Thursday, September 27, 2007

Analytics : Consulting, In-House or Outsourcing

Anunay has currently written an article in American Banker about Analytics Outsourcing (sorry, it need login, so I am not able to provide the link for the article). The article is titled "Catching the new wave of Globalization".

He has strongly put his points towards the need of Analytics outsourcing in the lines of other operations. I think, I agree with him completely.

There is a Business Process Metamorphosis. Every process start with a innovation by a specialized process solution vendor and it uses its expertise to serve prospective clients through Consulting route. When this process becomes a basic necessity of the clients some see an opportunity to open in-house division for it. But as the department grows and the cost involving to maintain in terms of both tangible and intangible assets becomes huge, some leaders think forward and outsource it. Then a new industry is formally born for the process which is different from the early movers. These new players are not only looking to prove some innovation but they look seriously to establish themselves as a potential process partner. They add tremendous value to their clients. And the party who adopts this for the first time will run much ahead of its competitors. And they deserve it.

I remember one example of Airtel India. Most of the network management and IT Management for Telecom industry was done in-house in India following similar rules in other developing countries. But Airtel came forward and outsourced both welcoming criticisms from all over. IT management was outsourced to IBM while Network Management to Juniper, Ericson and others. This gave Airtel board time to focus on other major priorities like expansion of retail outlets and focusing on customer service. The reward was awesome. Airtel jumped above the state-subsidized BSNL to become the country's largest Telecoms Company.

Now, similar changes are very look awaited in Analytics. Some of the US banks are off-shoring it by opening their captive off-shore centers for cost cutting. And they are gaining a lot. Citi is doing Analytics work mainly in India, Mumbai and Bangalore. The similar trend is being followed by various other banks.

But one point is missed. They are off-shoring but not outsourcing. It may be due to lack of good Analytics Outsourcing Vendors or the lack of interest by the parties to outsource due to the data sensitivity. What ever may be the reason, this is something that is coming in near future. The one who moves early will be highly rewarded.


Arpit said...

Good post..though I mainly wished to get more details on Analytics Outsourcing..Plz paste the relevant links if u have any.

Bhupendra said...

Thanks Arpit. I will post some relevant links if I get any but it is really hard to find as till now Analytics Outsourcing is not done in any major way. Few companies like Tesco (outsourced to Dunhunby) are doing it for quite sometime now.


Afzal Khan said...

Hey Arpit,

It's great to land on your Blog today. Nice article stuff on Business Analytics Outsourcing. Keep writing & spend few moment to my Blog too..

Would love to add your name on Blogger's Directory , do send me your details to add.

Afzal Khan

Datasmith said...

HI There,
Do you forsee analytical outsourcing in telecom & financial sectors to sustain or grow in the next 5 years? If its for growth then do you think that there would be a linear growth or exponential?

Also when we mean analytical outsourcing would it be limited to more or less reporting or will it also include a lil intrusion into the decision making system??

Bhupendra said...

I see analytics outsourcing to take place in all spaces, be it finance or telecom. There can be various reasons to do it:
1. It has to be done by third party for fair reports.
2. Analytics done by third party will beat the quality of inhouse as the third party will have knowledge of general market (may be the client's conpetitor too).
3. Outsourcing is always cheaper than building in-house.

I see exponential growth in analytics outsourcing atleast for next 10 years.

Third is really a great question. Analytics consulting is mainly done around decision making systems and now few KPOs are bullish on reporting and MIS works. But I would focus on complete outsourcing of Analytics activity, right from data handling and reporting to most complex decision making systems. I see Analytics growing in all ways be it marketing campaingn management or risk management; be it fraud detection to cross-sell campaigns.

Actually doing part by part is very costly. It is always to outsource these analytics works together, as most of the data works are common and that is most resource intensive.

I have tried to answer your queries. Hope it is of some help to you.
Thanks for your time.


Datasmith said...

Hi Bhupen,

Thanks for the reply, so according to your statements "I see Analytics growing in all ways be it marketing campaingn management or risk management; be it fraud detection to cross-sell campaigns"
the team which does the BI, BA work needs to be coherrent with the decison taking boards requirements/understanding/thinking & so on, which means the BI teaam needs to know the business very well & also the market forces that may impact or have a bearing on such a decision. Do you concurr? if yes then is marketelligent doing this? if no which company has this process alreday in place?

Bhupendra said...

We have actually started Marketelligent with the aim of doing those things only.
There are many Analytics companies to offer expert Analytics Services and BI products, but what they lack is the business understanding. Those companies have hardcore statistical modelers team in place and are bullish on the quality results they bring to the table. But sadly, there are many places where those works ends being reports as the business manager never understand those Analytics jargon.

Here we saw some scope to pitch in and formed a team of people having experiences in various fields of business. We have good modelers, analysts, marketeers, business managers etc. And I think, that is what any Analytics Team should be made of.

I see this question taking me to the basic approach we have thought of moving forward - Analytics Outsourcing (not consulting). Because I see to do a small project end to end (data extraction and strategy consulting to implementation in decisioning system and monitoring it) requires a lot of work, bringing the cost of the project too high. This can however be brought down if whole business decisioning function is out-sourced, as the data works (which is the major resource taker) will not have to be repeated for different projects.

I see we two at the same point. Business functions will have to be addressed by Analytics Team.

And if anyone need, Marketelligent does it.


Datasmith said...

hi bhupen,

Well said & done. Great!!!!!
But don mind me asking this but if business decisioning function is out-sourced then..............i think i can exaggerate to say fire the CEO lol right??????
Well i do concurr with you, but iam a lil sceptical about the decisioning function being outsourced at all.... i dont know

Datasmith said...

i love this statement,
"We have good modelers, analysts, marketeers, business managers etc. And I think, that is what any Analytics Team should be made of

which i think many companies are failing to build/cordinate and make it a consistent smooth & cross functional delivery system.
this is rampant around the world. And in europe most of the BI/BA projects have/ are failing because of this issue. If one is set right the other is not, if both are right something else is not, making every company handicapped in some or the other way in the speed, accuracy & effective decision making.
I hope you agree, my blog is all abt that now...

Bhupendra said...

Huh!! So you want to fire the CEO!!!!

I would suggest not to. Don't fire the CEO right after outsourcing the decisioning system, implementing and monoring various outsourced components may be equally challenging.

I will be closely following ur blog. Hope we have some good discussion ahead.


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Deepak Poddar said...

Hi Bhupendra,

Read your articles, very nice one. Would like to request can we publish the same content in my blog.

We are training people from various streams for Business Anallytics.

Bhupendra said...

Hi Deepak,
You may publish my articles in your blog. Please do me some favor by including my name, blog address and email id.


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