Put simply, the more we know, the better we perform.
Analytics as a discipline, using information gathered and stored in a digital format, has increased in scope enormously over recent years and will continue to play an ever greater role in all aspects of business life in the years to come. In this series of articles we will look at the impact of big data and analytics on business, competitiveness and career development.
Applying the lessons of analytics to business situations can result in competitive commercial advantages, as business leaders understand more thoroughly how they can cut costs and boost revenue.
In addition, the field of predictive analytics - in which current and historical data is analysed to predict future risks and opportunities - has developed strongly in recent years. This differs from conventional analytics, which offers insights into business activities based on findings from big data.
With the US leading the way in the adoption of analytics in business, much has been made of the speed at which businesses in the UK are following suit; that said, there is much that can be learned from the findings of US research on the subject. According to International Data Corporation's latest figures, the global business analytics software market is due to grow by 9.7 per cent each year up until 2017, while management consultancy giant McKinsey argues that big data analytics is the single most important driver of GDP growth in the United States today.
"McKinsey Global Institute (MGI) believes widespread use of big data analytics could increase annual GDP in retail and manufacturing by up to $325 billion in 2020 and produce up to $284 billion in productivity gains in healthcare and government services," states a recent study.
Similar magnitude gains are expected in finance, banking, security, media, insurance, information technology, transportation, real estate, utilities and agriculture, says McKinsey.
A combination of massively higher levels of data, much improved tools with which to analyse this data, and the extraordinary boon of cloud computing, meaning that vast amounts of computing power are available on demand, at low cost, has driven rapid advances in the sector.
Here are three brief examples of how analytics can improve business performance:
In retail, companies can use analytics to optimise their inventory, make transportation more efficient and improve overall supply chain management. MGI believes that US retail can gain up to $55 billion in additional GDP by 2020.
In manufacturing, research and development costs, production and supply chain productivity gains will equal up to $270 billion in the US by 2020. This will be achieved by improved decision making over product lifecycle management, customer usage data, sensor analytics and preventative maintenance data, among other areas.
In healthcare, remote patient monitoring, R&D optimisation, personalised medicine, drug safety and improved response rates will achieve cost savings of up to $190 billion in the US, says MGI.
Such predictions can be applied across most industrialised economies, with much of the discourse around predictions of the US adoption of analytics suggesting that the UK will follow suit at a very similar rate.
The key difference between commercial decision-making prior to the age of data analytics, and the situation today, is that it was based more on personal preferences and intuition. This meant that individual prejudices, biases and experiences could shape decisions, leading to errors or incorrect assumptions.
Analytics, when properly applied, helps to reduce such errors and to provide rational, evidence-based support to decision-makers. It also harnesses the power of the internet and digital technologies to achieve cost savings, greater efficiency and smarter applications.
In particular, employees with predictive analytics skills and experience are in very high demand, as companies are increasingly using predictive analytics to harness the power of big data to gain a competitive advantage which has led to exceptional demand for qualified professionals.
From a recruitment point of view, the demand for business intelligence professionals who have strong analytics expertise is growing rapidly. After some years of subdued demand, as the financial crisis played out from 2008 until 2013, there has been a burst of new activity. Budgets for hiring in the sector are rising sharply and prospects are extremely bright. Analytics is becoming a driving force behind the way that many organisations shape their business to gain a competitive advantage, to deliver more efficient services and to develop the careers of the talent that they are working with.