Why is Advanced Analytics all pervasive?
In the recent years, we suddenly see a growing trend of everyone wanting to do advanced analytics in some form or type. Why is that so?
I suppose everyone wants to do it because competition might get an edge over them and they might end up losing their customers or their process efficiencies will be less compared to others and so will become out priced and lose market share.
The question to be asked is if everyone adopts advanced analytics, at least for those in the same domain, where and what will be the differentiator.
According to me, the differentiators will be in 2 major areas:
- Although company X and company Y do the same business, their problem areas will always have some uniqueness. If one solves the problem area using advanced analytics, the results will automatically trigger a differentiator – it may not be a pronounced one, but subtle enough to have an edge in one area over the other
- The second area is who does the prediction of outcomes better, as in the accuracy of their advanced analytics programs. The higher the prediction accuracy, the more better decision making – faster, cheaper and better being the goal. e.g. in the sub prime credit lending market, the competition is intense, so the company that can predict delinquency with higher accuracy of its customers is the one who will make money.
The 2nd question to be asked is that in our quest for more efficiency, more predictability, better outcomes, one often wonders is there an end-point beyond which any additional analysis can only give results that have an extremely low ROI. Will the use the advanced analytics ever stop till such time, we have extracted every ounce of usability from a resource/ capability.
I believe the answer is no, because, every time we reach that peak, data scientists will look for a new horizon. E.g. in some of the most common problem areas to do with performance optimization, the once considered outliers, would have shed their anomalous nature, and all these outliers would have emerged to become the new data sets with their unique attributes.
Markets, customers, technologies and society will change and advanced analytics will find new problems to solve.