Predictive analytics: the CIO’s key to the boardroom
A major global brewing company can advise its retail outlets on what kind of beer their local customers are most likely to choose, which shelf positions will lead to the most sales, and what extra snacks they’d prefer to pick up alongside these — long before a customer actually sets foot in the store.
This predictive capability is now becoming part of many well-run businesses, helping to provide intelligence about the future of their business and informing their decisions accordingly.
CIOs are well placed to help. They can identify the right data, validate it and communicate it to the right people at the right time.
Using predictive analytics, CIOs can harness the power of data to provide the business with a more fact-based vision of where to aim and how to get there. Proactively taking this responsibility creates a huge opportunity for them to join the executive management team.
However, along with the opportunity also comes a set of risks, challenges and changed responsibilities for the CIO organization. Balancing our privacy and other concerns, while maximizing the potential opportunity, will be a key balancing act in predictive analytics.
Few companies today are fully exploiting predictive analytics, despite its obvious potential to improve decision-making and bolster competitive advantage.
For the most part, key executives don’t truly understand what can be achieved with predictive analytics, raising the risk that these firms will be left behind by rivals. The faster businesses can move on fact-based decisions and the more accurately businesses can predict trends and decision impacts, the greater the chances of them outpacing their competitors.
But aspirations on predictive analytics often collide with the struggle to contain and cut IT budgets. The CIO needs to sell the merits of predictive analytics to the business while also working out how to deliver on it within tightening constraints.
These aren’t the only challenges CIOs face:
- They’re often considered only an implementation partner, rather than a trusted business advisor
- Many IT functions lack the skills and capabilities to really understand the business questions being posed and answer with the relevant data
- Other executives often control the data that CIOs need to access to make predictive analytics truly work
Predictive analytics is not brand new, but the technologies that help firms make sense of their data have only recently become available and more affordable. It is becoming economical in more use cases to uncover and exploit patterns in data, identifying risks and opportunities ahead.
As businesses become more data-driven, leading organizations recognize predictive analytics can deliver more than just customer insight. Compliance, security, fraud detection and risk management are among the opportunities.
CIOs in many organizations face stiff competition from tech-savvy business managers who build their own data science teams and capabilities. To support best use of an organization’s investment into improving business performance through predictive analytics, one person should overlook the process.
If CIOs do not act quickly, this responsibility might be taken by business leaders (often supported by external advisors and system integrators).
CIOs who take the lead on predictive analytics will become trusted advisors to the business.
According to The DNA of the CIO, 60% of CIOs think they add strong value to their businesses by enabling corporate strategists to make fact-based decisions. Yet just 35% of their C-suite peers agree.
The opportunity for the CIO to build and manage a portfolio of analytics capabilities supporting business performance has never been greater. The prize is the transformation of the IT organization from pure technology provider to business advisor, enabler and partner.
Those CIOs who champion predictive analytics can deliver real competitive advantage to their businesses, helping to:
- Move from a retroactive and intuitive decision-making process to a proactive data-driven approach
- Build models that more closely predict future scenarios and their related problems and opportunities
- Uncover hidden patterns and relationships in company data
With predictive analytics, CIOs can offer intelligence and insight through information in a business context. They can translate business requests into IT initiatives, supporting and enabling the organization to improve performance and reduce risk.
The CIO can identify the technology and information capabilities that support the development of such solutions.
In the future, business performance will depend on an organization’s ability to gain access to the right information and to exploit its value fully. CIOs must play a crucial part in a business-led and technology-enabled transformation as businesses become data-driven organizations.
By working more closely with peers across all functions, adopting predictive analytics technologies and building related capabilities, CIOs can meet the business’s expectations, suggesting innovative new ideas and boosting organizational effectiveness.
Work on innovative strategies to improve business performance by leveraging information value drivers. Advise on solutions that respond to requests for data-driven insight, and drive the integration of analytics into every function of the organization.