Why Enterprises Need to Invest in Analytics


Enterprises are cautious of economic headwinds, focusing on cost optimization and restricting discretionary spending. Data from the ISG Index show that Q4 2022 experienced the lowest annual contract value (ACV) since Q2 2021, with a significant decline in spending on cloud-based infrastructure services.

The challenge: Enterprises need to shift their investments to support the most critical aspects of their business. This has put spending of the past year(s) under a microscope. We expect large transformation projects will be either self-funded by specific business units or have a stronger near-term ROI than in previous years.

The solution: As enterprises re-examine and strategize their investment priorities, analytics will be a critical component. Board members and business executives will need to see the potential for maximizing the value from digital technology spending in the past years so they can make data-driven decisions for business resiliency and growth.

New Investments in Analytics

Analytics is among the key investment areas – especially during economic downturns – to empower businesses to harness data for real-time, actionable insights and informed decision-making. And it does not require large budgets; tactical analytics solutions can derive meaningful insights and facilitate decision-making. Currently, enterprises are investing in the following solutions:

  • Embedded analytics and BI platforms: The first step to becoming data-driven with analytics is achieving data literacy and data democratization through embedded analytics and BI platforms. This will pave the way for citizen data analysts. Whether an organization has analytics maturity or not, an understanding of the way data flows and how it’s used can help define which programs and initiatives will be most effective.
  • Data governance platforms: While enterprises with low data maturity are focusing on efficient data management, compliance and security, enterprises with higher analytics maturity are relying on data governance platforms to achieve data quality.

Enterprises have made significant investments in cloud migration and digital transformation over the years and are now at a stage to drive analytics projects. They need their business leaders to derive value, including enhanced ROI, from digital investments. These are opportunities for service providers to showcase their data and analytics capabilities, in addition to their traditional ADM, cybersecurity and cloud migration acumen. As data takes center stage, it becomes paramount to embed analytics to drive enterprise decisions for optimizing costs, enhancing processes and improving overall business performance.

The Role of Analytics in Driving Cost Optimization

From a cost optimization perspective, enterprises are taking the following strategic measures with analytics:

  • Workforce reduction: As layoffs and resignations increase, business leaders will need to foster citizen data scientists to drive insights and make data-driven decisions to support business growth. This will, in turn, trigger data democratization and collaboration efforts between different teams and departments. Companies are looking to self-service modules, embedded analytics, business intelligence tools with low-code/no-code capabilities and cognitive technologies to process natural language. Every investment dollar in these areas produces sizable returns in savings and output.
  • Operational efficiencies: Enterprises are using analytics to enhance operational efficiency, reduce waste and improve productivity. Business units are using analytics to optimize their internal processes, streamline supply chain management and improve cost efficiency. Specific solutions to look for include supply chain analytics, ESG analytics, industrialized analytics solutions and digital twins.

The Role of Analytics in Realizing ROI

From an ROI perspective, enterprises will need to take strategic measures in the following areas:

  • Customer experience (CX): Customer-centric businesses seeking to improve customer value, CX, the customer journey and customer engagement have invested significantly at touchpoints such as conversational AI platforms, chatbots and other social media APIs. But are they using the data generated at these touchpoints to improve engagement, reduce churn and attract new customers? This question has spurred demand for customer analytics, small data analytics platforms, customer 360 and customer data platforms – and we expect to see more of these kinds of solutions in the future.
  • Data monetization: Enterprises that have already invested in building strong data infrastructures and data lakes in the cloud can readily share data across departments and functions to leverage insights for enabling newer revenue streams. This will serve to build comprehensive data models that drive a data-centric mindset among employees. Companies will be looking to data-sharing platforms, data hubs, data ecosystems, customer data platforms and supply chain platforms to help them more easily monetize their data.
  • Data trustworthiness: Businesses that are mature in data and analytics and want to maximize the value of data will be investing in tools to ensure data credibility and enhance data quality to empower decision-making. These tools will be in the form of data governance platforms, solutions and services.

The recently published reports ISG Provider Lens™ Analytics Services - U.S. 2022 and ISG Provider Lens™ Analytics Platform - U.S. 2022 explore these enterprise challenges and showcase providers and vendors that can actively address them. The reports also highlight the specific capabilities of these players to help enterprises choose the right partner to sustain and grow in the current economic environment.


About the author

Gowtham Sampath

Gowtham Sampath

Gowtham Sampath is a Manager with ISG Research focusing on emerging technologies and their impact on businesses. He is also responsible for authoring Provider Lens quadrant reports for Banking Industry Services and Analytics Solutions & Services market. Gowtham’s responsibility includes authoring ongoing research articles and blogs on the data analytics market covering a broad spectrum of verticals and across functional domains. In his role, he also works with advisors in addressing enterprise clients' requests for ad-hoc research requirements within the IT services sector, across industries.