Analytics is changing how business gets done. Companies across all industries are going proactive and using Big Data to get a jump on market shifts, heightened competition, changing operational risks and more. And while launching a sophisticated analytics initiative might seem the preserve of Fortune 500 giants with seven-figure IT budgets, the good news for middle market companies is the cloud now makes it practical and affordable for them to play.
“The cloud is changing the game,” said Sarah O’Brien, practice area director for advanced analytics at consultants Bain & Co. “It enables the midmarket to get up and running without a deep implementation phase.”
Tapping analytics resources from the cloud, including data storage, processing and predictive software, means midmarket companies—those with revenues between $25 million and $1 billion—don’t have to spend millions on hardware and software licenses. Commercial, cloud-based analytics packages from large name-brand vendors can be accessed for as little as $9 per month for some .
Now on an equal footing
With cloud analytics, companies can streamline sales planning, manage customer relationships and optimize their supply chain and inventory processes. These packages allow companies to collect and use data to better inform business decisions such as when to hold a sale, increase inventory or even close a production facility. “This is giving midmarket firms the ability to compete on an equal footing with large enterprises,” said Chris Chute, vice president for customer insights and analysis at market watcher IDC. “It’s trickling down from the top.”
A recent survey by Deloitte showed 42 percent of midmarket companies use the cloud for at least some applications.
Companies in all areas, even those in the middle market, may find they have to spend more on professionals who can make sense of the mass of data captured and processed by analytics programs. It’s a bit of a dark art for which practitioners can earn well into six figures. “For the midmarket, realistically, the ability to attract and retain analytics talent is challenging,” O’Brien said, adding that it may be more practical to outsource analytics processing to a third-party specialist.
Health care by numbers
Many organizations are aggressively moving beyond generalized back office applications to adopt analytics technologies tailored to their business lines. Some of the most forward-leaning early adopters include companies in the health care, marketing services and education markets.
A West Coast-based research lab that studies the effectiveness of various medications recently adopted a third-party analytics package to identify patients at risk of an adverse medical event due to improper dosages or missing their meds altogether.
A study by the New England Health Institute found that poor medication adherence accounted for as much as $337 billion in direct and indirect health care costs in 2013. The federal Department of Health and Human Services, meanwhile, found that 20 to 30 percent of prescriptions are never filled.
Labs can now compare prescriptions issued to prescriptions filled for a given population and combine that with other data sets, such as demographic and consumer behavioral data, to identify at-risk patients. Providers can then use that information to create outreach programs where patients are contacted through email, phone calls or in-person visits and reminded to take their medication in the proper doses.
Higher education is an intensely competitive environment in which colleges and universities need better ways to track the student lifecycle: recruitment, enrollment, retention and alumni affairs.
The stakes are high. A by Eduventures showed that per-student acquisition costs can range from more than $2,000 per student at public universities to over $5,000 at private, for-profit institutions. Analytics, can, for instance, help administrators determine which inquiries are most likely to convert to actual applications, so they can spend more time with those candidates.
Retention also is key. One northeastern college recently deployed an analytics package to give an early warning if students are falling behind or at risk of dropping out. It allows faculty to intervene and hopefully get the learner back on track.
Analytics also supports marketing services by bringing greater precision to predicting demand, tracking customer behavior patterns, monitoring location performance and evaluating the comparative effectiveness of web, email and social media campaigns.
Such capabilities were particularly valuable for a $300 million operator of auto parts stores nationwide. The company tapped a provider of cloud-based web analytics to increase visitor engagement on its website. The program uses behavioral data to pinpoint visitors most likely to make a purchase, and immediately sends them an email with special offers and promotions. The campaign increased click-through rates by 18 percent and produced a 50 percent uptick in revenues per email.
Midmarket companies are likely to increasingly adopt analytics in the years ahead as technology and implementation become more affordable and success stories proliferate. Even now, marketing and other business line managers can access sophisticated analytics packages through the cloud simply by entering a credit card number. “It enables them to just go out and get their job done,” said IDC’s Chute.