Moving from Analytics to Action Requires Planning

Analyst Viewpoint

Good analytics requires planning and good planning requires analytics. These worlds have largely been kept separate for decades but they shouldn’t be because each activity informs the other. But that doesn’t mean it’s easy to conjoin the two; in our recent Value Index assessment of Analytics and Business Intelligence vendors, only one-third of the vendors we evaluated offered planning capabilities. Even fewer offered integrated planning and analytics environments.

The analytics and BI software technology market today still consists primarily of tools that offer just read-only reporting and dashboarding capabilities. While vendors have improved ease of use, scalability and portability, there has been less focus on integrating what-if, driver-based planning capabilities. These types of planning capabilities require input from users and interactive recalculation capabilities that most analytics and BI products lack.

However, if one of the main purposes of analytics and BI is to support decision-making, then planning should be considered a critical requirement. Analytics and BI tools help line-of -business personnel create well-informed insights into the state of current and past operations. Those insights can lead to suggestions of actions to take in the future. For example, if a marketing campaign is performing well, the organization may consider expanding the campaign to other regions or other products and services. Before expanding the campaign, however, decision makers should evaluate all options to determine which course of action will best match the organization’s goals and objectives. That evaluation requires planning capabilities, which should be readily accessible as line of business personnel are assessing current and past operations.

Planning capabilities enable organizations to see projections of how different actions will impact their operations. For example, if a marketing campaign is expanded, analytics with planning capabilities can provide the likely bottom-line impacts of various alternatives, taking into con-sideration the costs of the expanded campaigns as well as both the revenue yield and costs of delivering additional products and services.

In our Sales and Operations Planning Dynamic Insights research, fewer than one-quarter (22%) of the participants reported that they managed the planning process well. Too often organiza-tions resort to spreadsheets to do the planning part of the process, but this approach is error-prone and difficult to audit. One of the ways organizations can improve the planning process is by using tools that combine analytics and planning. The planning tool then can help manage the various scenarios that are being considered and offer easy comparison of different outcomes.

This process is not as simple as it sounds. These analyses cannot be done off the top of one’s head. They should include forecasts of staffing costs, material costs, advertising costs and any other costs associated with the additional sales. These values will likely vary by region and type of product or service being sold. The only way to accurately evaluate different scenarios such as these is with analytic capabilities that project these values and makes them easy to compare.

Even if an organization is using or considering using artificial intelligence (AI), planning capabilities still will be needed. AI can help predict responses to the marketing campaign and then us e those predictions to improve overall response rates for the campaign. But without planning capabilities available to use as part of the analysis, it won’t be possible to forecast the inventory and staffing that’s required to meet the increased demand. That means it won’t be clear how the increased demand is impacting the bottom line.

Planning tools also help coordinate the process of collecting and approving plans. Planning tools can track the progress of the plans, highlighting which have been submitted, which are still outstanding, which have been approved and which are awaiting approval. Once plans are approved, they provide a baseline for comparing actual performance to the plan.

Analytics and BI are intended to support decision-making. Plans are the implementation of those decisions. Every organization should be evaluating, comparing and approving its plans in an effective and efficient manner. Avoid the temptation to rely on spreadsheets for the planning process. Consider tools that combine analytics and BI capabilities with the appropriate planning capabilities to improve the decision-making processes.