Business leaders reported a shocking lack of confidence in their ability to measure the effectiveness and impact of data and analytics (D&A) and a lack of trust in the analytics used to drive decision-making, according to Building Trust in Analytics, a new report from KPMG International.
Although the survey reveals that most businesses use D&A tools to analyse existing customers (50 per cent), find new customers (48 per cent) and develop new products and services (47 per cent), respondents do not trust that they are managing their D&A processes effectively to generate optimum outcomes and lack the necessary measures to assess the efficacy of those models.
Fewer than half of respondents said they are very confident about the insights they’re deriving from D&A for risk and security (43 per cent), for customer insight (38 per cent) and for business operations (34 per cent).
KPMG commissioned Forrester Consulting to survey 2165 respondents from 10 countries for the latest report.
Trust is highest at the beginning of the lifecycle, with 38 per cent of respondents reporting the most trust in data sourcing. From there, it slides downward with 21 per cent reporting the most trust in analysis and/or modelling and 19 per cent in data preparation and blending. Going from bad to worse, only 11 per cent have the most trust in using/deploying analytics and just 10 per cent in measuring the effectiveness of their analytics efforts.
“As analytics increasingly drive the decisions that affect us as individuals, as businesses and as societies, there must be a heightened focus on ensuring the highest level of trust in the data, the analytics and the controls that generate desired outcomes,” said Christian Rast, global head, D&A, and a partner with KPMG in Germany.
“Organisations that continue to invest in D&A without determining its effectiveness could likely make decisions based on inaccurate models, which would perpetuate a cycle of mistrust in the insights.”
A top-down problem, almost half of respondents reported that their C-level executives do not fully support their organisation’s data and analytics strategy. “Seventy per cent of executives believe that by using data and analytics they expose their organisations to reputational risk,” said Rast.
“Transparency about the use and impact of an organisation’s data and analytics is key to overcoming the long-held bias that conventional decision-making is more reliable,” said Brad Fisher, US D&A leader, and a partner with KPMG in the US.
Only 10 per cent of respondents said their organisations excelled across all areas in developing and managing D&A. While 18 per cent reported having appropriate frameworks in place across all areas of D&A governance, 16 per cent reported excelling in ensuring the accuracy of models they produce. Finally, just 13 per cent reported performing well in all areas of privacy and ethical use of data and analytics.
KPMG made seven recommendations for closing the trust gaps in the analytics lifecycle:
- Assess the trust gaps,
- Create purpose by clarifying goals,
- Raise awareness to increase internal engagement,
- Develop an internal D&A culture,
- Open up the “black box” to encourage greater transparency,
- Have a 360-degree view by building ecosystems, and
- Stimulate innovation and analytics R&D to incubate new ideas and maintain a competitive stance.