It is a crucial time for organizations across multiple industries, as CEOs work to help their companies navigate critical disruptors, unique challenges and powerful external forces.
According to KPMG’s 2016 CEO Outlook survey, in fact, two-thirds of chief executive officers believe that the next three years will be more critical than the last 50 years. “CEOs have a clear goal, to create a more intelligent, data-driven experience for their customers, their innovators, and their partners,” says the survey. “But the landscape is changing so fast that it’s increasingly difficult to have a reliable long-term, or even medium-term, view.”
The key to obtaining that crystal-clear future outlook? The smart, sophisticated use of data analytics. Data success is really about defining a common language across the business to come to an understanding of how to measure different events and functions, explains KPMG Principal, Dan Fisher. Basic analytics, through these common KPIs and metrics, help the CEO dig into the data and understand how the overall business is performing. Then, advanced analytics allow them to project out and understand what is likely to happen if they make different decisions.
With overwhelming agreement, CEOs say organizations must dive into ever-expanding data resources to develop new products and services as well as drive efficiencies and strategies. In the CEO Outlook survey, CEOs named data and analytics as a top three investment priority for the next three years: Half are already using data and analytics to develop new products and services; drive process and efficiency and find new customers.
Data Analytics: A Compass for CEOs
Organizations have always gathered data on their customers, but data analytics is particularly on the CEO’s mind because of the tremendous number of disruptors hitting organizations on a daily basis and feeding off of each other, says Fisher. These include the digitization of business; customers making quicker shopping decisions across devices and channels; and dramatically-changing technologies to run the business and manage data, particularly packages of cloud-based SaaS software.
“Applying analytics and getting control of data offers organizations a map, a compass, and binoculars to look down the road to see what’s coming and work to understand it,” says Fisher. “Without data analytics, CEOs are really flying blind.” If a competitor offers a new service, for example, the organization has to be able to react quickly. “The CEO doesn’t have months or years to be able to react. Waiting means losing market share, mind share and revenue to invest in that capability.”
The CIO’s Role as Data and Analytics Leader
While it presents significant opportunities, succeeding with data analytics is no easy task. KPMG’s CEO Outlook survey found that only 31% feel their organizations are leaders in data and analytics usage.
The CIO can play a tremendous role in this area, says Fisher. “The CIO needs to step forward and take a leadership position to help the organization,” he says, focusing on the needs of the enterprise — developing architectures and making sure capabilities are not built out in silos. For example, a traditional retailer may want to use data analytics capabilities to speed up planning cycles around product placement and promotion from a monthly to a weekly basis. It needs to connect with consumers on a real-time basis in a relevant, customized way, with connections up and down the supply chain.
“The traditional business models are breaking down, but redefining them and integrating them becomes really challenging,” says Fisher. “It is the role of CIO to think long-term how to break down those barriers.” In order to use data analytics to enable speed, agility, nimbleness, innovation and flexibility — what the CEO wants — the CIO needs a team of solution architects to think about the enterprise and how different software components will talk to each other. They must make decisions about software partners — platforms and packages —and how some tools may be built out internally, and the trade-offs of each strategy. And, they need to think about issues such as layered architectures, so layers can be swapped out without impacting everything that has been built.
CEOs Struggle with Data Analytics Distrust
As CEOs fight to keep up with the rising volume of data as well as the growing opportunities to use it, they often struggle with how to trust the data and the results of analytics. The KPMG CEO Outlook survey found that one out of 10 CEOs actively distrusts their organization’s use of data and analytics, while only a third have a high level of trust in the accuracy of their data and analytics
Here, the CIO can also lead the way, by helping the CEO trust both the quality of data, the use of analytics and issues related to privacy and governance. “The CIO stands squarely at the intersection of these business imperatives,” Fisher explains. “He or she must work as a mediator and facilitator to deal with these issues,” he says. There are security and data standards to meet. There are privacy and regulation standards such as HIPAA to understand. This can add other layers of complexity to trip the organization up as it works to boost speed, add nimbleness and lower costs. “It’s a lot on their plate,” Fisher adds.
The Application of Data Analytics for Today’s CEO
For today’s CEO, the power of data analytics is in knowledge, understanding and creating advantages for the business. The more the CEO can understand about the health and pulse of the business, the better — whether it plays out in a meeting with an analyst or internally with a board member. Applying data analytics also helps change the way the CEO approaches entering new markets and creating new capabilities — by helping the organization figure out how to compete in that market, rather than just playing “me too” or catch-up.
Today’s organizations are working to move and grow at the speed of business. The winners in this race, according to the KPMG 2016 CEO Outlook, will be the ones that can become agile, fast, flexible and knowledgeable — and it is the CIO that can help the CEO take advantage of data analytics to reach those goals.