How a Low-Margin Business Cocreated Analytics Value through an Innovation Partnership
Study: How a Low-Margin Business Cocreated Analytics Value through an Innovation Partnership
Business unit managers often feel they need to start analytics initiatives to remain competitive. Given the budget constraints placed on business units, including the internal IT business unit, managers have to find innovative ways to pay for the analytics initiatives. Since IT departments are cost centers, this leads to business unit managers trying to launch analytics initiatives outside the purview of the internal IT department. This trend is called shadow IT.
How it was studied:
This article examines how a low-margin company launched an analytics initiative with an analytics vendor that increased profit. The analytics initiative results in the service offering to sell advertising on the sides of the client’s diesel trucks. The solution tracked the number of people who viewed the advertisements and their demographics. The research offers recommendations for low-margin businesses looking to create value with analytics and for IT managers on how to handle shadow IT.
- Shadow IT can lead to innovation, so rather than focusing on restraining business units, IT departments can adopt policies to guide such ventures.
- Co-creation can help analytics vendors and clients explore ways to use analytics in the business.
- Co-destruction, rather than co-creation between analytics vendors and their clients, can emerge. This happens when analytics vendors make up-front investments to help clients explore ways to use analytics that the client does not reciprocate. The client might take the ideas and do it themselves, hire a different vendor, or not move forward.