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Strategic Alignment of Analytics and Information capabilities

By Sudipta Sarkar the Bangalore city, India.

 

Information is the new differentiator in today’s business. Organizations are significantly focusing on developing analytical and data interpretation capabilities to understand it’s customer’s, have a better speed to market than the competition and serve the customers better. Business Analytics is showing unforeseen views and patterns of the business and highlighting future opportunities for value addition and growth.

 

But how do we ensure maximum value creation from the business analytics investment and ensure that the analytical views are aligned to the organization strategy.

 

Strategy and Value Generation:


  • Management guru Michael Porter illustrated in his Market share vs Profitability model , that firms gain maximum profitability if they are either focused on differentiation based strategy or low cost leadership (assuming broad market scope). If the firm is stuck in the middle, profitability decreases.

 

  • Hence to ensure maximum profitability – organizations need to be clear of their strategic positioning (where do you play – which markets, which segments, etc), align their strategic planning (how do you play – differentiation or low cost) and core competencies (what organization strengths will help you win) to the positioning for creating and capturing value. Analytics can then ask relevant questions in each of these areas.

 

  • Value will be created in 3 broad areas:
    • Market value (resulting in revenue growth)
      • Which customers do we focus on?
      • Which geographies do we focus on?
      • Which services do we focus on?
      • Which marketing lever provides the most impact?
      • What is our discount vs net profit?
      • What can we cross-sell, to whom and when?
      • Which competitor do we focus on?
      • What might disrupt the strategy?

 

  • Operational value (resulting in gross profit growth)
    • Which metrics provides the most value?
    • Which operating unit requires focus?
    • Which geography requires operational support?
    • Which client requires operational support?
    • How do we support investments in constantly moving sourcing base?
    • How quickly and efficiently can we churn out new services aligned to market needs?

 

  • Financial value (resulting in earning after tax growth)
    • How do we bring down cost of capital?
    • When & how do we use financial leverage in capital expenditure?
    • Do we need currency hedging?
    • Which geo do we set up base from a taxation point?

 

 

How to align analytical capabilities to strategy and value generation

  • Understand the organization’s strategic positioning and the Unique Selling Proposition
  • Align the analytical questions and information focus to the strategy.
  • If it is a differentiation based strategy, focus on the following:
    • How is our customer segmentation strategy working
    • How quickly can the organization create new products and services
    • How can we use external and internal information to systematically identify and capture gaps in the product/ service offerings available in the market
    • How are our different channels of customer engagement working
    • Where is our differentiation gap reducing from competitors
  • If it is a low cost strategy, focus on the following:
    • How do we build scale and market share to offset per unit low profit?
    • How do we produce cheap and in which geographies?
    • How do we ensure operating lean?
    • Is there a bottom of the pyramid customer segment which is untapped?
    • How do we bring down cost of financing?

 

  • Start with data sources which will provide the most value at minimum effort and (or) leverage both the strategic alignment and core competencies. E.g. If operational strength is the biggest core competency, start with operational systems and operational key performance indicators (KPIs). Ensure right questions asked on Operational KPIs
  • Gradually bring in other internal and external data sources.
  • Start with historical data analysis (what is happening), move to understand reasons (why it is happening) and then finally to future trend prediction (what will happen based on the trends and how).
  • Use data analytics to constantly reality check progress against strategic objectives and if required use future trend analysis to fine tune both strategic positioning and strategic planning.

 

 

 

 

 

 

 

Profile of the Author:

Sudipta Sarkar has worked on, setup and managed practices involving Business and Information Consulting, Financial and Data Analytics in Telecom, Consumer Goods, Finance, Manufacturing, Media, ecommerce. He has also provided consulting in areas varying from supply chain process improvement, product strategy and venture funding and has spoken in industry forums. In his current role he has been assigned to conceptualize, set up and grow the business analytics and consulting practice for Bureau Veritas. In his earlier organizations he has played leadership roles in P&L management, consulting, delivery and client Engagement. Sudipta has worked and managed customer engagements in multiple countries across Europe, Asia Pacific and Americas. Sudipta has an MBA along with an engineering degree and has completed a senior leadership program from INSEAD business school.


 

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