Speaker Says Competing On Analytics Is Key
KISSIMMEE, FL -- While using analytics is good, competing on analytics is even better.
That was the key message from Tom Davenport, information technology expert, author, and Babson college professor of information management, who was the keynote speaker at the 20th Teradata Partners User Group Conference and Expo Sept. 18.
In his speech, Mr. Davenport drew on an article he wrote in the January 2006 issue of the Harvard Business Review called "Competing on Analytics Means Competing on Technology," where he highlighted 32 companies that use analytical intelligence to drive successful decision-making and competitive information.
Some leaders were Marriot, Wal-Mart, Royal Bank of Canada, Proctor and Gamble and the Oakland As.
Marriott, "has been developing revenue management capabilities for over 20 years," Mr. Davenport said. He added that "Marriot gets about an 8 percent revenue advantage over its competitors because of this capability, which is clearly a very important competitive asset."
RBC, Mr. Davenport said, has been using analytical intelligence for customer relationship management activities since the 1970s.
Other companies Mr. Davenport mentioned have used analytics to successfully turn around their businesses.
An example of this is Harrah's. Mr. Davenport said that before Gary Loveland, a former Harvard professor who focused on database analytics, became CEO, the company was floundering.
"The seven years before Gary came in, Harrah's failed to meet its numbers," Mr. Davenport said. "The eight years since he came in, every measure of financial performance has gone up. You talk to Gary Loveman, and ask him how did this happen, and he'll tell you it was an analytical transformation of the business."
Another group of companies Mr. Davenport spoke about are companies that have been analytical since their inceptions. They include Amazon.com, Capital One, Google, Yahoo and NetFlix.
Mr. Davenport pointed out that Netflix is unique in its ability to use data and analysis to choose the best movies for a consumer -- as opposed to consumers choosing them for themselves.
"This ability to negotiate through consumer preferences will help Netflix survive as we move beyond the DVD-in-the mailbox model that it uses now," Mr. Davenport said.
Mr. Davenport mentioned five points to remember about analytics:
- Find a CEO who is passionate about analytics -- not just knowledge -- and who will spread it throughout the entire business.
- Make widespread use of modeling and prediction.
- Find your distinct capability as an organization and use analytics to support it.
- Manage information, people, and analytics at the enterprise-level.
- Have large-scale ambition and results.