Investing in Analytics in difficult times

by Geert Verstraeten, Partner, Python Predictions

At a moment in time where a previous economical crisis (starting in 2008) is still fresh in our memories, a new recession has emerged. One could argue that an economical downturn might offer benefits to the analytically skilled. Indeed, in these times, Return On Marketing Investment is key, and analytics may help to fine-tune marketing investments adequately.

However, it feels overly optimistic to say that analysts will necessarily prosper because of the emergence of a crisis. In difficult times, budgets are likely to be cut and investments in non-critical operations may be postponed. Additionally, purchasing or procurement departments plausibly gain in power, and company policy may require to include such departments even when negotiating small contracts. As analytical talents today are scarcer than other talents (e.g. IT-skills, managerial skills), it is not uncommon that internal experts team with external experts to obtain maximal success in high-visibility projects. But given the scarcity of analytical expertise, a general procurement department may not always have detailed experience on comparing different suppliers beyond the comparison of average daily rates.

In these times, it may make sense for all parties involved to look for longer-term analytical partnerships. Concretely, a Belgian company has recently decided to organize a ‘request for proposal’ (RFP) for a long-term analytical partnership. While it may seem a burden for internal experts to organize a large-scale RFP, and for external experts to compete in such procedures, it does make sense to structure some of the elements required for a successful long-term collaboration in Advanced Analytics.

I have used the original RFP for inspiration for this post (obviously after checking with the company in case), and roughly, the following four points are central to the request. In my humble opinion (but feel free to react!), they are all crucial, and I’ve tried to write a brief motivation for each:

  • Expertise: Advanced (e.g. Predictive) Analytics is a very specific domain requiring very specific skills. Experts have usually grown into their role by combining advanced and detailed training with professional experience on real-life projects. Today, both service suppliers and vendors focus highly on R&D activities and the creation of relevant new business applications.
  • Focus: While some organizations are purely focused on Advanced Analytics, other companies may offer Analytics as a part of their broader services offering. For some situations, a niche player will prove most valuable, while in other situations the broader range of services might prove most useful. Choose carefully.
  • Partnership potential: Engaging in longer term analytical partnerships usually requires a more intense form of commitment. It may make sense for all parties to work transparently and to share more strategic insights in return for agreements of confidentiality, knowledge transfer and perhaps even exclusivity.
  • Budget: Obviously, the budget may play an important role. However, to allow comparisons, it may make sense to take into account daily rates, speed (time to execute standard projects), and expertise when comparing budgets.

Obviously, I hope this post will more serve as a beginning of a discussion than anything else. Do you also sense an increased pressure to rationalize your choice of preferred supplier of analytics? An increased focus on long-term partnerships? A reluctancy to engage in long RFPs? Do you believe some points highlighted are irrelevant? Or that some neglected points are more relevant than these? Do you think such evaluations even makes sense without the emergence of a crisis?

Looking forward to reading your responses and opinions! Pls react by using the twitter hashtag #bqmr and feel free to interact directly: @pythongeert

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