Originally written by Helena Schwenk at MWD Advisors.
Our research suggests that whilst many organisations understand the value and power of predictive analytics and its potential impact on business efficiencies, competitive advantage and revenue generation, a high proportion didn’t articulate these ideas and notions within a business case. When asked why, many alluded to the fact that whilst they recognised its purpose, building a business case simply proved to be too darn hard.
And whilst it’s true that building a business case is not for the faint hearted – in part because many focus on hard to quantify benefits such as ‘improved decision making’ – there are many reasons why it makes absolute sense, especially when you consider that a strong business case significantly increases your chances of success; both now and in the longer term.
One of the primary purposes of a business case is to define and get a common understanding and agreement around the business value of your predictive analytics initiative. That’s because if everyone involved buys in to the concept there’s a much higher likelihood you’ll secure funding, as well as commitment and senior executive involvement for your project. What adds more weight to this argument is that there’s also a higher chance of better adoption rates since people will understand its purpose and why they need to get on board and change the way they do things.
Our experience shows that formulating a business case which articulates the expected benefits of your predictive analytics in quantifiable and measurable terms is a worthwhile endeavour. So instead of just stating a loosely defined end goal such as better or faster decision making your business case needs to focus on the impact analytics will have on certain business processes and the organisation as a whole.
For example one of the primary reasons that companies are turning to predictive analytics is to pinpoint and reduce operational inefficiencies and costs out of their internal and external business processes. For example the use of predictive analytics can help organisation take a more proactive and forward looking approach to planning and implementing cost cutting strategies such as identifying customers likely to churn and preventing the profitable from deflecting.
Similarly predictive analytics’ ability to create predictions about behaviour, preferences and needs can, if used correctly, be leveraged to deliver more effective business performance in a number of areas including helping predict how likely it is that a prospect converts or buys a company’s product or service.
In the graphic below, I’ve summarised the different groups of benefits that can flow from a predictive analytics investment.
When thinking about how to build your business cases it’s also important to take into account other softer factors such as your current culture, your type and size of organisation, the scale of your proposed initiative your analytics maturity and the skills and expertise you have access to, to succeed. For those with an established or evolving predictive analytics practice a compelling business case can also help build on existing successes, secure future funding and be used to communicate its business value to other parts of the organisation.
If you are struggling with where to start just remember than in an environment when many organisations are competing for resources and budget, a compelling business case can make the real difference between getting approval to proceed versus dropping to the bottom of the priority list.
You can read more about Building a Business Case for Predictive Analytics in my recent report, which is free to download for a limited time.