IBM and MIT Sloan Management Review: Corporate Culture Key to Success with Analytics

Organizational challenges -- not technology -- impede more rapid adoption

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CAMBRIDGE, Mass. - 08 Nov 2011: New research released today by MIT Sloan Management Review and the IBM Institute for Business Value (NYSE: IBM) reports that organizational challenges, more so than technology hurdles, are holding companies back from fully integrating analytics across their enterprises.

According to a global survey of more than 4,500 executives, managers and analysts from more than 120 countries and 30 industries, 44 percent of organizations say cultural barriers to enterprise-wide analytics adoption, such as the requirement for new leadership competencies and organizational resistance to new ideas, are the primary barriers.  In contrast, only 24 percent point to technology concerns.

Org Challenges Graphic

Org Challenges Graphic:  New research from IBM and MIT Sloan Management Review reports that cultural barriers, more so than technology hurdles, are holding organizations back from fully integrating analytics across their enterprises.  This chart shows the percentage of respondents who rate these challenges as extremely difficult to resolve.

The new report, entitled "Analytics: The Widening Divide," builds on the findings from the original study by MIT SMR and IBM in 2010 to understand how companies are embedding analytics in more of the enterprise's processes and operations.  The 2010 study found organizations fall into one of three levels of sophistication: basic users referred to as Aspirationals, followed by the more Experienced users, and the most advanced users referred to as Transformed.  Year-to-year comparisons reveal that the more sophisticated users are expanding their deployment of analytics and widening the performance gap over their peers.

For instance, from 2010 to 2011 the percentage of respondents who cited a competitive advantage using analytics grew 23 percent for Transformed and 66 percent for Experienced organizations.  These same organizations are more than twice as likely to substantially outperform their competitive peers.  In contrast, Aspirational organizations lost ground in competitiveness, falling 5 percent since last year.

"Our new research shows that the early and aggressive adopters of analytics make significant gains in both performance and overall competitiveness," said Fred Balboni, IBM's global leader, Business Analytics and Optimization.  "These indicators point to an urgent need for organizations to foster a data-oriented culture and drive an analytics strategy that embeds fact-based insights into decisions and processes at every level of the business."

Competitive Advantage Graphic

Competitive Advantage Graphic:  The ability of organizations to create a competitive advantage with analytics has surged in the past 12 months, according to new research from IBM and MIT Sloan Management Review.  This chart shows the percentage of respondents who cited a competitive advantage using analytics, year over year, grouped by analytic sophistication levels

"We've found that there are three legs to the competitive analytics stool: a data-oriented culture, information management competency, and analytics expertise," said David Kiron, executive editor for MIT Sloan Management Review.  "Companies that have all three use analytics to deliver advantage in the marketplace."

The study found that the majority of organizations are using analytics to manage their financial and operational activities, but are less likely to rely on analytics-based insights for decisions in other key areas.  On average, less than 25 percent of Aspirational organizations, and one-half of Transformed organizations, say they rely on data and analytics to make decisions involving customers, business strategy and human resources.  Even Transformed organizations are not using analytics to their fullest potential, indicating ample opportunities for advanced users to do more and for less sophisticated organizations to create a competitive advantage by targeting analytics at key strategic activities.

While Transformed organizations use analytics more broadly across the organization than their peers, they differentiate themselves by intensely focusing on applying analytics to three areas:

The study examines how Transformed organizations are creating an advantage in the marketplace.  The analysis shows that of all the characteristics exhibited by this group, their proficiency in six areas (represented by the percentage of Transformed companies that say they possess these characteristics) distinguished them the most:

To access the full report, visit MIT SMR or IBM.  Go here for more information on the MIT SMR/IBM joint New Intelligent Enterprise project.

About MIT Sloan Management Review

A media company based at the MIT Sloan School of Management, MIT Sloan Management Review's mission is to lead the conversation among research scholars, business executives and other thought leaders about advances in management practice that are transforming how people lead and innovate. MIT Sloan Management Review captures for thoughtful managers the creativity, excitement and opportunity generated by rapid organizational, technological and societal change.

About IBM

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To join the conversation on the study, "Analytics: The Widening Divide," follow @IBMIBV or hashtags #IBMBAO and #mitsmr on Twitter, or join our groups on LinkedIn at IBM Institute for Business Value and MIT SMR.

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