I recently pondered the value of a great analyst to a mid-sized public company (revenues around $1-2 billion.) Based on my experience at multiple companies, I estimate the productivity, typical project benefits, and costs of an average, good and great analyst. The differences in the return to a company are staggering with great analysts yielding double the ROI of a good analyst and triple the ROI of an average analyst!
My conservative estimates of analyst project results (annual value to the firm) are $460k for average analysts, $1.2m for good analysts and $3.1m for great analysts!
There are two primary drivers behind the much higher value produced by great analysts (illustrated in the following graph):
- More projects completed per year across all project types- strategic, tactical and day to day questions
- Each project completed will have much higher average value to the company.
From an ROI standpoint, great analysts are an exceptional choice and well worth seeking out.
From a practical standpoint, how do great analysts generate so much more value? They will:
- Connect with the business
- Work on the highest value questions that can be acted upon since they understand and listen to the business
- Think strategically, transforming and streamlining the analytics process over time throughout the company
- Bring in the right tools when needed and dispose of useless tools if supported by management
- Communicate results in a meaningful manner and socialize analytic thinking
- Refine analytic results to maximize the ability of the business to act
- Seek out new possibilities to improve the company via relevant analytics.
Tags: Analyst · Home · Management · Principles · Tableau · Tools3 Comments
Posted on June 12th, 2009 by
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Well i’d have to concur with you when it comes to the real value of an analyst. In my view i believe that analysts are the bloodline of any business as they comb through data and using advanced statistics,(MVA,PCA…etc) are able to
1.Prioritize what is most important to the company. eliminate waste
2.put the company’s goals in perspective
3.create a system that will help in automation of company policy
The flip side to that is that there exists very sophisticated software that is capable of screaming to you the future….but unfortunately some analysts lack the mere understanding of the power of the apps. Some charge licenses of up to $30,000 a year which is all good but if the analyst is not aware of what the software can do it looses meaning. Software is only as good as the user!
Great post. My hope is visual analytics will emerge with new weight in the 21st century. The combination of having highly skilled researchers/thinkers/and visual communicators, I am convinced, will be the difference between agile, successful companies and the rest. We need more stories told that cast a vision for the importance of good analysis.
Hi Stephen,
I think it should be expanded outward to include IT consultants.
Now, no guffaws. I honestly think an IT consultant can also have a huge hit on a company’s bottom-line. I’ll provide an example.
I recently switched a manual process at a very large company to an automated process. Cost savings:
Original process: 50 hours per diagram
New process: 30 seconds
Total engineers doing this process: 18
Average diagrams per year: (let’s guess) 10
Average salary per engineer: (let’s guess) $150,000 fully loaded
Ok, original process 18 * 1440 mins * 10 = 259200 mins = 4320 hours
New process, 18 * .5 mins * 10 = 90 mins = 1.5 hours
Total dollars saved; 4318.5 * ~$74 = $319,570
Now, I am being conservative, real dollars, and focused on direct costs/benefits.
Not sure about the numbers but they should be in line. It is late though and I am debugging code so double-check and question….;-]
Alan Churchill