The Value of Business Analytics: Identifying the Path to Profitability

INTRODUCTION

Business analytics, when successfully executed, plays multiple roles within an organization. It:

• Supports strategic planning
• Creates competitive advantage
• Delivers tactical value

Everything needs a starting point. While we will get into detail of how to successfully overcome common barriers in later chapters, this chapter is primarily focused on giving a basic grounding as to why business analytics almost inevitably forms a cornerstone strategic enabler.

Within this chapter we will examine the key driver of market success: the ability to develop competitive differentiation. To do this, we will review four different perspectives on how organizations create competitive advantage through strategic planning:

1. The Traditional Perspective: SWOT Analysis

2. The External Perspective: Porter’s Five Forces

3. The Internal Perspective: The Resource-Based View of the Firm

4. The Market Perspective: Wilde and Hax’s Delta Model

Each of these approaches provides a structured process to identify and nurture competitive differentiation. By examining the assumptions behind and execution of these different perspectives, we will uncover the critical role business analytics invariably plays within each. And, by doing so, managers can consciously map their tactical activities into strategic outcomes, raising the profile of their work within the organization.

After establishing the importance of business analytics in effective strategic planning, we will look into how it supports innovation, ...