– By Sudipta Ghosh, Leader – Data & Analytics, PwC India
CEO of a retail store wants to open a store in a particular location. Is this big decision taken on the basis of gut feel and “experience” or there is advanced analytics around consumer profile, competitive landscape, economic outlook which needs to be performed for objectively “evaluating” the attractiveness of the store location. Moreover, is there a consistency of approach in opening not just the first store but also the next 50 stores? If we take the complexity of the decision making to the next level, is there a feedback loop of historically “performing” versus “non-performing stores” which can be an input to the effectiveness of the decision making process.
Big Decisions’ are getting increasingly complex for organizations. Are organizations using data or are they mostly relying on their experience for taking these big decisions? More importantly, even if CXOs are taking data-driven decisions, are they using advanced analytics for getting more confident about the decision making process. How does Indian organizations’ cost against their global counterparts?
As per PwC’s Data and Analytics survey (2016) involving C-suite leaders in India, nearly 98% of the respondents were found to believe that their organizations were either highly (61%) or either somewhat (37%) data-driven and that descriptive and predictive analytics were currently employed in their organizations to drive decisions. Cost reduction and increasing market share are among the key reasons for organizations to invest in advanced data analytics techniques.
The usage of data analytics has been driven by multiple factors. Firstly, with the increasing smartphone and internet penetration, it is becoming easier to capture consumer-level data. Also, businesses themselves have realized the need to capture consumer as well as internal data in the digital format to improve data management and usability. The growth of cloud services is increasingly making it cost effective and flexible to store data. Secondly, Indian firms across sectors are evolving in line with the more “analytics” mature counterparts in the developed markets and taking cues from them to use data in order to gain a competitive advantage. Thirdly, the tools for advanced analytics including artificial intelligence and deep learning algorithms have improved immensely, thus helping adoption.
The applications of data analytics are visible in every sector in India. E-commerce companies are analyzing the customer transactions and developing analytics driven systems such as recommendation engines for cross-selling and up-selling their products. Banks are using customers’ credit card transactions for opportunities to recommend offers as well as up-sell new products. Telecom services providers have been analyzing customer usage patterns to recommend optimal plans. Logistics companies are increasingly adopting RFID tags, IoT sensors & analytics to track and improve efficiencies in the supply chain.
The PwC survey also revealed that the use and investment in analytics (predictive and prescriptive) is not correlated to the size of the firm, with the start-ups investing in analytics and embedding advanced analytics in their business processes.
Based on our experiences and discussions with the industry leaders in India, companies are surely moving towards making decisions using analytics. The PwC Survey highlights that Indian leaders score higher (40%) than their global counterparts (31%) in terms of deploying predictive modeling techniques for decision making. Similarly, Indian leaders have shown greater preference for prescriptive analytics (19%) as compared to global leaders (13%).
Organizations feel more confident about their decision making process which are backed by advanced analytics. However, adoption of analytics in the organization is not uniform and this leaves scope for driving the culture from the top to rely on data driven decision making process. Interestingly, our research suggested that C-level executives are more confident of their firm’s data and analytics maturity as compared to the mid-level executives which also puts the onus back on the top management to support and cascade their optimism across all levels in the organization.
Organizations are increasingly enabling the environment for data-backed decision-making. The first enabler is the right digital infrastructure to store the digital data that is being generated. Secondly, putting in place systems and processes analyze this data real time, and support quick decision making. Third, it is important to have a separate data analytics team (internal or outsourced) with the required capabilities to empower the business to remain a step ahead of competition. Doing this requires significant investments but given the increasing competition across sectors, it becomes an imperative for Indian Organizations to succeed in the long run.
In summary, the new age decision makers in India have moved from the stage of just collecting digital data to making use of the data to build a competitive edge. And that is why we see that business leaders now perceive the use of data analytics as synonymous with good decision making process.