Why Can't Executives Make Analytics Pay?

This article first appeared on Forbes from Meta S. Brown.

The analytics industry isn’t keen to admit that many initiatives never break even. It’s bad for business.

Yet proper use of analytics can produce excellent returns. The fix is simple in concept, and no harder in practice than any other business activity. At least, any business activity you take seriously.

How often do analytics investments fail? Often.

  • One McKinsey survey found 86% of executives describing their results as “at best, only somewhat effective at meeting the primary objective of their data and analytics programs.”
  • Altaplana surveys of text analytics users in 2014 and 2011 found that the majority of respondents were not yet breaking even.
  • Speaking from my own experience in the industry, I can tell you I’ve witnessed a lot of failure.

Then again, you’ve probably heard about organizations reporting fabulous positive returns on analytics investment. Although you should not automatically accept success stories without further examination, analytics success is not merely possible, it’s common.

So, what’s the difference? Why is money spent on analytics a great investment for one company, but a big waste at another?

The difference is not elusive talent. It’s not sophisticated software. It’s not about “achieving scale” or data architecture. It’s certainly not about subtleties of algorithms.

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