July 4th, 2015 | Training

MIT study and the advantages of outsourcing Analytics.

The MIT Sloan Management Review had published a very interesting study called “Should You Outsource Analytics?” where they explain the benefits of outsourcing Analytics Services. Here’s a summary of the study:

The surge of interest in big data has led to growing demand for analytics teams. Having big data capabilities can help companies become more efficient and improve overall competitiveness. Companies with superior data analytics capabilities have found ways to build long-term advantages.

“Investing in an in-house analytics team is always an attractive proposition but is expensive and difficult to convince management to fund without fully knowing the future benefits. Outsourcing is an easier way to get capabilities quickly and at a low cost.”

Assembling analytics teams, however, is difficult. For one thing, many companies lack the in-house knowledge and experience needed to put together an analytics team. What’s more, the labor market for analytics professionals has grown increasingly tight. Fortune recently reported, “Online help-wanted ads for data analysis mavens have shot up 46% since April 2011, and 246% since April 2009, to over 31,000 openings now, according to job-market trackers.” The shortage of analysts — particularly those capable of developing and leading world-class teams that can enable a company to create a competitive advantage from its data and analytics — is driving organizations to consider outsourcing their analytics activities. However, choosing analytics providers and structuring effective working relationships that deliver value require managers to have a clear understanding of what they’re looking for and the potential risks involved.

By the turn of the 21st century, the birth of the analytics BPO was firmly established. A number of well-known Fortune 500 companies outsource and offshore at least some of their analytics.

Offshoring allows organizations to increase flexibility by making fixed costs variable, which in turn can boost other success factors. Researchers have also reported that the success of BPO partnerships is dependent on such factors as the geographic distance between onshore and offshore hubs, the existence of adequate infrastructure and connectivity, adequate language and technical skills and proper contingency planning. Customers must also be careful not to lose their expertise or their core intellectual property (IP), which suggests that companies should first do a thorough job of identifying which capabilities are core and which could be better served by an offshore provider.

The analytically challenged companies saw analytics BPOs as a way to obtain the resources and training needed to manage and execute their analytics and to gain quick access to important insights. As an executive at an analytically challenged company told us, “Investing in an in-house analytics team is always an attractive proposition but is expensive and difficult to convince management to fund without fully knowing the future benefits. Outsourcing is an easier way to get capabilities quickly and at a low cost.”

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