South African businesses understand the importance of analytics, but the results of most implementations are still mainly used for reporting rather than forward-looking strategies and analyses.
These were some of the findings of a study conducted by business analytics software and services provider SAS on Business Analytics in SA.
According to SAS, analytics - the art of using data trends to make predictions and meaningful business decisions - is changing the way that the world, and SA, does business. SAS South Africa has carried out a study, Business Analytics in SA, to assess the rate of adoption, the faith in the data and the level of buy-in to the results of business analytics implementations.
SAS South Africa modelled their survey on global research carried out by the SAS Institute, so that the South African results could be comparable to the international findings.
The report discovered that tools such as analytics are needed in increasingly complex and dynamic environments to make sense of information and plot the way forward. It reveals that there is a significant opportunity to improve the current use of analytics tools to more sophisticated and advanced analytics models.
It also emerged from the study that organisations require an integrated view of the business to make informed decisions and to assess the impact of those decisions.
SAS points out that for the successful adaptation of analytics in any organisation, business buy-in and business engagement is critical.
Strategic analysis, choice and implementation are best executed using as much quality data as possible, says SAS, adding that there is scope for more effective use of analytics in many organisations.
It also emerged that there is a notable move towards an increase in the use of analytics as more organisations invest and realise its benefits, while the more decision-makers trust the data, the more they will combine it with their "gut" to make decisions.
SAS also states that there is a strong correlation between the effective use of analytics and how much analytics is contributing to decision making.
The global survey findings revealed that the adoption of business analytics was initiated through a pilot programme to address a specific business need, and these programmes then expanded further into the organisation as they proved effective. By contrast, South African companies show a more rapid uptake of the use of analytics in a more integrated manner.
The highest rated benefits of business analytics were listed as: increased profitability (50%), cost reductions (39%) and a reduction in time to solve problems and make decisions (36%). At the same time, however, the results showed that few organisations were actually using business analytics for prediction, and were rather focusing on their results for reporting purposes.
"Analytics has great potential to transform the way that we do business and respond to market factors," says Desan Naidoo, managing director of SAS South Africa.
"As the adoption and use of these tools matures in South Africa, we believe that we'll start to see far greater focus on the predictive capabilities of analytics, rather than simply reporting on things as they are. In fact, in his budget speech earlier this year, Minister Pravin Gordhan mentioned the importance of analytics saying that, without compromising privacy and confidentiality, analytics will contribute to reducing identity fraud, lower administration costs and enhance compliance."
Companies are using analytics substantially for decision-making - 53% of respondents state that analytics contributes to more than 60% of their organisation's decision-making. Another 8% indicated that analytics contributes to 0% to 20% of their decision-making.
"It has been shown that the more organisations trust their data, the more they combine the results with their own gut feel when making decisions," says Naidoo.
While SA has certainly advanced considerably in the adoption and use of analytics, the study shows that we still have far to go. "The capabilities of these business tools are only beginning to be unlocked," says Naidoo. "But we have faith that the extraordinary benefits for profit creation, responsiveness and competitiveness will continue to promote acceptance as their use becomes more widespread."
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