Strategy& and INSEAD global study sends clear message to global executives to embrace Demand Analytics or miss the boat
London, October 14, 2014 – A global study conducted by management consultancy Strategy&, part of the PwC network of firms, in collaboration with INSEAD eLab, supports that companies with leading *Demand Analytics (DA) capabilities are demonstrating higher commercial performance levels than competitors.
- The findings show that on average companies that are leaders in DA capabilities are 38% more likely to be leaders in commercial performance.
- This link between DA capabilities and commercial performance is widely recognized by the executives surveyed with 80% of leaders in commercial performance saying that DA is very important in driving business performance.
- The key enablers of DA capabilities are not tools and technology – the most important enablers are: data availability and quality, creating clear processes for applying analytics, expertise, and focused analytics resources.
- Even current DA leaders don’t believe they have the right enablers in place, nor apply DA to the best extent possible – only 16% of the leaders are doing so. There is still a huge potential to develop Analytics capabilities, and so drive enhanced commercial performance.
To undertake this study INSEAD and Strategy& surveyed almost 500 INSEAD alumni in commercial leadership roles across multiple geographies, industries, and businesses of different sizes. The results were then analysed by Strategy& to set out a number of conclusions and action recommendations.
Big data and the opportunities opened up by digitization are creating revolutionary opportunities for the business world – executives who recognise this, who understand the opportunities, and are investing the time and resources to action what they have learnt are seeing the greatest return. The study highlights that 70% of the leading companies who are significantly investing on a yearly basis to develop their capabilities are seeing considerable impact - 26% say it helped to turn around a business and improve profitability. Additionally, 84% of the early adopters reported that they better understood what drives demand in their business and saw improved profitability.
James Walker, Partner in Strategy&’s London office and co-author of the study, notes: “The digitization of business has created massively more data. This represents both a challenge and an opportunity for companies and executives often do not know where to start. We undertook this study to identify how and where companies are using their Demand Analytics capabilities and also to understand if access to this data gives them a competitive edge. Our research found a clear positive correlation - companies who are taking the time to understand and invest in their Demand Analytics capabilities are clearly seeing greater commercial performance”.
He adds: “Businesses with these leading Demand Analytics capabilities have put distinct enablers in place – for example, data availability, creating clear processes for applying analytics, expertise, and focused analytics resources. Interestingly we also found that investing in people and processes seems to matter more than investing in tools or technology - which is where companies often first look to spend their development budget.”
The study also revealed that on an industry level the relevance of DA is particularly evident in consumer & retail, and financial. It also found that while enablers are critical for a leading DA capability they vary per industry. But across the board; data, expertise and governance remain crucial. Additionally the study found a link between DA and performance not only to be relevant in developed economies but also holding true for emerging markets.
Joerg Niessing, INSEAD Affiliate Professor of Marketing and co-author of this study, notes: ‘Three important vectors are driving the dramatic business change that companies now face: big data and analytics, customer-centricity, and digitization. Demand Analytics sits right at the centre of these three trends. We are on the threshold of some exciting and momentous developments and our study proves that some companies are already taking their first steps to master their Demand Analytics capabilities. Our message to companies is that if you don’t embrace the opportunities now you have already lost the race.”
*DA are data centric solutions that support smarter demand-side decision-making about customers, brands, marketing, budgets, and pricing.
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