Achieving actionable insights:

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Achieving

actionable

insights:

Data and analytics

in the Caribbean

KPMG ISLANDS GROUP

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02 04

06 07

09

11 Foreword

Executive

summary

Key

_findings

A clear

_value

proposition

Few

benefits

yet

Maturing

the

definition

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19

22 14 16

24 Lagging

investment

set to boom

Cost and

risk versus

growth

Facing

common

challenges

Conclusion:

Moving

to a fully

embedded

D&A strategy

Taking

action to

encourage

adoption

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Everyone is talking about Data and Analytics (D&A). And for

companies headquartered in the Caribbean, the value of D&A is

clear. Yet our survey and our experience suggests that few – if any

– Caribbean-based organizations truly understand the full value

and benefits that sophisticated D&A can deliver.

Many organizations across the region and around the world have quickly found that turning mountains of data into valuable, practical and actionable business analytics is not nearly as straightforward as people believe. To gain a more concrete understanding of the opportunities and challenges that D&A presents, KPMG Islands Group commissioned a survey of 45 CFOs and CIOs from major corporations across the Caribbean region and compared the results against a recent global survey of more than 144 respondents from around the world. This report provides a snapshot of the current state of data and analytics in major Caribbean-based organizations. The findings are compelling: our respondents are clearly aware of the importance of D&A and most say they could benefit from improving their use of D&A. Yet this report suggests that few have invested anything into improving their IT systems over the past 5 years and less than half say they have changed their business strategy to take advantage of D&A insights. At the same time, respondents from the Caribbean are also facing many of the same challenges as their global peers. Issues such as systems integration and data capture capacity rank high with respondents; many are also struggling to implement the right solutions to accurately analyze their data.

Our report addresses some of the challenges organizations in the Caribbean will face as they start to embed data and analytics within their organization and navigate the cultural, managerial and operational changes that this will require.

We hope that the insights captured in this report catalyze business executives to start rethinking the way they approach their data and analytics challenge.

To learn more about the findings in this report – or to benchmark how your organization stacks up against the industry leaders – we encourage you to contact your local KPMG member firm or any of the contacts listed at the back of this report.

Foreword

Brenda Pope

Head of Management Consulting, KPMG Islands Group

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Nobody doubts the value that D&A can offer. All but 2 percent of Caribbean-based

organizations responding to our survey admitted that D&A was at least somewhat

important to their business strategies. Four out of five respondents said that it was either

crucially or very important.

Yet respondents across the region are also very aware that they may not be achieving as much value from their D&A capabilities as their global peers. Eighty-two percent of respondents from the Caribbean said they felt they could be getting significantly more from D&A, versus just 56 percent of global respondents.

We would agree. Our experience

in this report, suggests that most organizations are currently focused on just a fraction of the benefits that data and analytics could unlock. Many may not yet fully understand what D&A actually is, let alone what value it can deliver when properly harnessed. So what is really stopping business leaders from connecting the dots between data, analytics and business

respondents from the Caribbean region suggest that they are struggling to lay the solid foundation needed to become a data-driven organization.

For example, more than four-in-ten respondents said that their greatest challenge was in integrating data technology into their existing systems and business models. The vast majority (90 percent) also said they were

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correct solutions to accurately analyze and interpret their existing data. This report suggests that – in the Caribbean region – challenges related to funding and talent may be creating additional barriers to value. More than half (58 percent) of our regional respondents admitted to spending less than 1 percent of annual sales on D&A and IT over the past 5 years. A lack of talent was cited by more than half of respondents as a top-three barrier to implementing a D&A strategy.

But with global D&A capabilities rapidly maturing and increasing pressure on Caribbean-based organizations to improve the value of their investments,

it is also clear that D&A could provide a valuable competitive advantage – or, if the opportunity is missed, disadvantage – to those in the region able to move quickly and strategically. The benefits of embedding a D&A strategy are immense. Organizations with a strong D&A strategy will, for instance, find that they always have a number of scenarios and hypothesis on hand that would allow the organization to effectively respond to sudden changes of direction. A data-driven organization would also be highly capable of using data to manage its exposure to risks in marketing, supply chain and finance. And it would be able

to leverage those insights to ensure that it is selling the right products and services to the right customers. Those organizations able to connect the dots will be poised to achieve quantum benefits from their data and analytics. Those that cannot – or those that do nothing – will be forever submerged in data with untapped value.

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1. D&A on the agenda: 80% of respondents based in the Caribbean consider data

and analytics to be crucially or very important to their current growth plans

2. Benefits left on the table: 82% say they could be benefiting more from better

utilization of D&A

3. analytics specifically is in implementing the right solutions to accurately analyze

Looking for solutions: 90% said that one of their biggest challenges with

and interpret data

4. Integrating systems: The largest share of respondents (44 percent) consider

integrating data technology into existing systems and/or business models to be

the biggest challenge their companies have faced regarding data capture

5. A clear operational focus: Caribbean-based respondents were more than

twice as likely to say they were focused on operational improvements versus

innovations

6. Slow to change: Less than half of Caribbean-based organizations say they have

changed their business strategy to meet the challenges of big data

7. on D&A or IT over the past 5 years, but almost a third say they will spend more

Low but rising investment: 56% say they spent less than 1% of annual sales

than 6% of annual sales over the next 2 years

8. and analysis represents the biggest barrier to implementing a data and analytics

Capacity challenges: Respondents say that a lack of capacity for data capture

strategy across their business

9. greatly increased their understanding of their customers; only 24% say they

From insights to value: Just 29% say customer analytics has increased or

have seen a significant increase in sales

10. Clear disconnect: Just 23% suggest they are having significant difficulties

making decisions around analyzing data

Key

findings

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Caribbean

A clear value

proposition

Executives across the Caribbean and around the

world are well aware of the potential value that lies

within their data.

Caribbean respondents seem acutely aware of the value of D&A. Fully 80 percent of regional respondents said that D&A would be very or crucially important to their current growth strategies, versus just 69 percent of their global peers. Only one respondent from the Caribbean suggested that D&A would have no importance at all.

How exactly does D&A add ‘value’ to organizations?

Simply put, data and analytics is about providing more accurate, more insightful and more timely information to help guide decision-making across the organizations. For some, this would mean better information about customer preferences – often at an individual level – which could lead to new products and services. For others, it’s about identifying bottlenecks and process inefficiencies to drive enhanced productivity. And for almost everyone, it is about identifying potential risks and opportunities to help them remain ahead of their competitors.

The reality is that, while ‘value’ means different things to different organizations, the benefits of D&A are clear: better, faster and more insightful decision-making across the organization.

Data and analytics really got our

attention after the economic

crisis when we had to identify

potential business opportunities

in a more uncertain and

competitive environment. With

data and analytics, we gathered

insights on economic conditions,

consumer interest, changing

regulations and financial

conditions.

– Survey respondent

Note: Graph may not add up to 100% due to rounding. Source: KPMG Island Groups D&A survey 2015.

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Caribbean

Caribbean executives also seem to recognize that they may not be making the most of D&A’s capabilities yet. More than eight-in-ten respondents from the region admitted they could be benefiting more from better utilizing D&A, almost double the number of respondents from Europe, Middle East and Africa (EMEA) who said the same. Interestingly, respondents from Asia Pacific (AsPac) were almost as likely as those from the Caribbean to admit that benefits remained untapped.

Source: KPMG Island Groups D&A survey 2015. Note: Graph may not add up to 100% due to rounding.

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Few benefits

yet

According to our data, less than a quarter of respondents from the Caribbean have achieved any tangible value from their customer analytics to date. Just 24 percent said they had seen an ‘increase’ in sales as a result of customer analytics. In fact, respondents from the region were four times more likely than the global average to say they had seen no sales increases at all.

While respondents may expect massive opportunities

from D&A, few across the region seem to have managed

to translate their data into insights and their insights into

tangible business value.

Clearly, organizations across

the Caribbean are struggling

to turn their data into tangible

and sustainable value for the

business. But the data also

suggests that significant

competitive advantage can be

achieved by those ‘first-movers’

in the region who can properly

link D&A to customer outcomes.

– Donald Barnett, Partner, Risk Consulting, KPMG in Jamaica

Caribbean

Source: Going Beyond the Data: Turning insights into value, KPMG International, 2015 According to another recent survey by KPMG International

EARLY ADVANTAGES

ARE ALREADY

BEING ENJOYED

80%

86%

67%

of respondants say they are already making more accurate decisions

of respondants say they are already making faster decisions

of respondants say they are already reducing business risk

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Caribbean

Similarly, only 29 percent of Caribbean respondents said they had measurably improved their understanding of their customers by using analytics. And, once again, regional respondents fell far behind their global peers in driving tangible benefits; Caribbean executives were three times more likely than the global average to say they had seen no improvement in their understanding of their customers.

Source: Data and Analytics – A New Driver of Performance and Valuation, KPMG International, 2015

45%

of investors and analysts say they would view investing in a company in their sector more favorably if it were to use D&A to control costs, shrink inventory, and optimize resource allocation.

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Maturing

the definition

Rather surprisingly, respondents from across the Caribbean region seem to report extensive experience with D&A. Almost two-thirds of respondents from the region say they have been using D&A for more than 5 years. However, with just 35 percent of global respondents saying the same, the data suggests that Caribbean respondents may be confusing Business Intelligence (BI) and Management Information (MI) with D&A.

Respondents from the Caribbean seem to suggest they

already have significant experience using D&A and few

are willing to admit they are facing problems. Evidence

suggests that organizations across the region may need to

update their definition of D&A.

The reality is that D&A is much

more than BI or MI. It’s about

bringing together Big Data,

sophisticated analytics and

a deep understanding of the

business to improve

decision-making and identify new

ideas and new approaches

that – ultimately – improve

performance, reduce risk or

grow sales.

– Abigail De Freitas, Director, Management Consulting, KPMG in

Trinidad and Tobago

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According to another recent survey by KPMG International

Likely due to a difference of definition around D&A, respondents from the region also suggest that they face fewer difficulties in making decisions around analyzing data with more than half of Caribbean respondents saying they find decision-making only ‘somewhat difficult’.

KEY AREAS OF OPPORTUNITY

REMAIN UNEXPLORED

Less than a quarter say they currently use D&A to identify new revenue streams

ONLY ONLY

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KPMG Insight

From ad hoc data to sophisticated business insights

By Brenda Pope, Head of Management Consulting, KPMG Islands Group

D&A’s role in the future of business strategy is unquestionably huge. The fact is that winning in today’s markets requires world-class insight and the capacity to change direction at short notice. And the only way to achieve that is through enterprise-wide data and analytics enablement. In the past, decision making was largely driven by intuition and experience; whoever had the best ‘gut feeling’ would win. Today, the winners are defined by who has the more insightful grasp of their data.

The problem is that, while everyone may intrinsically know that D&A is going to be big, most still struggle to do it effectively. Caribbean organizations are clearly hitting roadblocks in determining which data to collect, in integrating D&A into their legacy systems and in getting value from their analytics.

Decisions are further complicated by a rapidly evolving ecosystem which is disrupting

organizations’ ability to adapt. New technologies are emerging and new sources of data are being uncovered at a breakneck pace. Social media feeds, customer blogs, mobile data: all of these are increasing complexity and creating new opportunities for organizations.

Going forward, business leaders will also need to focus on ensuring that they understand the veracity of their data. In fact, we believe that – as more and more unstructured and external data become integrated into the organizational analytics – the ability to gauge the trustworthiness of data and insights will be key to making smart business decisions.

However, the fact that a third of respondents from the Caribbean said that they had achieved no improvements in sales as a result of D&A highlights our concern that businesses don’t fully grasp the enormous potential value that sits before them.

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Cost

and

risk

versus

growth?

Facing high cost pressures and slow growth in most markets, it is perhaps not surprising that Caribbean organizations are looking to D&A to deliver operational improvements rather than new growth opportunities. Regional respondents were three times more likely to say they were focusing their D&A on process or performance efficiencies rather than discovering new innovations.

With operational benefits high on the agenda for Caribbean

organizations, few have yet to hone their capabilities

or their business strategy towards driving new growth

opportunities through D&A.

Organizations are more focused

on using D&A to analyze their

data with greater speed – in

other words, doing the same

things, only faster – rather than

as an opportunity to expand or

sharpen their insights in order to

do different things.

– Thomas Kelly, Managing Director, Insurance, KPMG in Bermuda

Caribbean

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Evidence suggests that organizations across the region and around the globe also understand the broad business impact of D&A. Around half of all respondents from the Caribbean and from Europe (EMEA) said that they had made changes to their business strategy to exploit the opportunities delivered by D&A; respondents from the Americas reported being the most likely to adapt their business models to respond to D&A.

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Facing common

challenges

Around the world and across the Caribbean region, executives suggest they are facing significant challenges integrating D&A capabilities into their legacy systems. Forty-four percent of regional respondents said that the biggest challenge they face regarding data capture specifically is in integrating data technology into their existing systems and business models.

Respondents also seem uncertain as to how to best proceed with their analytics with nine-in-ten Caribbean executives saying that they are facing significant challenges implementing the correct solutions to accurately analyze and interpret their data.

According to our survey, organizations across every

region are struggling to overcome common challenges

related to data and analytics. Capturing data and

integrating new solutions into existing legacy systems

are at the top of the agenda.

We frequently talk to

organizations that are struggling

to break down data silos

and create a consistent data

strategy. The bottom line is that

– if you can’t access or trust

your data – then you probably

aren’t getting valuable insights.

– Andrew Hamilton, Director, Management Consulting, KPMG in The Bahamas, Bermuda & the

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Source: Going Beyond the Data: Turning insights into value, KPMG International, 2015

The growing need to capture and analyze data is also creating significant problems for organizations with 58 percent of respondents from the Caribbean citing a lack of data capabilities as a potential barrier to implementing an enterprise-wide D&A strategy.

According to another recent survey by KPMG International

DOUBTING

THE DATA

STRUGGLING FOR

SUFFICIENT SKILLS

BIG CHALLENGES STILL REMAIN

of organizations have difficulties evaluating data quality and reliability

think they have all the talent and capabilities they need to fully leverage D%A

ONLY

58 %

14 %

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KPMG Insight

Creating an analytical workforce

By Shawn Christie, D&A SGI Champion, KPMG Islands Group

How best to put data and analytics to work within a business is a major focus area for most organizations, and organizational culture is one area that will require particular attention if businesses hope to move towards a data-driven operating model.

Organizations need to find ways to empower their workforce to be more analytical in their decision making. If they can get that right, they should quickly start to see analytics driving their overall people performance, their operational performance, their customer performance and their selling performance.

Risk management and compliance could also see significant benefits as testing can be targeted, root causes can be better analyzed and truly effective mitigation steps identified.

One of the most underestimated challenges facing many organizations is how to move from a ‘gut feeling’ decision to a data-driven culture. This

requires a pervasive shift in mind-set that can often be accelerated by adopting a collaborative federated model that cuts across silos.

Some of the world’s high-performing organizations are creating combined teams of functional and analytical professionals as a way to truly embed analytics-thinking into key business functions.

As is often the case, the key question these firms should ask is what they are trying to achieve from their data and analytics. Defining the business problems and identifying key hypotheses may not be the easiest thing to achieve up-front, but it is far more efficient and effective in the longer term. Throwing all of your data together and hoping for valuable insights will rarely – if ever – deliver meaningful results.

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Lagging investment

set to boom

The fact that executives are struggling to integrate D&A solutions into their legacy systems is not surprising. The majority – 58 percent – of respondents say they spent less than 1 percent of their sales on D&A or IT over the past 5 years. In comparison, the majority of global respondents (55 percent) said they spent upwards of 10 percent of sales over the same period, suggesting that Caribbean respondents may be working with older IT systems and infrastructure.

While our survey shows that investment into D&A has

historically been low across the Caribbean region, many

organizations suggest that investment levels are set to

increase significantly.

Caribbean organizations will

need to focus investment

into improving their legacy IT

systems, their data processes

and their D&A capabilities at the

same time if they hope to keep

up with global competitors.

– Brenda Pope, Head of Management Consulting, KPMG Islands Group

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Looking ahead, respondents from the Caribbean region indicate that investment into D&A is set to increase. One-in-five Caribbean respondents say they will spend upwards of 10 percent of sales on D&A or IT over the coming 2 years; 39 percent say they will spend between 1 and 10 percent of sales. However, it is worth noting that 42 percent of respondents still plan to spend almost nothing on D&A or IT over the next 2 years.

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KPMG Insight

Moving to predictive analytics

By Brenda Pope, Head of Management Consulting, KPMG Islands Group

It takes a lot of foresight to see beyond today’s problems to tomorrow’s opportunities. And it’s not about how much you are willing to invest in a D&A capability; it’s about how you use the tools, data and insight you already have. The truth is that most business leaders are not yet able to visualize or contextualize what D&A can deliver. Indeed, it’s not easy for many of today’s business leaders to fully grasp the quantum shift that smart data and analytics will have on organizational performance. Some liken it to asking the Wright brothers how they planned to land their airplane on an aircraft carrier when they were still just struggling to fly an extra foot. Predictive analytics is one such area. Essentially, predictive analytics allows organizations to identify hitherto unknown patterns in complex

data sets to not only start to see true causes and effects, but also to then use this insight to predict outcomes based on certain initial conditions. Whether it’s predicting when a customer will switch to a competitor or knowing – to a high degree of certainty – what impact a marketing campaign will have on sales, organizations are now looking to harness their data to make accurate predictions based on sound analytics. For many, gaining this level of vision requires business leaders to take a step back to pause and clearly consider what they hope to achieve from their D&A strategies. Only then can they start to find answers to the tough questions around data, new business models and innovation. And only then can they start to really unlock tangible business value from their mountains of data.

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Taking action to

encourage adoption

According to our survey, Caribbean organizations are adopting a variety of strategies to help drive adoption and enhance value from D&A. The vast majority (88 percent) say they have upgraded their IT systems (though, given the investment levels indicated in the previous chapter, the extent and value of these upgrades may be negligible) and around half say they have improved their data storage or collection in some way.

Organizations across the Caribbean are already taking

concrete steps to improve the way D&A is integrated

into their business. But much more must still be done.

Regional respondents are taking

strong steps to improve their

data collection and storage, but

they seem to be lagging when

it comes to turning that data

into better decision-making by

either improving the way insights

are visualized or by helping

management better understand

the role that D&A can play.

– Christopher Brome, Partner, Advisory, KPMG in Barbados

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Of those Caribbean respondents who said they had changed their business strategy to take advantage of D&A, more than two-thirds say they increased their D&A capacity while 59 percent pointed to attaining executive buy-in. Interestingly, 55 percent said they had focused on applying their insights to real business challenges in a timely way.

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For one, organizations with a strong D&A strategy will find that – while they have clearly stated goals and a strategic vision – there is no longer a ‘one-size-fits-all’ approach to strategy execution. Instead, the business would always have a number of scenarios and hypotheses on hand that would allow the organization to effectively respond to sudden changes of direction. Furthermore, a data-driven organization

insights to ensure that it is selling the right products and services to the right customers.

The achievement of risk and

performance objectives would become inextricably linked to the exploitation of the data and analytics. Marketing would still focus on the needs of the customer, but would do so with pin-point insight into how their activities would create top and bottom line implications. And

the gap in order to meet or exceed upcoming financial goals.

In other words, a fully embedded D&A strategy would mean that businesses and employees look first to data to guide their actions; that business decisions are made based on deep insight and keen analysis; that opportunities are naturally identified and exploited through predictive analytics; and that business flexibility is delivered through

Given these findings and insights, many executives are keen

to understand what a ‘fully embedded’ D&A strategy would

look like for their business.

Conclusion:

Moving to a fully

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Jamaica

Capacity to capture and analyze all

data from all areas of business

Bahamas

Sourcing talent or training existing talent to set up

and manage data and analytics infrastructure

Bermuda

Sourcing talent or training existing

talent to set up and manage data

and analytics infrastructure

Trinidad & Tobago

Identifying what data

to collect

Barbados

Capacity to capture and analyze all

data from all areas of business

What are the biggest barriers

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kpmg.com/socialmedia Andrew Hamilton KPMG in The Bahamas T: +1 (242) 393 2007 E: [email protected] Brenda Pope KPMG in Barbados T: +1 (246) 434 3904 E: [email protected] Thomas Kelly KPMG in Bermuda T: +1 (441) 295 5063 E: [email protected] Russell Crumpler

KPMG in the British Virgin Islands T: +1 (284) 852 4814

E: [email protected]

Kris Beighton

KPMG in the Cayman Islands T: +1 (345) 914 4392

Ashley Paxton

KPMG in the Channel Islands T: +44 (0) 1481 741 871

Brian Glasgow

KPMG in the Eastern Caribbean T: +1 (784) 456 2669

Micky Swindale

KPMG in the Isle of Man and Gibraltar T: +44 (0) 1624 681020 E: [email protected] Donald Barnett KPMG in Jamaica T: +1 (876) 922 6640 E: [email protected] Jan Grech KPMG in Malta T: +1 (356) 2563 1037 E: [email protected] Abigail de Freitas

KPMG in Trinidad and Tobago T: +1 (868) 623 1081

Gary Brough

KPMG in the Turks and Caicos Islands T: +1 (649) 941 3882