Achieving Analytics Excellence Part Two: Building the Analytics Center of Expertise

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1 Achieving Analytics Excellence Part Two: Building the Analytics Center of Expertise Building the Analytics COE How to flourish in a chaotic marketplace: It s a longstanding challenge that encompasses economic changes, tightening regulatory environments, technological trends and innovations, and the formidable pressure to attract and keep increasingly savvy customers. The obstacles to most effectively meeting this challenge are steep: financial market chaos, slow growth and continued economic pressure, the need to constantly refine the product mix, increased demand for transparency, pricing pressures from lower-cost competitors, increased marketing costs, and shifting product distribution channels the list goes on and on. This paper is the second in a two-part series on how companies can learn to thrive in the chaos by designing, organizing, and building an analytics Center of Expertise (COE). COEs are not a new idea in information technology (IT). In fact, many companies already have COEs for other areas such as data governance. These companies have realized many of the benefits of COEs such as reduced costs, enhanced data quality, more timely data delivery, and a streamlining of processes and policies. The road map to the Analytics COE The COE cannot be designed and rolled out with a bigbang approach; it is simply too complex. Instead, most companies that choose to build an analytics COE employ a phased implementation that starts with defining the analytics requirements of the organization, designing a COE operating model, and progressing through to the enterprise rollout of the COE. The figure below presents a road map to design and deploy a COE operating model. Identify requirements Finalize design Roll out Optimize operating model 2 3 Months 2 3 Months 2 Months Ongoing Operating model components Business Operating People Establish foundation for CoE services, customers, and engagement and delivery Examine current operating processes Finalize organization structure Assess technology requirements Determine skill requirements for CoE services Finalize new operating processes Establish governance model Finalize roles and responsibilities Create resource management tool Develop necessary training Evaluate and revise performance management program Educate employees on CoE business strategy Services offered, customers served, and engagement and delivery Communicate/train employees on new operating strategy components Deploy new operating strategy Deploy resource management tool Deploy training, as required Deploy updated performance management program Monitor and measure new operating strategy Enhance people strategy for increased employee engagement and retention Figure 1: COE operating model road map

2 The road map is a guide to implementing the analytics COE. It is not an ironclad project plan that cannot be changed or customized according to needs or time constraints. However, no matter which implementation plan or timeline companies choose to design and deploy the COE, the effectiveness of the effort will largely be determined by two things: the quality and commitment of the COE leadership and the buy-in of the business units to the COE concept in general. Without these two crucial factors, the COE almost certainly will fail to reach its potential. The COE operating model In depth Once the COE road map is complete, most companies will realize that they have much of the technology, and some of the foundational processes, in place to most effectively implement an analytics COE. The next step is to flesh out the operating model and customize it to the analytics needs of the enterprise. our organizational structure look like, What will our governance processes look like, and What technologies will we need to implement in our business strategy? People strategy Questions such as How will we acquire, develop, and deploy our resources? and How will we manage and incent the desired performance? Business strategy The development of the business strategy portion of the COE operating model includes the creation and formalization of the COE service offerings. It also involves identifying potential customers and developing strategies to serve their analytics needs. The business strategy will outline the engagement and delivery model for the COE. The guiding principle of the business strategy should be to foster a sense of collaboration between the COE and the business units and functions. The figure below represents a sample COE operating model. Business strategy Services Customers Engagement and delivery Services: Definition of products and services provided Customers: for identifying and prioritizing internal and external users of services provided Engagement and delivery: Methods by which relationships with customers are formed and services delivered (e.g., engagement through cross-functional forums, delivery through PowerPoint presentation) Operating strategy Operating processes Governance Organization Technology Operating processes: Definition of inputs, outputs, and activities needed to provide services and support Governance: Decision authorities (which decisions need to be made and by whom), financial stewardship, and oversight Organization: Roles and responsibilities, reporting relationships, and organization structure Technology: Systems and infrastructure required to provide services. People strategy Figure 2: The COE operating model Development and deployment Performance management Development and deployment: Required skills and competencies, talent development strategy (on the job training and instructor-led training), talent staffing strategy (hire, redeploy, and shared resources) Performance management: How will performance be measured and what will be incentivized The purpose of the COE operating model The operating model should answer questions in three key areas: Business strategy Questions such as What will our services be, Who are our customers, and How will we engage the customers and deliver services to them? Operating strategy Questions such as What will our operating processes look like, What will Services The COE should offer a wide range of services to business functions, such as marketing, finance, sales, servicing, and human resources. Initial service offerings would most likely include: Performance management and analytics Analytics standards development, maintenance, and education 2

3 Analytics research Analytics delivery and the ability to synthesize information throughout the business functions The COE should strive to continually educate the organization on how analytics capabilities can be leveraged and enhanced, and it should provide support and leadership in these efforts. Customers The guiding principles of the COE customer business strategy should be to identify target customer segments based on their required services, prioritize those customers, define a service level for each customer segment that aligns with the COE s vision and strategy, and allocate COE resources based on the priority of each customer segment. Understanding customers, and prioritizing them, is foundational to the effective implementation of the COE. Typically, the highest priority customers for an analytics COE are organizational strategists. Strategists are usually involved in highly strategic, complex projects requiring sophisticated analytics methods. The sponsor for these projects is usually the head of a particular business unit or division. Thus, the exposure of the COE is large, and the stakes are high. Other customers of the COE might include those business units that have undertaken special, one-off projects that require complex analytical capabilities and that have high visibility within the company. The COE might also serve as resources permit workers in business functions involved in more operational roles, such as metrics calculation and reporting. Engagement and delivery The engagement and delivery strategy for the COE should communicate a clear menu of service offerings in a push engagement model that generates awareness of and interest in the COE s services. Over time, as the customer base becomes more engaged with the COE, this push model can be transitioned somewhat into a pull model where customers are aware of the COE services and leverage them as needed. It s also important to tailor service delivery methods to customer segments. The choice of delivery method will depend on the customer desire and a determination of the most effective means of delivering a particular service. Operating strategy The operating strategy for the COE entails the definition of operating processes for COE activities, such as intake and capacity planning, work prioritization, synthesis, and feedback. It also details the governance structure for the COE, as well as the roles, responsibilities, relationships, and organizational structure. Finally, it includes a description of the systems and infrastructure required to provide services. Processes One way to achieve operational efficiency is to define and follow standard intake, prioritization, and fulfillment (where feasible) processes for new service requests so that those requests can be quickly logged, correctly prioritized, and satisfactorily fulfilled. Having consistent processes can help in capacity planning, and it can allow for the synthesis of work and collaboration across analytical groups. Formal processes should also be developed to collect and incorporate feedback so that service improvement is continual. Governance and organization The foundation of the governance effort for the COE is a governance council with defined vision, membership, roles, and responsibilities. The council s first job is to establish the organizational structure of the COE, along with governance processes and tools, such as data standards, data policies and procedures, and service-level agreements. The governance council leadership should also promote collaboration between the COE and business units and use their input in developing the strategy and setting the direction of the COE. Technology The ultimate goal of the COE should be to implement a common technology platform for all analytics groups across enterprise to ease the implementation of common data standards and processes across business functions and units. The technology platform should present an easily accessible, user-friendly interface to allow for easy data manipulation by business users. People strategy Because of its particular function within the organization, the COE leadership should develop its own resource management system to efficiently deploy resources. 3

4 Development and deployment The first place to seek talented resources for the COE is within the organization, but it s also critical to forge relationships with top analytical universities to tap the pipeline of new ideas and talent. The engagement and continual education of COE resources can be fostered through opportunities to get involved in different types of project work across the enterprise, for example, rotational programs. Skills inventories can be developed to correctly deploy resources in roles that they are suited for. Balance quantitative experience with business knowledge. It s also necessary to provide ongoing opportunities for analysts to develop new and enhance existing skills (e.g., training, mentoring, information sharing, conferences). COE employees should also be coached on consulting and relationship skills to effectively engage and deliver results to the business. Performance management Performance evaluation of COE resources should align with the COE business and operating strategy i.e., it should incent analysts for collaboration and team interaction and for demonstrating innovation vis-à-vis new analytics capabilities and services. To further foster a sense of input and collaboration between the business and the COE, it would be wise to examine incorporating enterprise performance data and user feedback into the performance management system for the COE. One way to implement this would be to link and align the goal-setting process for COE analysts with the wider business and strategic planning process. Leading the COE Though it s not necessarily a part of the COE operating model, one final consideration in building the COE is reporting structure and leadership. Some companies choose to have the Finance function lead the analytics effort; some choose IT. Still yet, some forward-thinking companies are realizing the value of analytics to the enterprise and elevating the leadership of the analytics organization to the C-Suite. These companies have created the position of Chief Analytics Officer (CAO). While there are few official CAOs thus far, more will emerge. The role may not always have that title, but there is a need at least for a centrally coordinated model for someone to lead the analytics organization. The CAO could be either a permanent role, or it could be a transitional role for a company that needs to improve its analytical capabilities and requires strong leadership to do so. The roles of a CAO could include any or all of the following activities: Mobilizing the needed data, people, and systems to make analytics succeed within an organization Working closely with executives to inject analytics into company strategies and important decisions Supervising the activities and careers of analysts Consulting with business functions and units on how to take advantage of analytics in their business processes Surveying and contracting with external providers of analytical capabilities There is no right answer. Whichever reporting structure and leadership options companies choose, they must be the options that fit the needs of the company. It s also important to reevaluate reporting structure and leadership periodically to make sure that both are still meeting the needs of the organization. Wrapping it up Today, more than ever, many companies are looking to technological innovation to give them an edge on the competition. Technology itself, however, is not always the final answer. The way in which technology is leveraged and managed can often be more critical to achieving results than the technology itself. The analytics COE gives companies a leg up on managing the powerful technological capabilities inherent in analytics. With a COE in place, companies can realize the benefits of enhanced collaboration between business and technology and increased synthesis of analytics capabilities throughout the enterprise, giving knowledge workers and managers at various levels timely information they can trust. 4

5 For more information, please contact: Jane Griffin Americas Deloitte Analytics Leader Deloitte Consulting LLP Join the analytics discussion at This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright 2011 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited