It's the long-sought holy grail of the decade for insurance companies: to be able to “compete on analytics,” by having access to boatloads of data that can be quickly converted into actionable information that helps executives—and machines—make the right decision at the right time.
In a recent report, Nucleus Research outlines the four stages of evolution that bring most organizations to the brink of an analytics-driven culture. The good news is that as the organization advances to the next stage of analytics, ROI dramatically increases for many reasons. For example, the deeper a company moves into analytics, the more employees’ work practices improve “as they increasingly embrace analytics as a way to make better decisions and incorporate more data into their analyses." Of course, decision making also improves, “as analytics is embedded into more processes and enables employees to base their conclusions on data rather than intuition.”
The four stages of analytics identified by Nucleus include the following:
Automated: At this stage, enterprises “use analytics to automate report building and achieved benefits that included increased productivity for data analyzers and reduced workloads for IT departments. Data management capabilities at this stage typically included the construction of data warehouses and data cubes.” Average ROI: 188 percent.
Tactical: Here, organizations start using analytical solutions “to improve decision making, rather than just increase productivity. Tactical users of analytics typically have expanded their data management capabilities to include data migration, data integration, and better data quality control.” Average ROI: 389 percent.
Strategic: At this stage, enterprises have analytics strategically deployed across most of the organization, “and used analytics to align daily operations with the goals of senior management. Strategic analytics organizations typically have advanced data governance tools and practices.” Average ROI: 968 percent.
Predictive: Finally, the deployment of predictive analytics “achieve higher returns by tapping into what is commonly referred to as 'big data.' Such deployments “also reach beyond the traditional limits of internal enterprise data to the Web, customers, vendors, and partners,” says Nucleus. Average ROI: 1,209 percent.
(Thanks for Herman Mehling for surfacing this study.)
Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.
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