There are multiple uses for analytics (both internally and externally). The uses include the more obvious internal things like cost-containment, quality assurance/control and “make or buy” decisions. Some of the less obvious uses in my opinion include workforce development/retention. To elaborate on the workforce topic through analysis it can be determined if the company culture (that exists) is attracting/retaining the types of employees that are best for the long-term health of the company. It may also uncover details regarding what portions of the total compensation package are most important to best employees (or potential employees). Can other things such as respect, recognition or project ownership replace monetary compensation? Or is the line of business that was in dictate “that money talks and everything else walks”.
Externally, such things as the competitive and economic environment, the long-term prognosis of the business lines a company is engaged in, and customer satisfaction/preference can be assessed and/or modeled.
The thing that makes analytics exciting to me is that many of the things necessary to develop cogent models may already exist in-house. Most larger companies have Customer relationship software, and enterprise resource Planning software, spreadsheets, transaction records and the like on-hand that could be used for both internal and external purposes. The only cost is time, the data scientists ability to bring management’s vision of the analytic plan to life and management’s wherewithal to act upon the relationships, tendencies and opportunities discovered.
Financial Management – Analytics helps businesses to forecast possible future financial scenarios. Enables insight into the general ledger, provides visibility into performance against budget and the way staffing costs and employee or supplier performance affects revenue and customer satisfaction. It enables organizations define financial goals, develop business plans and monitor costs and revenue during execution.
Operations – At every stage of the operational processes that bring the product/service to market, there are opportunities to increase efficiency and reduce cost. Operational analytics can help maximize productivity and profitability across every organizational department. It helps to streamline operational processes to meet ever-changing customer demands, more effectively allocate capital and human resources and optimize production and distribution channels.
Internal analytics deals with various processes such as, financial, manufacturing, R&D and Human Resources. Financial analytics helps company to make financial decisions. Effective analytics in the finance department will also help the company to build more accurate forecasts for the future, which obviously help the company in budget making. The rest of the internal process deals with the operation that brings products to the market. Various analytical tools can be used to streamline the process and continuously improve the manufacturing of products and invent new products. Effective analytics in these areas can have great impact on company and help them to become far more efficient. The important part of internal analytics is that the company thinks carefully about what they are going to track and this will give them a competitive advantage or make a strategic impact to their company.
Logistics – Logistics analytics helps logistics service providers and shippers unlock value from their customers’ supply chain by reducing cost/mile, on-time pickup and delivery, and realizing higher asset utilization. Logistics Analytics dives deep your logistics function across multiple locations, products, and customers & uncover problem areas that hinder delivery capability to identify gaps and create opportunities.
Customer Relation – In CRM, analytics helps organizations understand customer needs, differentiation, segmentation, loyalty, value and marketing effectiveness. To analyze this complete customer picture, information must be extracted from operational, ERP and front office systems and should be combined with external market information. The analysis of such information is joined with the business strategy, which drives forward the customer-focused business.
External analytics deals mainly with customer relations and supply chain management. With regards to customer relations, analytics can be extremely useful especially to a marketing department. They can have a more advanced brand management where they are able to align the product with the needs of a customer. They are better suited to analyze the effectiveness of their various advertising and marketing campaigns. They are also able to figure out which customers are more valuable and how to attract them and therefore plan accordingly.
Supply chain management can be greatly improved by effective analytics. Analytics can bring the supplier and the customer closer together so the supplier can see what is in demand. They can also help with inventory control, making sure there are no stock outs as well as maintaining a steady turnover of inventory. As we saw in the example some supply chain software can help with logistics and route optimization, therefore saving a great amount of money on transportation costs.