Outsourced vs Inhouse Data & Analytics Teams
There are generally two resource approaches for Australian enterprises looking to enhance their data analytics and decision making - building BI software applications and supporting capability with inhouse teams based on a business intelligence software platform or partnering with an external BI services firm to use their resources and skillsets. Which is better?
Data analytics is a quickly evolving technology that harnesses data, Artificial Intelligence (AI) and advanced market insights to identify meaningful patterns in large data-sets. Smartly deployed analytics provides premium insights into an organisation’s performance metrics, and the complex, often bewildering, changes happening around them. In fact the most in-demand consultant skills in Australia according to Business Insider and research by Expert-360 are project management, process management, data science and data analytics for businesses with more than $500 million turnover.
While Deloitte’s Global Perspectives for Private Companies Report released this year showed that the top risk for Australian private companies over the next 12 months is the cost of keeping up with technological advances, while big data, cloud infrastructure and analytics were cited by Australian businesses as the three top technology trends expected to have the greatest impact over the coming 12 months. In fact, over 40% of Australian private companies were planning to invest in business intelligence/data analytics this year, while they are also moving to develop more flexible augmented workforces to achieve this.
So, when looking to enhance data analytics capability and resourcing the teams to support this, the option businesses pick can depend on various factors including budget, the size of the organisation and its goals. But, regardless of these, there are general pros and cons that will always impact the decision, which we’ll explore below.
Designing & Delivering Business Analytics With Inhouse Teams
Most businesses will have someone that is responsible for their business analytics capability. The larger the firm, the larger the BI teams, which usually sit under IT or Finance divisions, but can sometimes be departmental as well. When looking to evolve your BI capability some prefer to keep everything inhouse, taking a DIY approach to analytics based on the platforms chosen. There are some advantages and disadvantages to this approach.
Doing it yourself can offer greater control, and to some, less compliance risk (especially if you are accessing your own data).
As an internal resource servicing the analytics needs of the wider business, it can be assumed that you would have a deeper understanding of how the business operates, along with its business processes and systems, which should enhance any BI project.
Projects and internal resources can be internally prioritised to meet the demands of an initiative, however sometimes politics can come into play here.
Assembling analytics teams is difficult. For one thing, many companies lack the in-house knowledge and experience needed to put together an analytics team. What’s more, the labour market for analytics professionals in Australia according to recruitment specialist Robert Walters and industry analyst Gartner has grown increasingly tight. Plus it can take up to 18 months for an analyst to become value generating. The shortage of analysts — particularly those capable of developing and leading world-class teams that can enable a company to create a competitive advantage from its data and analytics — is driving organisations to consider outsourcing their analytics activities.
There is a high cost associated with attracting and retaining high calibre BI professionals inhouse. If you’re looking to move down the path of more advanced analytics, then you’ll need to add a Data Scientist to your team, if you can find one, which can cost you anywhere from $150,000 a year upwards plus employee benefits.
More often than not internal analytics resources are time constrained, find it difficult to keep up with adhoc reporting and analytics requests from the business and can be moved from one priority to the next. Ensuring you have the relevant skill as well within your team for the job at hand is important. Just because you have a BI specialist on staff doesn’t mean they are great at all aspects of an analytics project.
Keeping it all inhouse also means you don’t have access to literally decades worth of experience and specialisation that a partner would otherwise have.
Partnering with a Data & Analytics Consulting Firm
There are a lot of data & analytics consulting firms out there and it’s not always easy to choose one that fits perfectly. The best business intelligence consulting strategy is built around the idea of forging strong relationships from day one and delivering value to the client quickly, this has always been our motto. As with using an inhouse BI team, there are also a number of advantages and disadvantages to partnering with a BI Consulting firm that should be considered as well.
The obvious biggest advantage is cost. Outsourcing data analytics application development, integration etc means that you typically can get a highly specialised, senior BI resource without the full-time employee expenses of payroll taxes, benefits etc. You only pay for a specific deliverable.
Using expertise from a BI consulting firm will result in not just the right deliverables you’re after for a particular project but it will usually be accomplished far faster as there are no competing internal priorities for resources. They have all the technology and people at their fingertips as well as the experience and can usually easily flex resources up or down to meet your needs.
Outsourcing data analytics allows the management and executive team to focus on other core operations of their business.
BI consultants are expected to deliver results. They also bring with them a wealth of experience across different industries as well as similar businesses and projects that can add value. Many also have pre-packaged templates for industries, business processes or for integrating with various data sources which speeds up the development cycle and lets you leverage learnings from past deployments of others.
A large benefit of commissioning an external BI firm is specialisation. Dedicated business analytics firms need to keep up-to-date on the latest analytical techniques (which are constantly evolving), should know the business intelligence software platforms they focus on well, are thought leaders in the space and outmanoeuvre the competition simply by being better. Can the same be said of your recruits?
There is always a risk of exposing sensitive company data and losing confidentiality. Measures to ensure data security and confidentiality such as an NDA need to be put in place.
Is your business a priority for the consulting firm? Be certain that any agreement or scope of work has tight timelines and outputs, as well as being clear on roles and responsibilities both on the client and consultancy side. Do you have a dedicated project team assigned to you and does this include a Director of the external consultancy to ensure you receive the right attention. Always engage in regular work in progress meetings with the consultant’s project manager to keep things on track.
There can be communication breakdowns if the business sits back and relies on the outsourcer to handle it all. Again this is mitigated if there is a commitment on the part of the business to be actively engaged in the project.
Have You Done Your Due Diligence?
In many instances the advantages of outsourcing data analytics outweigh the drawbacks, especially for mid-sized and larger enterprises. It’s important to conduct due diligence to ensure the firm you choose has a solid proven track record of client success with references in your industry or the business process you’re looking for help with, and has been a BI and data analytics specialist for some time. Much of the success of outsourcing areas of data analytics comes from the relationship between the company and the consulting firm.
Regardless of the solution you choose, often the best choice may be a combination of applying internal teams alongside hired guns, whereby the inhouse teams manage the day-to-day work and you bring in external analytics specialists for the big projects, to manage workloads or to compliment internal skills gaps - this is what we’ve found works really well.
However, choosing analytics providers and structuring effective working relationships that deliver value require managers to have a clear understanding of what they’re looking for and the potential risks involved. Analytics capabilities need to evolve, just as other business skills have, to remain relevant to the strategic intent of the business.
Remember, it is not the data, but the people who can interpret and leverage it who are the real assets. Consultants who can combine their business intelligence credentials, with strategic acumen with an ability to explain analytics in layman’s terms, are rare. At BOOMDATA we’ve always made a point of ensuring that as a data & analytics services firm our advice and techniques must add value beyond those already operating at the client. If you’d like to know more about how we can assist in the areas of data and analytics scoping, application design, data management, data integration and training services for the leading Microsoft Business Intelligence platform, then reach out we’d love to hear from you.