By ensuring data veracity, companies are able to filter through to obtain deep insights on certain focus areas, such as customer purchase behavior or their supply chain. Managers across the business can then use these deep insights to inform their strategy and actions.

The path forward

The path to becoming an analytics Leader is not always smooth. Organizations that exhaust quick wins early on in their transformation find the rate of return on their investments slows down, as does motivation. The middle ground can be slow and frustrating territory. But this year’s Analytics Impact Index shows that organizations that invest in the right areas of analytics are making significant gains.

It is important to note that capital investment alone will not get you to where you need to be. We know from years of studying this area that it takes a comprehensive approach to analytics investments for an organization to succeed. Having a strong data ecosystem is necessary but not sufficient. Enabling that transformation requires organizations to embed culture of curiosity and experimentation into the fabric of your organization, driven by leaders who understand the unique transformative capacity of analytics (see sidebar: Melbourne Water aiming to grow in its analytics journey).

Melbourne Water aiming to grow in its analytics journey

Melbourne Water, a Victorian government-owned utilities company, manages the water system in Melbourne, Victoria, Australia, including the supply of water to residents, reservoirs, and the sewerage and drainage system that services the city. Identified among organizations with nascent analytics capability, Melbourne Water is striving to progress on its analytics maturity.

Interview with Paul Chisanga, a business performance and analytics manager with more than 15 years of experience across industries

What is the history of analytics at Melbourne Water?

A couple of years ago, Anthony O’Shannessy, the chief financial officer, initiated a discussion around the potential to harness analytics to ensure the residents of Melbourne are paying the lowest possible price for water utilities improving service levels. Realizing that we had little to none of the capabilities in terms of analytics, we started engaging different schools, one of them being Melbourne Business School, to understand how data and analytics could be used to solve the organization’s pressing challenges.

How has your analytics capability evolved over years?

We completed the Analytics Impact Index survey in 2019 and realized the state of our analytics capabilities relative to other organizations. The 2019 survey identified our organization among the Followers and provided us with very practicable practices to help us grow our analytics maturity. It helped us develop a road map to improve our analytics capability and a framework that our CFO uses to obtain buy-in across the organization and lead our analytics journey.

Our company has been working on two key aspects since then: refining our organizational structure for analytics by engaging multiple senior leaders at the C-suite and board level to champion for analytics and being more experimental and innovative with data by making efforts to use data to make decisions.

How does Melbourne Water envision its analytics capabilities in the upcoming years? How long do you think it will take for Melbourne Water to move from being a Follower to an Explorer?

Melbourne Water is rigorously working to advance on its analytical maturity, focusing our efforts on key aspects as the company aims to become an Explorer within the next 24 months:

Executive sponsorship. Led by the CFO, Melbourne Water is working toward increasing the engagement from leaders in the C-suite and also at the board level. This would help foster a culture for data. Executive sponsorship is also beneficial as it enables funding and investment into analytics projects.
Building analytics talent and skills. Melbourne Water is also directing its efforts toward harnessing its existing analytics capability while simultaneously creating a pipeline for analytics talent. In the past few months, we have identified individuals with a quantitative mindset and rechanneled their efforts into analytics projects. We are also working with human resources to recruit individuals with analytics skills to ensure we have the right talent to grow on the analytics maturity ladder.
Advancing data management and infrastructure. Our organization is also investing in building tools and technologies that enable the use of data in an optimized fashion. We are setting up a data management team to ensure seamless flow of data.
Embedding a data culture. We are rigorously vouching for a data culture by promoting the use of data in departments and functions. For example, most of our leaders now use data visualizations to gain full visibility into the working of the company, which is a refreshing for a company that has traditionally used intuition and experience rather than data for decision-making.

With the combination of efforts from leadership, coupled with great talent and data management, I am confident that Melbourne Water will become an Explorer in the next two years. It is not a quick journey, but it will bring great outcomes for us.

You mentioned that Melbourne Water is using descriptive analytics and visualization within its organization. Is your organization also using predictive modelling or advanced analytics capabilities in any way?

Yes, we are well on track and are advancing from using descriptive to predictive analytics. In fact, our organization has recently engaged with students at the Centre for Business Analytics at Melbourne Business School to help us optimize costs for our company using advanced analytics. We are also working on predictive maintenance modeling to reduce inefficiencies with repairs and maintenance. We are also in talks to explore further potential of how advanced analytics can help our organization.

Where do you see the barriers that might hold back Melbourne Water from growing into an analytics leader?

Lack of data culture could be one of the key hurdles in Melbourne Water’s growth. Often, employees rely on their experience and are hesitant to use data and technology for decision-making. However, we are earnestly working toward changing this mindset through quick analytics pilots. It is also promising to see leaders being so receptive to this experimentation, which makes me confident about our capabilities to fulfill our vision. The Analytics Impact Index study has shown that leadership and strategy is the key enabler of analytics value, and we certainly see sufficient evidence in our organization that senior leaders are championing data for decision-making.

Over the past 10 years, there has been rapid digital change within almost every industry around the world. However, nothing has prepared us for the pace of change that we have seen in 2020. The COVID-19 pandemic has turned the business world on its head, forcing many companies to accelerate their digital transformation plans.

Amid this flux and unpredictability, the dependability of data is reassuring. It is a steadfast reminder of the need to measure, reflect, and adapt in order to remain competitive. Although many organizations are scaling back their investments, analytics is not something you can afford to slow down on.

In summary, the 2020 Analytics Impact Index reveals five findings:

Survey participants advance toward analytical maturity, with 9 percent more categorized as Leader and Explorer compared with 2019 (64 percent versus 55 percent).
Financial returns are correlated with analytical maturity, with Laggards potentially able to generate up to 81 percent more profit if they were to become as mature as Leaders.
Mature participants invest similarly in AI capabilities but experience four to five times higher uplift in revenue/profit by focusing on value.
Participants saw an increase in data volume by an average of 14x over the past five years. However, 50 percent of them struggle with data reliability issues.
Leaders continue to differentiate themselves through organizational attributes such as a centrally led operating models and C-suite leadership.

The pace of change in analytics can be daunting. Leaders will need to stay ahead of the game by experimenting with rapidly evolving technologies such as AI, machine learning, and robotics while also deploying capabilities to address the growing need for data veracity. This imperative will result in better decision-making and an increase in profits, which is of course at the heart of investments in data and analytics.

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