Balanced Scorecard Uptake Data by Bain & Co.

Was doing some research and came across this post by Tom Davenport of Harvard’s Business School. In the post he postulates that the next big thing will be analytics @ the enterprise level.

He reference a study by Bain & Co. which is a fascinating study and which includes some must-see results (pdf) if you’re interested in the uptake of various management tools.

I disagree.

The idea, or concept, of analytics, is a very good one. And the technology is getting there, but there are many problems, some that are intractable. Here are the obstacles:

1. Data Integrity and Unified Schema

There are many organizations that are working on this problem, but there are precious few enterprises anywhere in the world that have the right data infrastructure to actually know that their data is the right data that a manager is after, and even fewer that can tie data across the silos that are modern management systems. For instance, a company uses SAP for X and PSFT/ORCL for Y, and it will be yet another failed data warehouse installation that will solve the problem of how all the data in one system relates to the other.

There are small companies that are working on this problem, but it’s far from solved.

2. Behavior and Management skills

Even if the above problems were tackled and solved, and people could get access to the data they needed, there is a general paucity of good sense around what those numbers mean, and how they affect the business.

3. Lack of data on external benchmarks

Knowing what your company is doing, without an easy way to get access to external data to validate that position, leaves you with a limited understanding of the world and your place in it.

I recently assisted an organization that attempted to discover their penetration into a certain software market. They bucketed their revenues by the type of development environment that the products were sold into, and concluded that they had a fairly good mix of product sales. I asked them what the baseline was for those development environments in the marketplace. They researched the penetration of the various development environments, and then superimposed their revenue shares against the relative market shares of the development environments, and suddenly a very different picture emerged: what seemed like a good mix in the absence of context turned into a lopsided distribution when weighed against the market.

It is almost impossible to readily find good data, at the line manager level, around the baseline market conditions, and it is even more difficult to know how to interpret data well, and to understand the causality or relationship between data.

In the next 3 years, even at the highest enterprise levels, the gut instinct and intuition are going to be better methods than crunching the numbers.