Analytics Pose Competitive Advantage Questions for Service Providers

Analytics technology is like a three-legged stool. Its rests on three necessary components: talent (data scientists, analysts and project managers), tools (from Excel all the way to Watson) and data. The most powerful is data. Data yielded in analytics are incredibly valuable in addressing business problems. As I recently explained, that value can be extremely profitable for service providers. But when it comes to designing a significant competitive advantage for providers, analytics pose strategic questions.

Should a provider sell analytics as a pure, standalone service? Or should the provider sell analytics embedded into its other service markets? Or should it do both?

And there are additional questions to consider in making that decision:

  • If the provider sells pure analytics as a service, will it cannibalize its business?
  • Or does the provider even have a choice since, if it doesn’t do what the customer wants, another provider will grab that opportunity.
  • Will selling pure analytics instead of embedding it in other service offerings cause the provider to forego the opportunity to create differentiated services?

The issue at the core of whether or not to embed analytics in existing service offerings is the fact that the data service providers have access to is proprietary, owned by their clients. We’re seeing that increasingly clients recognize data value and are not willing to cede that value.

The Analytics Holy Grail

A service provider having the ability to use a client’s proprietary data in a broader context and therefore the base of a broader service business would be the Holy Grail in the analytics space. But how can providers achieve this outcome?

We at Everest Group have seen examples where the service provider creates a multi-tenant platform and provides the same or a similar service to multiple clients. The provider extracts the multiple clients’ data, combines it with broader industry data and embeds the analytics from that to provide an enriched service for the clients on that platform.

An example is a service provider that leverages proprietary transportation data from state and local government clients. The provider integrates those clients’ data into broader traffic data and gives back to those states and municipalities actionable insight that they use in reconfiguring road systems where there is an accident or delay.

Another example is analytics services derived from logistics systems of multiple tenants such as railroads, airlines or shipping businesses. Their data allows the provider to identify bottlenecks to the benefit of all. Healthcare analytics is another instance where it makes sense to sell analytics embedded in existing service offerings. Such an offering could compare patient data in large populations to extract information and patterns that allow for better patent treatment or clinical outcomes across a broad population.

Analytics technology is incredibly powerful and valuable, and service providers will enjoy profitability from this service, whether they sell pure analytics as a service or sell embedded analytics. But embedding clients’ proprietary analytics data into existing service offerings is the strategy for getting the Holy Grail.