Business is placing a big bet on big data. Yet a yawning skills gap is matched by the need to overhaul business processes and challenge corporate cultures.
Companies have invested billions in analytics solutions and while many are desperate to hire data scientists some are beginning to realize the benefit of placing trained talent at the top.
For business leaders, the path to the C-suite is ever slightly paved with data. “That's the bet we're making,” says Professor Peter Fader, who leads the Customer Analytics Initiative at Wharton, the leading US business school. He says the real win for the field of data analysis will be in training executives to be fluent in analytics.
The data surge has been easy for business to comprehend but harder to make work in practise. Big data is believed to be near the top of corporate agendas but few companies are getting value out of it today, according to a report from Bain & Company, the consultancy.
“All hyped-up buzzwords will undoubtedly fail to live up [to their hype],” says Professor Kalyan Talluri, director of the MSc in Business Analytics at Imperial College Business School.
Corporations are sitting on top of mountains of data. A survey by software group SAP found that 92% of respondents saw the volume of data in their organization increase, while three-quarters said they needed new data science skills. Analytics is here to stay. The challenge is to figure out how to best use it for a competitive advantage. “This is far from being resolved – those who do it will get the prize,” says Kalyan.
Indeed, a KPMG survey of around 150 business chiefs last year found that 85% of them said they did not know how to analyse their data.
“Most organisations are unable to connect the dots because they do not fully understand how data and analytics can transform their business,” says Alwin Magimay, head of digital and analytics for KPMG UK.
US digital pioneers like Amazon, Facebook and Twitter have been ahead of the curve but many older companies and those without sufficient financial resources have struggled to adapt.
Over the past year the number of organizations which have invested in data-driven projects has increased by 125%, according to figures from media company IDG Enterprise. For years companies have been throwing money at IT to develop data solutions but many have lacked strategic guidance, says Peter at Wharton.
Becoming a data-driven company means adopting scientific methods to decision making. “Firms need to have an enterprise strategy for the use of data across functions,” says Dustin Pusch, director of decision sciences and business analytics at George Washington University’s business school.
This can be difficult to implement, as it often means changing a company’s culture. “Change is always difficult,” says Yehuda Bassok, USC Marshall School of Business professor and chair of the Department of Data Sciences and Operations.
He says this requires skill and training. But most importantly, employees must understand that they can benefit from analytics. “Many companies firstly are not aware of what can be achieved,” says Yehuda.
Making use of data represents another challenge, as companies must learn how to utilize tools to unlock value. “This means [using] statistical tools, the optimization tools and the technical skills – [coding] languages and computer programming,” Yehuda adds.
Many companies lack these resources and also the infrastructure needed to store and manage their data.
“Although many organizations have fairly mature processes and frameworks in place to manage their data, several other organizations still struggle with it,” says Dustin at GWU.
Another obstacle is the widening skills gap. A lack of data analysts across industries has been widely reported. Accenture, the consultancy firm, estimates that the US could see demand for analytics talent outstrip supply by more than 250,000 positions this year alone.
“There is great demand for analytical skills in marketing, finance, supply chain and information management,” says Jennifer Whitten, director of career services for graduate programs at W.P Carey School of Business.
Business schools have been quick to try and plug the gap. NYU Stern, McCombs School of Business and Melbourne Business School are among dozens of schools that have launched master’s degrees in business analytics. Others have partnered with the likes of IBM to develop short courses within MBAs.
Demand has been insatiable. USC Marshall’s master's has already received around 1,000 applications for between 50-60 spots, says Yehuda. “We could roll out another class if we wanted to,” he says.
The technology companies that offer Moocs, or massive open online courses, are helping to address the talent crisis.
Julia Stiglitz, head of business development at Coursera, which has nearly 13 million users, says data science is one of the most popular courses on the platform. She adds: “To satisfy the demand… Means going beyond the traditional walls of higher education.”
In addition to the general shortage of analytics talent, there is a lack of team leaders in this area, says Arne Strauss, associate professor of operational research who teaches the MSc Business Analytics at Warwick Business School.
“We feel that managers need to have the ability to understand the assumptions and limitations behind the analytical insights presented to them,” he says.
He adds that IBM is keen to take on graduates with these skills, along with the likes of SAP, Google and HP, the US tech conglomerate. “Every sector is showing interest now.”
Peter at Wharton points to US healthcare group Merck, which is trying to drive radically different and more effective decisions with data, and video game maker EA, which uses user data to inform products, as “legacy” companies which are leading the data charge at the executive level.
But even those that recruit the right talent face the challenges that come with storing data. Keeping data in a single location amounts to something of a sea change in how data are viewed by a company.
Providing access to that data while maintaing security has always been a challenge, notes GWU’s Dustin. And there are numerous legal issues to consider.
Ultimately, overcoming these obstacles and translating big data into business insights is increasingly key for leaders. “The data is just a means to a more impactful end,” says Wharton’s Peter.