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Industrialisation of analytics in India: Big Opportunity, Big Outcome

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India’s current scenario
Trends in the India market, factors driving adoption
Demand & supply side challenges
Recommendations for stakeholders

Published in: Business

Industrialisation of analytics in India: Big Opportunity, Big Outcome

  1. 1. Industrialisation of analytics in India: Big Opportunity, Big Outcome Webinar discussion
  2. 2. Study methodology NASSCOMcarriedoutthisstudyinpartnershipwithBlueoceanMarketIntelligence: •Onlinesurveyamonganalyticsusers/non-users:BlueoceanconductedanonlinesurveyamongIndianfirmscoveringbothusersandnon-usersofanalyticsacross~600firms •In-depthinterviewswithusers(demandside):blueoceanandanindependentresearchconsultantjointlyinterviewednearly15analyticuserfirmstogetdeeperinsightsaboutanalyticsadoption,driversandchallenges.Thesefirmsrepresentedvariousverticalsincludingadvertising,healthcare,telecom,auto,eCommerce,microfinance,energy& utilities,CPG,etc. •In-depthinterviewswithanalyticsvendors(supplyside):NASSCOM’sinternalteamandanindependentresearchconsultantconductedin-depthinterviewswithanalyticsvendors(20firmsrepresentingserviceprovidersandanalyticsproductfirms)tounderstandtheirperspectivesonthedomesticmarketpotential •Secondaryresearch:Blueoceanresearcherslookedatbusiness,industry,andtechnologypublicationsforinformation 2
  3. 3. Pre-relational DescriptiveWhat is happening? DiagnosticWhy/How did it happen? Predictive What may happen? Prescriptive What should we do? Analytics: Progress from reactive to proactive, real- time response Evolution: From static to real-time, dynamic analytics Examples: •Sales reports •Customer segmentation Examples: •Web analytics •Location intelligence Examples: •Propensity modeling •Sales forecasting Examples: •Price optimisation •Marketing mix optimisation Complexity, usage of statistical methods 1990s 2000-2004 Pre 1970s Examples: •Data generation •Storage 2005-2010 2011 onwards Technologies Relational Databases OLAP tools Web analytics tools Data virtualisation Packaged analytics tools Mobile BINoSQLHadoop, Hive Cloud BI Big data HANA ETL tools BI suites Dashboard tools Data integration platforms Machine learning AI Source: blueocean, NASSCOM 3
  4. 4. Analytics: Globally, one of the fastest growing technology markets… •Increasingmaturity:Firmsworldwideexpandinganalyticsadoptionfromdescriptiveanddiagnosticanalyticstopredictiveandprescriptiveanalytics •Dataandanalytics-nolongersoleresponsibilityofIT:Organisationalculturechangingfromasiloedownershipofdataandinsightstocross-enterpriseapproach •Firmsdrivingcloud-basedBI:Newscenariossuchascollaborationwithcustomersandoutside-the- firewallmobileaccessalsoacceleratingadoption 35 42 51 42 54 71 2012 2014E 2016P •Self-serviceanalyticsbecomesthenormatfast-movingfirms:Businessesarebeginningtoexpectflexibilityandusabilityfromtheirdashboards.Monolithicinfrastructurestackswillpassinfavorofsolutionsthatcanworkwithnewdatasources •In-memorycomputingprovidinganopportunitytorethinkinformationsystems:In-memorycomputingwillhavealong-termimpactbychangingusers’expectations,applicationdesignprinciples, andvendorsstrategies •EmergenceoftheCDO:WhileitrolledupunderCIOprioritiesearlier,withanalyticspervadingacrossbusinessunits,theroleofChiefDataOfficer(CDO)isemerging Software Services CAGR 14.3% CAGR 9.7% Notes: E: Estimate; P:Projection #: Represents only outsourcing services market Source: Cloudtech, Gartner, IDC Global analytics market USD billion 76 96 121 # 4
  5. 5. …Driven by data explosion, access to affordable computing & business imperatives Volumeof data is exploding 10x increase Zettabyte 5 4 40 2013 2020 10X 2000 2014 Data comes from increasing Varietyof sources; with increasing Velocity:Social media, cloud, IoT, eCommerce, cloud computing Significant reduction in cost of acquiring, storing, managing data Increased need for analytics:Firms realisingthe value of analytics to compete and operate efficiently Data storage cost USD/GB 800 mn+ daily active users 6 billionhours of video watched every month 250 mn+ active users; 100 mn+ tweets every day 1 Exabyte data stored in cloud, growing rapidly 9 billion connected devices in 2018, up from 2 billion today Increased vendor activity:Analytics is emerging as one of the top revenue opportunities Analytics: A top priority for CXO’s CIO priority surveys (2012-2014) Priority rank for Analytics & BI 1 C–Suite survey, 2013 1 CIO Conference Poll, 201 1 State of CIO survey, 2014 1 99% Source: cdn.business2community, Gartner, IDC 0.1 –0.5 10
  6. 6. India analytics market: CAGR of ~25 per cent to cross USD 2 billion by FY2018 Indian analytics market (USD million) Notes: #-represents only outsourcing services market Source: NASSCOM India: Analytics landscape •Domestic market still nascent; to double by FY2018 •Rapid growth in internet penetration, mobile penetration, ecommerce driving data growth •Globalization, competition, regulatory compliance are also key foundational drivers •There is increased C-Suite awareness about benefits from big data and analytics FY2014E Analytics firms Start-ups Product firms Integrated firms** 600+ XXX XXX XXX Notes: *: The break-up given includes over-laps; hence a direct total can't be calculated; **: Top 100 IT-BPM firms who offer analytics services and products Source: NASSCOM 2 # * 92 XXX XXX 521 XXX XXX FY2012 FY2014E FY2018P Domestic Exports CAGR 24% CAGR 26% 613 954 2,275
  7. 7. Mobile and internet growth, technology base, growing economy sets the base for analytics growth in India Increasinginternet, mobile penetration driving data growth internet users 29 382 2012 2016 Smartphone users in India#(mn) Organised retailgrowing rapidly, driving need for analytics 2012 2015E 40.5 88.3 Increasedawareness at C-suite level Regulatory compliance social media users •Big data & analytics -No. 2(after cloud) in key areas for investment for CIOs •RBI’s Automated Data Flow initiative (ADF) •International Financial Reporting Standards (IFRS) •eXtensible Business Reporting Language [XBRL] To further push firms to invest in analytics and BI 243 mn 168.7 mn Organised retail* USD million Retail eCommerce is exploding (no of online shoppers) 20mn 2013 40mn 2016 Rapid technology adoption by Indian industry •Limited legacy IT challenges, enable rapid technology adoption •Huge potential for analytics as large number of Indian firms get increasingly IT enabled Growingeconomy, competition, globalisation •India: One of the fastest growing economies •Stabilising economy, globalization, increased on- data, fact-based decision- making tools Source: Accelpartners, Avendus, blueocean, CIOandleader, Gartner, IBEF, IBM 7
  8. 8. Mumbai 16% Bengaluru 29% Chennai 8% Pune 8% Delhi 11% Hyderabad 11% Gurgaon 7% Noida 7% Kolkata 4% India: Vibrant analytics vendor ecosystem •1.5X:GrowthinnumberofanalyticsfirmsinIndiainlasttwoyears •~3.6X:IncreaseinaverageemployeesofanalyticsfirmsinIndiafrom76in2012to270in2013 …Geographic spread in India per cent Analytics vendor landscape in India… Global in-house centres 50+ Pure-play analytics service providers 80+ BPMs & KPOs 80+ Integrated firms 100+ Analytics software / product firms 200+ Source: Analytics India magazine, blueocean, NASSCOM 8
  9. 9. 9 Key drivers: Data driven decision making, customer insights, improved performance and efficiencies 243 212 181 169 145 Base 286; multiple responses allowed, value indicates number of respondents ranking these in top 3 Primary factors driving Indian firms to deploy analytics No. of responses •eCommerce firms, BFSI and telecom, leading the charge •Firms in India increasingly looking to analytics to formulate business-driven strategies and derive value… •…and better manage costs, optimiseoperational processes, earn higher returns Source: blueocean, NASSCOM Verticals Adoption rate Telecom High BFSI High eCommerce High Retail Medium Manufacturing Medium Media & advertising Medium Government Medium Healthcare Low Education Low Better decision-making Driving sales and revenues Cost control, improve RoI Process efficiency & improvement Greater customer insights
  10. 10. Supply-side challenges: Proving business case, data veracity •CXO level commitment lacking -Analytics remains a priority to select teams/individuals •In many Indian organisations, there is a lack of understanding of analytics and its potential benefits •Customers focus on short term resultsvis-à-vis long term growth goals –more “output” focused than “outcome” focused •Data collection capabilities are not robust or standardised in many Indian firms; silo-eddata available, and these don’t talk to each other; no consolidated view •Reluctance to changeexisting internal IT structure or some of the existing organisational systems •Difficult in finding resources with knowledge of statistics and analytical tools plus domain knowledge, business analysis skills and program management skills •Internal analytics teams of customers not exposed to business side –leading to lack to understanding of requirements at both ends 10 Challenges mapped to analytics value chain Value Chain Stages Challenges •Organisational siloes •Existing systems Data Collection •User appreciation of importance of this phase •Existing systems •Cost of resources •Short term focus •Domain knowledge •Cost of resources Data Organization Data Analysis Data Interpretations Source: blueocean, NASSCOM
  11. 11. Demand-side challenges: Proving RoI, TCO, budget are key challenges; users find data siloes as a key challenge 11 Base: 286-analytics users and 312-non-users of analytics (multiple responses allowed, value indicate number respondents ranking these in top 3) Key challenges for analytics deployment •While many of the challenges were reported by both the users and non-users, there were some clear differences. •For non-users budget constraints came out as the number one reason closely followed by “unsure how analytics can benefit the organization” (Users) (Non-users) Source: blueocean, NASSCOM 31% 39% 42% 50% 57% 72% 77% 86% Lack of in-house expertise Where do I start? Lack of domain skills(vendors) Data collection issues Lack of managementsupport Cost of solutions andservices Unsure of benefits Budget constraints 19% 25% 34% 40% 43% 46% 53% 58% 64% Insufficient in-house expertise Where do I start? Poor data quality Budget constraints Management support, vision Analytics tool cost Vendor costs Sharing data across BUs, siloes Proving the RoI, business value
  12. 12. Over 60 per cent of users recognise relevance of analytics No opinion4% Not important5% Somewhat important30% Important38% Very important23% Importance of analytics Indian firms XX% XX% 18% 3% Central analytical group that closelycoordinates analytical activity acrossthe enterprise Central analytical group; somecoordination over analytical activityacross the enterprise Localised analytical capabilities that arebeginning to share tools, data & people Uncoordinated pockets of analyticalactivity Current state of analytics in Indian firms Users Base: 598; 286 analytics users, 312 non users Base: 286 analytics users Source: blueocean, NASSCOM No opinion9% Not important14% Somewhat important38% Important26% Very important13% Users Non-users Focus area for IT-BPM industry in immediate future 12
  13. 13. Indian firms recognise the relevance of leveraging analytics; but need to need to “industrialise” analytics 13 •In order to derive value from analytics, organizations need to “industrialize” analytics •Industrialization of analytics implies analytics programs that are tightly tied to business outcomes, delivered via engagement models that disaggregate the analytics process chain, hive out the repeatable and standard processes to centralized process teams, and use standardize tools & approaches •Very few respondents in our study indicated that analytics is “not important”. Business value Phase 1: Discover Phase 2: Establish •Deliver initial pilots/models •Organisational buy-in •Standardisetools, processes Phase 3: Industrialise •Link analytics business priorities •Disaggregate analytics, move “heavy lifting” processes to shared services teams/outsource •Standardisetools, processes Mid term Long term Short term •Data discovery •More of “art” •Analytics pilots Current state of analytics organization In Indian firms –(Users) 42.0% 37.4% 17.5% 3.1% Central analytical group that closelycoordinates analytical activity across theenterprise Central analytical group; somecoordination over analytical activityacross the enterprise Localised analytical capabilities that arebeginning to share tools, data & people Uncoordinated pockets of analyticalactivity Source: blueocean, NASSCOM
  14. 14. How can IT-BPM firms differentiate their solutions? 76% 69% 60% 54% 46% 31% 30% Base 286; multiple responses allowed, value indicate number of respondents rating these as top 2 on a 5 point scale Important criteria while selecting analytics solutions & services No. of responses Return on investment Proven cases, references Assistance in setting up analytics system Cost, discounts Vendor brand/reputation Product functionality Responsive after sales service Source: blueocean, NASSCOM Clear need for showcasing business value: •Demand side seeing value add in learnings from global and Indian peers Phase 1: Discover Phase 2: Establish Phase 3: Industrialise Hand-hold across the analytics value chain: •Integrate multiple data sources, optimise data utilisation, data security, maintenance •Lower total cost of ownership As analytics gets further embedded into firms’ business culture: •Greater demand for functionality across business value chain •After sales services –to emerge as a key differentiator 14
  15. 15. Engagement models: Largely hybrid of dedicated internal teams and vendor engagement •IntheIndiandomesticmarket,largepartofanalyticalengagementscontinuetobedrivenbyinternalteams.WhenIndianfirmslookatoutsourcinganalytics,largefirmspreferannuity/FTEmodels.Smallerfirmsoptingforad-hocengagementstopilotanalyticsbasedprojects,analysetheRoI,andthenmakelargerinvestments •Inmanycases,Indianfirmsworkwithanalyticssoftwarevendorsfortoolsandsystemsandimplementationservices,andthenhavetheirowninternalteamsrunandmanagetheanalyticsservices •IT-BPMfirmsofferinganalyticsaspartofthepackageddeal;independentpureanalyticsoutsourcingprojectsyettogainsufficienttraction Internal teams One-off/Project based engagement Annuity/FTE engagement Outcome based models Adoption by Indian analytics users High Moderate Low Negligible Source: blueocean, NASSCOM 15
  16. 16. Recommendations Vendors Users Academia Govt NASSCOM Increase awareness aboutanalytics Communicate the benefits of analytics Develop analytics talent pool, not just in tools, but also in domainskills, business analysis etc. Focus on long term benefits Be prepared to make investments in analytics Offer integrated services across the analytics value chain Address cost concerns of domestic clients 16 Recommendations for stakeholders What needs to be done to tap the domestic analytics market opportunity? Source: NASSCOM blueocean study
  17. 17. Recommendations Vendors Users Academia Govt Organizational focus, C suite commitment Strategic handshake between departments, cross-functional teams, focus Tie analytics initiatives to business priorities Integrate analytics with legacy systems and tools Disaggregate analytics processes, move standard processes to scalable delivery teams Standardize and leverage common tools & technology Address cost concerns of domestic clients 17 Recommendations for stakeholders What needs to be done to industrialise analytics in organizations in India? Source: NASSCOM blueocean study
  18. 18. Summary Foreachofthesestages,thesupply-sidewouldneedtoaddressspecificissues: •Phase1:ShowcaseRoI,usecases-valueaddinlearningsfromglobalandIndianpeers •Phase2:Addressentireanalyticsvaluechain-integratemultipledatasources,optimisedatautilisation,datasecurity,datamaintenance •Phase3:Industrialise:Greaterdemandforfunctionalityacrossbusinessvaluechain;aftersalesservices–akeydifferentiator Industrystakeholderswillneedtoworkona6pointagendawhichinvolves: Six point agenda for Industry stakeholders 1.Raising awareness 2.Creating talent 3.Variabilising cost of offerings 4.Standardising tools and technologies 5.Setting up cross functional analytics teams 6.Getting C-level buy in, to drive industrialisation of analytics in India 18
  19. 19. 19 Industrialisation of Analytics in India: Big Opportunities, Bigger Outcomes How to buy: Log on to http://www.nasscom.in/publicationsor send us an e-mail at research@nasscom.in Report Details
  20. 20. 20 Thanks!

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