Lots of business commentators are talking up the importance of business analytics.
A good recent example is Jeff Catlin, CEO of Lexalytics, whose company specialises in text analytics. He is quoted as saying growth for text analytics vendors in 2010 was 50% and is predicted to be 40% in 2011.
He also goes on to talk about social analytics, stating that in 2011 it will be a “crucial and mandatory element” for businesses.
Like many other commentators, we agree, but it is important to take a closer look under the lid. “Business analytics” can come in many forms, and “social analytics” in particular remains an evolving species for 90%+ of businesses. In this arena, the majority of vendors are still focussed on the “Voice of the Customer” (“VOC”) to attempt to track what is being said about brands, by whom, and possibly whether it is positive or negative. This is fine if the only concern is reputation, but there is one core flaw: a lack of transparency of meaning and value to the core business.
Small business analytics – what are the challenges?
So, the first important challenge is to make sure any analytics is able to transform company data into a valuable result for the business in question. In simple terms, this means aligning the metrics to business objectives. This may be as simple as defining and measuring the relationship between the “social data” and revenue, but this in itself is an important step.
There are two further challenges: firstly, in this ever-expanding world of data, ensuring the right data is monitored, and secondly, ensuring that the analytics is simple and cost-effective enough for small businesses to be able to use it. More on each of these on a future occasion.