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11/19/2010
08:42 AM
Bob Evans
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Global CIO: The Rise Of Analytics Triggers The Fall Of The Tactical CIO

The Year's Top Tech Stories: Top-priority analytics projects are accelerating the need for CIOs to drop the "alignment" anchor and begin driving strategy, revenue, and profit. (#5 on our Top 10 list.)

As business analytics and predictive analytics become indispensable to business strategy and execution, profound changes are rippling through entire organizations from supply chains to merchandising to demand-planning to pricing and marketing and product development and sales and more.

That's because companies and other large organizations are now gaining the ability to anticipate with great clarity what customers will want and when they'll want it and how they'll want it. In turn, that's giving companies the ability to shift from blunt-force "prepare for everything" approaches to the more productive and profitable model of focusing their efforts on the precise opportunities and outcomes that analytics can provide.

But while those changes are broad and deep across organizations, perhaps the departments that will be jarred most severely by the rise of analytics are IT groups, particularly those that have remained caught up in the tactical world of focusing on technology instead of business outcomes, and on metrics that have more to do with server uptime than with customer loyalty.

In recent conversations with executives from leading analytics vendors such as IBM, SAS, SAP, and Information Builders, a common theme has been the need for those companies to engage customers in two different ways with two different languages: business-oriented discussions for the LOB leaders driving the buying decision, and then a separate technology-oriented set of exchanges with the IT team.

(For extensive background and perspective on the analytics space, be sure to check out our "Recommended Reading" list at the end of this column.)

Yes, those technical aspects are essential and yes, applications whose impact will be so profound must be vetted, installed, and managed properly—I'm not quibbling with any of that. But in 2010, these powerful analytics applications moved from arcane and specialized niches into mainstream tools that every business will be using more aggressively, more broadly, and more strategically.

As a result, IT organizations that can't embrace these new analytics tools as engines of growth and customer engagement, and instead continue to view them through the lens of their technical features and deployment, will relegate themselves to permanent roles as back-office, non-strategic cost centers that are oblivious to business value and impediments to the real-time objectives of their companies.

If you think 2010 was a tough environment for people in those categories, just wait until 2011—as corporations realize that their ability to compete will hinge largely on their ability to not just deploy analytics widely and effectively but to master analytics widely and effectively, IT will become the gating factor between those two outcomes.

In 2011, we'll also see an enormous spread in the impact of analytics: not just across more departments or functional units, but also in the field on mobile devices and with access closer to real time than we've ever imagined.

Think also of the impact on analytics that'll come from the wave of optimized systems and appliances that hit in 2010: as these systems become bigger and more powerful and more pervasive, the volumes of data available for analysis, and the speed with which those analyses can be done, will be far greater than anything that any of us has experienced.

No, in 2011, it won't be just a matter of the running analytics on the same types of data sets as we had in 2010—rather, it'll be a necessity to perform much more-sophisticated types of analysis on far larger and more complex sets of data. And to do so as close to real time as possible.

The good news for CIOs—both the forward-looking types that have already begun to embrace analytics from a revenue-enhancing perspective as well as those still stuck on tactics—is that the market offers lots of choices and approaches to this wild new field.

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For example, Tibco CEO Vivek Ranadive says that big companies like IBM, Oracle, and SAP are coming at this very modern problem with legacy approaches.

He described the alternative viewpoints in a recent conversation that I wrote about in a column called Global CIO: Tibco Surges And CEO Flips Off IBM, Oracle, And SAP. Here's an excerpt:

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