The Value of Business Analytics: Identifying the Path to Profitability

INTRODUCTION

Organizations exist to create value, an abstract concept often considered to be the worth of various goods and services as identified by the market. They do this through a variety of activities, one of which is the application of business analytics. As discussed in Chapters 2 and 3, business analytics is unique in that it leverages a number of competencies and assets that can typically be applied to multiple discrete value-creating activities within an organization.

Although this value takes different forms depending on the objectives, context, and culture of the organization, the importance of value-addition as an outcome of an activity is constant. This commonality is both a strength and a weakness.

On one hand, it provides a common starting point to consider, compare, and contrast different activities; activities that add more value should be prioritized over activities that do not. On the other hand, this commonality means that it cannot provide guidance around what form the specific measures should take; what is considered value-adding in a government department may be significantly different from what is considered value-adding in the private sector.

Whereas business analytics acts as an important enabler for competitive advantage and organizational differentiation, the application of analytics in isolation does not normally create value. Value is created only when action is taken, not when insight is generated. Often, this requires changing existing operational ...