86% Of Executives Can't Make Analytics Pay. Here's How You Can.

The analytics industry isn’t keen to admit that many initiatives never break even. It’s bad for business.

Yet proper use of analytics can produce excellent returns. The fix is simple in concept, and no harder in practice than any other business activity. At least, any business activity you take seriously.

How often do analytics investments fail? Often.

• One McKinsey survey found 86% of executives describing their results as “at best, only somewhat effective at meeting the primary objective of their data and analytics programs.”
• Altaplana surveys of text analytics users in 2014 and 2011 found that the majority of respondents were not yet breaking even.
• Speaking from my own experience in the industry, I can tell you I’ve witnessed a lot of failure.

Then again, you’ve probably heard about organizations reporting fabulous positive returns on analytics investment. Although you should not automatically accept success stories without further examination, analytics success is not merely possible, it’s common.

So, what’s the difference? Why is money spent on analytics a great investment for one company, but a big waste at another?

The difference is not elusive talent. It’s not sophisticated software. It’s not about “achieving scale” or data architecture. It’s certainly not about subtleties of algorithms.

The difference between analytics failure and analytics success is planning and execution. Genuine analytics success is achievable. Approach it as you would any unfamiliar business venture:

• Start with small, low-risk projects.
• Define clear, specific, and modest goals, and success criteria from the start.
• Plan what you will do before you do it.
• Use professional tools, but don’t spend a fortune at first.
• Provide education and support for the talent you already have.
• Document every step of the process in detail.
• Evaluate your process and results.

Put another way, the difference between analytics failure and analytics success is the same as the difference between any other kind of business failure or success.

Analytics is only a way to get information. If you’re willing to make the effort to routinely obtain good information and act on it, you’ll profit. Yes, lack of know-how can be an issue, but it’s an issue that can be addressed with a reasonable amount of investment and effort, nothing more than you might devote to getting the right accounting or legal support.

The real question is, how will you use that information? Are you open to taking action, changing the way you do things? Are you willing to spend time up front, ensuring that management, data analysts and others all share a common understanding of goals and plans?

Don’t expect magic. Analytics magic does not exist, but that’s OK. You can make your own analytics success with down to earth action.