REACHING

MATURITY:
ANALYTICS IS
ONLY AS GOOD
AS ITS DATA
SIMON JAMES

There has never been a better time to

be a data analyst. There has never been
more data. There has never been more
boardroom attention. There has never
been more human interest in both our
own data and that of other people.
So, for all the talk of geeks inheriting
the earth and Harvard Business School
proclaiming data science to be the
sexiest job on the planet, why is it that
little physical evidence exists of brands
mastering the application of data analysis to their business practices? Even
Tesco, perhaps the brand most synonymous with data analytics, has not been
immune to market forces driving down
both its market share and stock price
over the past five years.
Creating competitive advantage
through analytics is difficult both to
achieve and sustain. Leadership is a
critical issue. The person accountable
for analytics within an organization
often does not hold a decision-empowered position or is not connected
enough to make an impact on business
strategy. A second issue is one of
adoption. Having the correct strategy
and gaining broad-based adoption of it
are two separate issues. A third issue is
one of transformation. Few companies
can communicate the process of how
they turn data into information, information into insight, and insight into action.

OUR PERSPECTIVES

Analytics is a means to an end

Data analytics is a means to the desired outcome of positive, commercial
impact. If the investment in analytics
cannot be tied back to real business
impact, then something is likely wrong.
Interestingly, people expect data analytics to prove the return on investment on
marketing activities, but few measure
it on the data analytics themselves.
For those students of calculus, you will
appreciate that this is a second order
differential problem. For everyone else,
this explains why companies data analytics functions are often underinvested,
understaffed, and misunderstood.

SapientNitro works collaboratively with

our clients to determine the scope and
shape of analytics services that will
succeed within their corporate culture
and service their business needs.
Broadly speaking, there are three target
operating models that data analytics
functions might form (see Figure 1).
Each has its strengths and weaknesses,
and it is often the culture, not strategy,
of the business that dictates which
solution is most appropriate. The three
models are:
Centralized: One big analytics
group servicing the entire organization.

A model for success

Hub and Spoke: A center of excellence supported by champions embedded within each business unit.

It starts with consultancy. Before

anybody starts adding up all the ones
and zeros, or working out how to
tag a mobile app with tracking code,

Decentralized: Each department or

business line conducts analytics independently and in a selfsufficient manner.

FIGURE01

CENTRALIZED

HUB & SPOKE

DECENTRALIZED

PROS
Single point of ownership
Center of excellence
Clarity of responsibility

PROS
Hub provides leadership
Spokes provide self-service
option/ownership
Flexible and scalable

PROS
High degree of local ownership
Embedded in business
Hard to govern

CONS
Risks ghettoization
Not embedded in business
Bottleneck

OUR PERSPECTIVES

CONS
Requires matrix management

CONS
No centralized learning
Hard to act consistently

The centralized model benefits from

having only one point of failure, easy
knowledge sharing, and the most
latitude for capacity planning. However, centralized teams risk creating a
bottleneck and making prioritization of
projects more political. Conversely, the
decentralized model benefits from implanting knowledge at the point of use
and giving individual business units full
autonomy. However, this model hinders
knowledge sharing and risks effort duplication. In the middle stands the hub
and spoke model, which is usually the
most popular, trading off the positives
of the other options while minimizing
the negatives.

Having a clear target operating model

with a widely communicated purpose is
a key driver of success. Yet leaders in
the field of analytics go further. They understand their investments in analytics,
from direct labor costs and software to
licensing and agency fees. They also
know what commercial impact this
work delivers and can, therefore, set
their level of investment intelligently.
Without this appreciation, data analytics is doomed to remain a cost center,
missing out on the link to revenue
growth. This explains why many client
analytics departments are fundamentally understaffed, and why companies
like us provide analytics services in
such volume.

LEARNING FROM THE LEADERS

Todd Yellin, Vice President of Product
Innovation at Netflix, was a bright spot
at 2015s SXSW Interactive Festival. He
shared highlights of how Netflix leverages data to produce insights and drive
product innovation. For example, Netflix
design and algorithm teams have run
more than one thousand A/B tests with
tens of millions of users to continually
improve the customer experience. They
have had many successes and, even
more importantly, many more failures.
He talked about "mountain testing" an
approach to testing major experience changes as one technique to counterbalance
incremental testing and optimization.
While incremental testing can get you to
the top of your current mountain faster
and faster, there are risks. Sometimes,
the focus on optimization can inad-

vertently lead you to forget about, or

ignore, any attempt to climb a higher
peak in the range.1
For example, Netflix spent many months
designing and building a beautiful,
colorful experience that their research
said kids should love. But it couldnt be
tested piecemeal they had to build the
new experience and then test it across
millions of visitors. In this case, the
experience simply didnt perform. And,
although they scrapped it, they were
able to use the data to avoid a major
investment in a complex redesign when
they launched in Japan.
There's an important lesson in this for
us as marketers: Know when to test
incrementally and when to look for new
mountains to scale. Be bold, take risks,
fail, and learn.

1
IPA UK. "Netflix and Buzzfeed on Test and Learn. http://austin.ipa.co.uk/post/113699851588/netflix-and-buzzfeedon-test-and-learn.

OUR PERSPECTIVES

Netflix created
mountain
testing to test
major experience
changes, not
just incremental
tweaks. #SXSW

The Analytics Value Chain

The diversity of types of analytics
from advertising effectiveness to
experience optimization to business
cases for digital transformation is
significant, as is the breadth of techniques applied to solve a vast array
of commercial problems.
SapientNitro has developed a unifying
framework of analytics that we refer to
as The Analytics Value Chain (see
Figure 2).
In this value chain, there are five incremental steps to achieving the highest
levels of analytics maturity:

INSTRUMENTATION
How to capture data from networks,
interactions, and behavior.

REPORTING
How to organize data into information.

ANALYSIS
How to generate insights from data.

OPTIMIZATION
How to programmatically apply insights
and fine-tune the process.

ADVANCED ANALYTICS
How to innovate and apply more advanced concepts (multi-variate statistics,
machine learning, algorithmic work) to
push analytics into new territories.
Everyone wants to maximize the strategic and commercial value of their data.
But we also understand that high-performing analytics is only possible with
strong fundamentals in place because
analytics is only as good as its data.
When analytics falls short, it is rarely
for reasons of technique or logic
it is likely due to incomplete or erroneous data.

Instrumentation: The foundation

Instrumentation is fundamental to good
data. Short-sighted instrumentation is
the number one reason why companies
fail at analytics its a productivity killer.

FIGURE02

The Analytics Value Chain

The Analytics Value Chain emphasizes the fundamentals of instrumentation and reporting before optimization and advanced
analytics. Analytical techniques are constantly evolving; this innovation helps brands move from lower value to higher value
positions. But as advanced techniques become widespread, they are commoditized and the process starts again.

CLIENT VALUE
Innovation

CONSULTING

INSTRUMENTATION

REPORTING

ANALYSIS

Commoditization

OUR PERSPECTIVES

OPTIMIZATION

ADVANCED
ANALYTICS

Poor instrumentation creates problems

down the line, and wastes valuable analytics resources creating workarounds
and post-hoc remedies.
With the rise of the Internet of Things,
the number of touchpoints that can be
instrumented to capture data is growing exponentially. This expansion makes
data capture more difficult and stresses
the need to automate data capture
wherever possible.

Reporting: Too often a placebo

Most client briefs end at the reporting
stage. This often proves to be a critical
mistake. The world is full of reports
that no one reads. They can be like
an industry placebo a sugar pill of
numbers. The very fact that reports are
being physically produced often gives
the illusion that all is well. Sadly, as
Churchill might have framed it, reporting is not the beginning of the end, but
the end of the beginning. Once you
have accurate and timely reports, the
fun really starts. Everything to this point
is preamble.
For a number of retailers, daily reports
are used to set priorities for the next
twenty-four to forty-eight hours. For
example, we generate a daily scrum
report and align the team based on
what happened the previous day. This
information then feeds retail operational
decisions when to discount or move
stock, what trends to jump on, and the
impact of weather-related shifts. The
way these retailers operationally tweak
their business on a daily basis can be a
valuable model for many other verticals
e.g., financial services, service
companies, and automotive.

Analysis: Real value creation

begins here
The analysis phase is where real value
is created. Drilling into the information we have, falsifying hunches, and
thoroughly following disciplined trains
of thought in our analysis, we look for
unstated problems and try to solve
them. Its worth reiterating that if you
dont get instrumentation correct, you
have neither the time nor the data to do
the analysis (see Figure 3).
For some clients, the analysis phase
can reveal signals coming from the
data. For example, imagine a scenario
where 3 percent of customers through
their behaviors can signal that they
were likely to switch to another provider.
Once you understand those signals,
the analysis phase can help the business make decisions about whether to
take steps to retain the client.

FIGURE03

The problem with (big) data

Big data is the problem, not the solution, for most companies. In this rough
sketch, the author notes that while the amount of data increases rapidly, the
amount of insight from that data does not.
35 Zettabytes2

Data

Insight3
2020
Approximate numbers.

I made this up but trust me, Im a professional.

OUR PERSPECTIVES

Optimization: Programs of change

Often, we formulate individual insights
into programs of change. These programs represent closed-loop learning
where hypotheses are tested and
iterated upon, and improvements in
performance are achieved through the
accumulation of marginal gains. These
optimization programs offer bottom-line
impact on everything from advertising
campaigns to digital experiences, and
ultimately, commerce conversion.
For one client, our analytics team
identified more than 100 potential
improvements to digital touchpoints,
which resulted in over $46 million in
additional, incremental revenue.

Advanced analytics: Seeing what

isnt there
Finally, the optimum application of
analytics is to see what isnt there.
We apply our knowledge of bleedingedge technologies, techniques, and
data to create solutions for problems
that brands didnt yet realize they had.
For example, our ability to make sense
of unstructured data with speed and
at scale is providing new insight into
areas where data analytics had
previously shone no light.

OUR PERSPECTIVES

Finally, the
optimum
application of
analytics is to see
what isnt there.

In one case, we helped a client identify

spot pricing opportunities in the oil
industry by identifying rigs, tankers,
fields, and refineries along the predicted paths of hurricanes (see Figure 4).
For a grocery retail client, we optimized
the layout of their dark stores (stores
that only take e-commerce orders) to
minimize transaction times and pass
those time savings onto consumers.
These are examples of applying tried
and trusted techniques to new sets of
data in innovative ways.

Realizing your potential

The promise of data analytics is real.
And data analytics as a driver of growth
is here to stay. Bridging the gap between the promise and value realization is best achieved by a systematic
approach. Linking effort to commercial
outcome and implementing analytics
across the entire value chain provide
the best chances for success. But in
order to achieve success, you need to
set yourself up for it. This means not
only ensuring that analytics is plugged
into the highest levels of your organization, but also appropriating data-driven
decision-making as a company-wide
issue and adoption measurement as a
key metric of success.

OUR PERSPECTIVES

FIGURE04

Hurricane path prediction

Advanced analytics combine new data sets with existing business problems to
deliver innovative solutions. Using predictive models, real-time location data, and
market information, we were able to identify spot pricing opportunities by predicting likely weather-related production changes.

Simon James
Vice President, Global Lead Performance
Analytics, SapientNitro London
sjames2@sapient.com
Simon is the global lead for Performance Analytics. For
the past 20 years, he has worked in marketing as a data
analyst. His team is responsible for measuring and
optimizing the effectiveness of our work.

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