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    Nine Predictions for the Analytics Industry in 2011

    The International Institute for Analytics (IIA) expects 2011 to mark the beginning of a multi-year cycle where the sparks of economic growth ignite a tinderbox of technology and business forces that are set to drive mainstream adoption of business analytics across commercial and government sectors. Without question, the competitive gap between analytical innovators and those who do not invest in analytics will widen over the coming 12 months.

    Processing power, storage capacity, cloud computing (storage & processing), and analytics software have all now matured to a point where it is now cost-effective and relatively simple for enterprises to adopt analytics to enhance competitive advantage.

    The growing community of analytics professionals, both business and technical will continue to generate and further adopt innovative analytical techniques in the areas of text analytics, survival mining, time series mining, net-lift modeling, and data visualization.

    Limiting the growth of analytics will be the scarcity of strong business-focused analytical talent, as well as the continued cry of privacy actors and regulators.

    Nine Predictions for the Analytics Industry in 2011 - slide 1

    Click through for nine predications the International Institute for Analytics (IIA) has made regarding business analytics in 2011.

    Nine Predictions for the Analytics Industry in 2011 - slide 2

    With even modest economic growth in 2011, the use of analytics as a competitive differentiator in selected industries will explode.

    IIA covers in-depth eight (8) distinct vertical industries that have led the way in the profitable use of analytic techniques and technologies to enhance profits and build competitive advantage. Listed in order of analytical saturation along with the primary analytical applications, these are:

    1. Banking (customer profitability, risk management)
    2. Insurance (pricing, claims fraud, underwriting risk)
    3. Health Care & Life Sciences (supply chain, pricing, drug development)
    4. Telecommunications (pricing, marketing, churn/retention, up-sell, cross-sell)
    5. Retail (marketing, store efficiency, supply chain)
    6. Energy/Utilities (pricing, marketing, demand forecasting)
    7. Media/Entertainment (marketing, social network analysis)
    8. Transportation (optimization, scheduling)

    Nine Predictions for the Analytics Industry in 2011 - slide 3

    The gap between analytical innovators and those who do not invest in analytics will widen in high-profile ways.

    The industries with “low batting averages” — pharmaceuticals, entertainment, etc. — will see greater differentiation between companies that use predictive analytics, and those who don’t. Early adopters of analytics in some industries, e.g., airlines and baseball, have failed to continue innovating, and have lost competitive advantage.

    Nine Predictions for the Analytics Industry in 2011 - slide 4

    The roles of marketing, sales, human resources, IT management, and finance will continue to be transformed by the use of analytics in 2011.

    • Marketing and sales: continuation of an existing trend, but companies will emphasize it more with an improving economy.
    • Human Resources: one of the fastest-growing areas for analytics.
    • IT: shift to BI and analytics support, instead of transactions.
    • Finance: instead of just scorecards, more analytical performance management; fraud & risk.

    Nine Predictions for the Analytics Industry in 2011 - slide 5

    15 Chief Analytics Officers (CAO) will be appointed in 2011.

    IIA has identified several specific examples of hiring in this category already. Many other firms and organizations are realizing that they need more centralized management of analytical capabilities. The “CAO” title will not be used by all companies for this role, but the position will become increasingly common by some name.

    Nine Predictions for the Analytics Industry in 2011 - slide 6

    The availability of strong business-focused analytical talent will be the greatest constraint on organizations’ analytical capabilities in 2011.

    As the labor market tightens with an improved economy, the availability of capable analytical personnel with strong business orientations will tighten even further, and will constrain analytical initiatives in many firms. Leading organizations will work with universities or analytical services providers to better train and certify analytical professionals. New programs from universities and other professional training groups aimed at churning out more analytical professionals will be announced but they will lag behind the demand.

    Nine Predictions for the Analytics Industry in 2011 - slide 7

    Database capacity, processor speeds and software enhancements will continue to drive even more sophisticated applications of analytics in 2011.

    The trend of analytical and database environments converging will continue, and even accelerate, in the coming year. The use of “sandboxes” within a data warehousing environment for development of analytics continues to see increased adoption.

    The early adopters are now up and running. Focus for those organizations is now shifting from getting set up to leveraging their environments to drive better, more sophisticated analytics.

    Nine Predictions for the Analytics Industry in 2011 - slide 8

    Newer analytical methods in the areas of text analytics, survival mining, time series mining, net-lift modeling, and data visualization will grow in use in 2011.

    Given the continuing influx of textual data, organizations are already pressured to find better means to search, categorize and glean insights from it. The sheer volume of documents organizations need to manage makes it impossible to manually categorize them. To truly leverage this source of data, it will have to be managed more strategically. Organizations paying attention to the conversations in social media will be better prepared to respond and show they are listening when appropriate and staying attuned to the voice of the customer.

    Nine Predictions for the Analytics Industry in 2011 - slide 9

    Consolidation of analytics software players will continue; entry of specialized analytics software and service providers will accelerate.

    The few remaining independent analytical software firms, such as SAS and KXEN, will see increasing interest from large IT firms who don’t have a significant analytical capability, e.g., HP and Oracle. Smaller software vendors will focus primarily on specific analytical “apps” for specific decisions and industries. Services firms that don’t have strong analytical capabilities will attempt to develop them, although the number of good people is waning.

    Nine Predictions for the Analytics Industry in 2011 - slide 10

    Regulatory and privacy constraints will continue to hamper growth of marketing analytics.

    In addition to the Fair Credit Reporting Act, IIA expects federal legislation/regulation to be introduced in the U.S. relating to Web tracking and analytics. Europe will continue to lead in the development of relatively restrictive customer data and analytical policies. Paradoxically, the comfort caused by these policies will likely lead to consumers to part with more information than in the U.S.

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