered. Leaders driving innovation are proactively engaging in analytics to drive questions to be analyzed.

To paraphrase a famous quote from John F. Kennedy: “A business leader today should ask not what analysts can provide, but rather ask the strategic questions that analysts should strive to answer.”

Chris Petersen is a strategic consultant who specializes in retail, leadership, marketing and measurement. As CEO of IMS, he has built a legacy of working with Fortune 500 companies to achieve measurable results in improving their performance and partnerships. Petersen is the founder of IMS Retail University, a series of strategic workshops focusing on critical elements of competing profitably in the increasingly complex retail marketplace. For more information, visit IMS.