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If there were ever a sign of just how much the market for data analysis has matured, it came last year when IBM expanded the accessibility of its Watson artificial intelligence system to normal businesses through a slew of new cloud-based application interfaces.
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Once a pure research project into semantic analysis that required mainframe-class computing power, Watson has been catapulted onto the enterprise applications stage. The force that is driving that catapult is the likes of Asia Pacific banking giant ANZ and engineering giant Woodside demanding easier access to high-end analytics technologies that can derive new meaning from their growing accumulations of unstructured enterprise data.
It’s a sign of how far the analytics land rush has come that Watson’s technology has been reduced to a small-footprint enterprise appliance and that the cloud-based Watson Developer Cloud now facilitates extraordinarily complex natural-language and machine-learning analysis. It’s also a sign of how far it is likely to continue growing in 2016.
Research from the International Institute for Analytics (IIA) suggests that APIs will become a key driver for the new analytics economy, with 50% of business analytics software using APIs to integrate cognitive-computing capabilities by 2020.
It’s a continuation of what Gartner has labelled ‘the algorithm economy’ Gartner senior vice president and global head of research Peter Sondergaard called it “the next great leap in machine-to-machine evolution in the internet of things”.
He added: “Products and services will be defined by the sophistication of their algorithms and services. Organisations will be valued, not just on their big data, but the algorithms that turn that data into actions, and ultimately impact customers.”
Regardless of who you ask, analytics technology – and the need for CIOs to plan how best to utilise it – continues to dominate the list of enterprise priorities this year. IDC, for one, has predicted that big data-related server shipments will increase from 6% of all servers shipped last year to 16% by 2019.
Business analytics services spending is expected to grow from US$58.6bn last year to US$101.9bn in 2019, driven by a healthy annual growth rate. Business analytics has, IDC says, become a “backbone technology”.
The recent Teradata Data Analysis Index highlighted CIOs’ expectations from analytics investments, with 26% of those surveyed hoping to reduce the number of customer complaints, 24% to increase revenue and 20% to make customers more loyal.
To reach these goals, 71% of surveyed organisations said they were planning to spend more on data and information management solutions; 53% said they would consider creating new products or services based on the data they gather.
The year of transition
Increasing demand for analytics-driven innovation will contribute to a growing profile of CIOs as corporate innovators. It’s a perception that other IDC research found is particularly rife within line-of-business managers, who, according to the Teradata figures, account for 63% of data analytics project requests. Capitalising on these changes will require an enthusiastic embrace of analytics, both as a technology investment and a business initiative. The signs are that 2016 will be a key year in this transition.
“Big data and analytics solutions present a potential for significant business value,” IDC programme vice president for business analytics and big data Dan Vesset said in a statement. “Organisations that are able to take advantage of the most important trends will be prepared to reap new benefits and overcome challenges provided by big data and analytics solutions… Few third-platform initiatives can be carried out without involving business analytics solutions in some form.”
Yet the road to analytics nirvana remains anything but smooth. Skills, for example, will continue to be a real challenge for CIOs in 2016 as they seek to secure expertise to help implement and exploit analytics in the business. Poor use of data-related algorithms will lead to wasted time as teams reinvent established methods, Forrester has predicted. Meanwhile Gartner believes that 50% of business ethics violations will come from misuse of analytics capabilities by 2018.
If the risk of failure is increasing, so too are the potential benefits of success. IDC believes this year will see Asia Pacific organisations transitioning to an analytics environment that could separate analytics-capable organisations from their peers by delivering an extra US$65bn in productivity benefits by 2020.
Capturing the benefits
Newer analytics deployments across Asia Pacific suggest that adopters have already begun working to realise these benefits. Australia’s Telstra, for example, last year launched a Hadoop-based predictive analytics platform to analyse network performance better and to identify areas where proactive network maintenance may avoid failures and repairs down the line. And Philippines-based telco PLDT is actively shoveling data into a high-volume analytics system to cater for changing customer usage patterns better.
It’s all part of a broader digital transformation agenda that is increasingly led from the boardroom – and putting CIOs in the firing line. This agenda will dominate longer-term strategic planning through this year. By 2017, IDC predicts that 60% of the top 1,000 companies in Asia Pacific will have reworked their corporate strategy around a digital transformation agenda. Big data analytics will lie at the heart of that shift, with expenditure growing at more than 20% through 2019.
CIO imperatives for the analytics revolution
The pressure on CIOs to leverage analytics for business innovation has never been higher, and the potential rewards for getting it right are just as prodigious. IDC’s latest forecast identified 10 key elements to the digital transformation that CIOs must be driving in 2016 and beyond – and analytics is a fundamental platform for most of them.
- CEOs will drive digital transformation: by the end of 2017, 60% of the top 1,000 enterprises in Asia Pacific will have transformation at the centre of their corporate strategy.
- By 2017, 60% of transforming companies will have an executive position to oversee the implementation.
- By 2017, more than 60% of ICT spending will be for third-party technologies, solutions and services – rising to nearly 80% by 2020.
- By 2018, 80% of B2C and 60% of B2B organisations will scale their ‘digital front door’ to support between 1,000 and 10,000 times as many customers as today.
- By 2018, two-thirds of CIOs will embrace 'leading in 3D’ – simultaneous innovation, integration and incorporation.
- By 2018, insufficient collaboration, integration, sourcing or project management will cause the failure of 70% of siloed transformation efforts.
- By 2020, transforming enterprises will more than double their software development.
- By 2018, 35% of IT resources will be spent on creating new digital revenue streams.
- By 2016, 40% of IT organisations will shift their focus to advanced ‘contain and control’ security rather than traditional perimeter-based structures.
- By 2017, two-thirds of Asian CIOs will develop a data transformation and governance framework to support the transformation of information into a competitive business differentiator.