Data analytics: flip the pyramid

Afbeeldingen over data analytics

Dr. Ronald Huisman

I frequently meet managers that want to start with data analytics, but don’t know where to begin. They are no data analysts or scientists and then I can image that data analytics seems to be a world of magic with its own slang. Other try to convince you that data is gold and that you should go for it and it seems to make sense. But how and what?

Searching for data analytics in my browser gives me the following images and that does not clarify. Data analytics is everywhere, but everyone seems to have its own definition or sees it differently or something else. And asking your IT people doesn’t help either, because they see data analytics from an IT and not necessarily from a business perspective.

Piramide

Quite often I see people using a picture describing data analytics as a pyramid. To be honest I have used it myself to explain data analytics to people. But I realize that it tells the wrong message to those who want to start with data analytics. The pyramid has a strong base labelled data (funny: data base). On top of that we have information, knowledge, and wisdom. It suggests following the path from data to wisdom, bottom up.

The impression that you get is that you should start with data when you want to start with data analytics. Start with I.T., data lakes and warehouses, data infrastructure, data management. A huge investment in time and resources. I have seen companies doing just that. Building such a base for three years and millions. And then what? For management, and I mean not IT management, this tells you that we have the data and we should use it. But it’s rather difficult to think, from having the data, what the next step is. How do we get to information? This brings you to fancy dashboards and reports but does not get you to knowledge or wisdom. Furthermore, it gives you the impression that the company has put all the internal data together in one lake. But (big) data is dynamic and many business challenges need data from outside sources to answer the questions. And every question needs its own set of unique data.

omgekeerde piramide

This pyramid tells you the IT side of things but does not help managers how to start supporting business challenges with data. I imagine that many IT companies and consultants used this picture to convince their clients. This is the IT impact pyramid. I started to realize how dominant such a picture is. It seems logical, build from a strong base and move up, but it also tells you that wisdom is smaller than data. What? I like to see it otherwise. Data can never be more important than wisdom. With wisdom the company can grow, innovate, become more sustainable and whatever. Therefore, I suggest flipping the pyramid.

This is the business impact pyramid. The business impact from wisdom is huge. More wisdom means innovative, growth, and sustainable (both financial as environmental) and more. Wisdom is biggest and on top. This is how I think manager should see data analytics. It helps you where to start. Let’s go top down. What is the wisdom that you need? What is the business challenge? Increase market share? Innovate maintenance? And then go down. What knowledge do we need for that? What information we need? And then, at the very tiny bottom, can we collect data to provide that information? And if this data does not exist within the company, we might find it outside.

Like any other management image, this does not tell the whole story. But I think that it helps managers to show data analytics from their perspective. Data analytics should not start with IT but with business challenges. Flip the pyramid.

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Dr. Ronald Huisman is Program Director van het programma Data Analytics voor Managers