Friday, December 05, 2008

How Web 2.0 will Change Analytics -- Part 1

By Tim Furey, CEO MarketBridge

Many of the posts on this blog focus on the types of analytics companies can use to generate customer insight from data. Great.

But an interesting trend I am seeing is how companies are procurring the software and services needed to deliver rich predictive analytics. Let's start with a description of the traditional model (see chart bottom):

1. Companies make major investments in "enterprise" platforms (ERP, CRM, BI) to automate core business processes like finance, supply chain, marketing, sales processes etc.

2. These major SW platforms are LOADED with lotsa feature/functionality in order to make the platform applicable to any company BUT most companies get 80% of the value from only 20% of the features that apply to their business.

3. But, by themselves these enterprise packages provide little business insight -- they just automate processes and collect data. Rather, most companies hire an internal staff of platform experts (e.g. SAP or Siebel experts) or external consultants to do analysis, insight and improve process management.

OK, so that's whats happened so far. But now companies are realizing that: a) automation is not enough, b) more insight and analytics is needed, and most importantly c) there are key, highly specialized, important business processes unique to each company that are not be easily automated by enterprise systems and for which they need unique, highly specialized data and analytics.

Some examples? Here are a few: the pricing process, price discovery, behavior based customer segmentaion and targeting, channel marketing programs, and solution configuration and customization. There are important, specialized business processes in every company that need: 1) some level of automation, 2) systematic data collection, and 3) intelligent data analytics to improve/modify strategy.

These specializded business processes are not amenable to "buying a software package" and then "hiring an expert". They need to be customized to each company's unique products and strategy and they need to produce data and insight unique to the needs of management. As powerful Web 2.0 tools emerge, we are seeing the emergence of is "tailored Web 2.0 solutions" -- a combination of customizable web-based BPM process automation platforms, systematic pro-active data collection, and then on-going analytics of process performance, and customer preferences. These are integrated solutions that combine sofware and services (see chart top).

Sound complex? Not really -- its already happening. In my next post I will describe some examples....

1 comment:

Andy Hasselwander said...

Tim, the post I wrote on "how to choose the right analytics partner" goes into this:

I think the key here is that analytic marketing will be delivered in a component / BPO model. Similar to IBM's on demand messaging.