Companies Yet To Understand Predictive Business Metrics

by CXOtoday News Desk    Jan 17, 2014


Companies are collecting tons of data everyday and trying to make sense out of it, and tools such as Big Data and BI are gaining prominence. However, a recent Gartner study points out that when it comes to predictive business metrics, most companies fail to understand the context without which these tools do not lead to competitive advantage.

A study of nearly five-hundred enterprise business and IT leaders from across the globe reveals that, nearly half of the enterprises do not have the ability to access the metrics for understanding the key performance indicators that are most critical to supporting their business strategies. What’s even appalling is that less than one in three have a complete dashboard in place to provide visibility of these metrics in order to make informed business decisions on the move.

In contrary, Gartner notes that organizations that have figured out how to use predictive performance metrics can stand to increase their overall profitability by at least 20%, as it can guide them on the best next action to take in the context of a particular customer’s expectations.

Business process directors who don’t apply predictive metrics to cross-boundary business processes will leave their organizations vulnerable to the risk of failing to execute their business strategies. This will be crucial in determining the organizations who survive the shift towards a digital world and who will be left behind.
-Samantha Searle, Gartner Analyst

According to Samantha Searle, research analyst at Gartner, the problem with business and IT leaders is that  they often misinterpret the term KPI, which is a measure to indicate what you need to do to significantly improve performance, and is therefore predictive - and therefore refrain from using predictive process.

“They persist in using historical measures and consequently miss the opportunity to either capture a business moment that would increase profit or intervene to prevent an unforeseen event, resulting in a decrease in profit,” says Searle.

She believes that to prevail in challenging market conditions, businesses need predictive metrics — also known as “leading indicators” — rather than just historical metrics which the research firm calls the “lagging indicator.”

According to Gartner, organizations that adopt intelligent business process management suites and operational intelligence platforms can easily identify relevant predictive metrics and become profitable. Towards that end the research firm expects a greater investment in this area in the next one year, as it estimates the BPMS market to reach $2.8 billion in 2014, a nearly 9% growth from the previous year.