Predictive analytics is a brilliant idea, according to Mervyn Mooi, director at Knowledge Integration Dynamics (KID). Take a bunch of variables, pop them through the mill and get nifty answers about cross-sell and up-sell opportunities, for example.
But predictive analytics is more of a goal than a reality at this stage. And Tom Willman, practice leader at research business Hackett Group and co-author of a report titled: “The CFO’s Agenda: Finance’s Top Issues in 2011”, agrees.
The problem is that the variables are historical business data, and too often the data isn’t quite what it should be. In fact, time and again South Africa has seen local organisations blowing their budgets on the applications, while the underlying data varies somewhere between faintly smelly to rancid. It’s enough to spoil the broth.
It’s a well known fact that, no matter the sophistication of the application or the number of experts stirring continuously, if the data is bad the entire mess goes buns up. What may be surprising is the number of organisations that perpetuate the need to keep talking this point.
But change is stewing. According to Willman’s report, 76% of CFOs now get the full aroma of their data situation and they’re prepared to shell out genuine money to kill the data pungency and brew sweeter flavours. Why? What has changed?
As John Cummings notes in his article: “CFOs' Top Priority for 2011? Get a Grip on Performance Management”, for one: CFOs want to improve the accuracy and efficiency of forecasting and two: top IT investments for the year are implementing BI and analytics while improving data governance through data stewardship, standardised master data, and clean data.
Master data management (MDM) is a function of data quality as is data integration. Managing data is becoming more important as the importance of data is recognised more in businesses and as decisions are based increasingly on what comes out of the stores and is passed through the analytics mills.
It’s a natural evolution of the grains of data that used to come into businesses piecemeal to the massive streams that feed silos of data stocks that corporations can feed on today.
It’s symptomatic of the fact that many CFOs expect that this year they are being forced to rethink their strategies, that they are moving from pure survival amid the global economic crisis to considering growth.
In fact, more than one local financial institution will be asking itself if its cutbacks caused any damage to its talent pool or long-term growth prospects which will result in heavier reliance on business-driven IT systems, such as predictive analytics, as they eke out competitive edge in saturated markets.