There is a referee’s penalty in the sport of American football called “piling on.” It is for unnecessarily jumping on a ball carrier who has already been tackled by others. There has been so much written about analytics that I fear if I add more, then I will be accused of “piling on.” But in my defense, I am not guilty because the adoption rate of analytics is just starting to ramp up.
Although the fundamentals of analytics have existed for decades even before computers, the embracing of analytics is in an embryonic and elusive stage. Like the football runner, his knee has not yet touched the ground – the ball is still good! Analytics has not yet been tackled, so I will continue to write about it.
The Root Cause for Analytics – Globalization of Markets and People
The increasing number of articles and books on analytics list many reasons for organizations to apply analytics for insights and decision making. Some reasons are:
- The margin for decision error is getting slimmer
- Gut feel and intuition are insufficient for the correct or best decision
- Increasing complexity requires intense analysis
- The compute power from technology has dramatically increased
- The availability of data is exponentially growing
I believe the root cause for the escalating need for analytics is deeper than those reasons. My hypothesis is that the root cause is the globalization of markets and people.
Why Analytics?
Think back to just a few years ago. Since then, globalization of markets and people has intensified to a higher degree, especially with the escalation of social networking. Examples include Skype, fast wireless Internet connectivity, affordable smart phones, Facebook, 24/7 financial markets, nano-stock trading (recall the “flash crash”), and cloud computing. Basically, what has occurred is the digitization of communications.
In the days of wooden sailing ships, merchants and proprietors of local economies, presumably based on products and materials, were protected. But today, there is not only substantial free trade across country borders and efficient supply chains but also relatively more services, some of which are not physically bound, like outsourced call centers.
As commerce and communications of our planet Earth becomes increasingly bound together more tightly and vibrantly, broad things happen:
- Everyone’s personal values, preferences, and behavior matter more than ever because they impact more people than ever.
- Our global financial institution and investment systems more quickly pursue financial return values. Money chases more money at lightning speed.
Cause and effect relationships and linkages are at the heart of the growing need for organizations to require and leverage analytics. The countries and economies of our world have shifted from being disconnected to connected to inter-connected to interdependent. As this has occurred analytics provides insights for better and faster decision making.
There are few circuit breakers in a hardwired world like this that can shield an organization from the core drivers, such as consumer demand, actions by competitors, or external events like natural disasters, pandemics, or fluctuations in foreign currency exchange rates or commodity prices.
So, am I piling on?
Is there too much being written about analytics? Am I “piling on”? I don’t think so.
In fact, my speculation is that organizations are just at the dawn of awareness when it comes to how critical it will be for them to gain competency in applying analytics. We are only scratching the surface of the full potential of analytics and the benefits that applying them will bring.
