Why Retailers Should Outsource Their Analytics

As predictive analytics and price optimization take their rightful place in the science of pricing, more and more retailers are asking: Is it better to perform my analytics in-house or use outside vendors who are experts in providing this service?

In a recent RetailWire discussion (Do retail marketers have an appetite for data science?) BrainTrust member Gib Bassett cited Gartner observations: "Due to a lack of skills, marketers spend a good portion of their budgets outsourcing analytics," and, June 2015 CMO Council research, “Lack of measurement can hold marketers back and could be a reason why many are not adopting omnichannel strategies at all.”

The CMO report further noted: "…The majority of mature data-driven marketers expect external sourcing to grow over the next two years; and 30 percent of them expect to decrease their internal team size, taking more advantage of the efficiency, scale and expertise of service providers."

So RetailWire asked its BrainTrust of retail experts: Do you think marketers are wise to outsource so much of their analytics? Do you think internal data science teams are up to the challenge of supporting their companies’ needs? 

Here are some selected comments from that RetailWire BrainTrust discussion:

Ross Ely, President and CEO, ProLogic Retail Services

"Retailers should strive to learn and understand analytics but continue to use external resources to provide the function until the technology has matured."

Adrian Weidmann, Principal, StoreStream Metrics, LLC

"It is easier, quicker and cheaper to contract an outside resource with specific and unique expertise within the context of that business objective than trying to prioritize and reallocate internal resources that are focused on big-picture initiatives."

Larry Negrich, Director, Business Development, TXT Retail

"Marketing is all about the results, and superior analytics brings a competitive advantage. Retailers need to find the blend of internal and external that will give them that competitive edge… outsourcing can bring best-practices, delivery of new capabilities and perspectives, and freedom from learning curves and resource constraints.

price-m-150Mark Price, Managing Partner, LiftPoint Consulting, Inc.

"Outsourcing analytics to a firm that combines data science with a deep understanding of what is practical can permit retailers to accelerate the implementation of the insights dramatically. Over time, retailers will become more adept at conducting their own analytics, however if the goal is to accelerate time to action an outsourced firm represents a strong opportunity."

Peter Charness, SVP America, Global CMO TXT Group

“We know what we are doing and what we are looking for, but we need to buy more bandwidth of skilled expertise to get the job done.”

Other points of view: 

mathews-r-150Ryan Mathews, Founder/CEO, Black Monk Consulting

"…It’s easy to say that contracting gives no competitive advantage and therefore homegrown systems are better… (but ultimately) "It is not a question of either/or but rather of how internal and external data science resources can, and should, complement each other to provide invaluable insights…"

ball-b-150Ben Ball, Senior Vice President, Dechert-Hampe 

"…Using outsourced data analytics cripples internal marketing teams in a very dangerous way."

Roger Saunders, Global Managing Director, Prosper Business Development

"Analytics ownership needs to remain in-house…"

Kai Clarke, CEO, American Retail Consultants

"Marketers should be outsourcing their analytics… creating the reports to inform the retailer better should be left to a data science specialist."

Doug Garnett, Founder & CEO, Atomic Direct 

"Marketers should be developing the expertise in-house… But I find there’s a tendency in data science to believe sophisticated and complex analysis is the key to success."

And what about the availability of analysts to do the job (in-house)?

"Data scientists are in high demand these days." Charles Whiteman, SVP, Client Services, MotionPoint

 

"It’s easy to say we should develop the expertise in-house, but our data tells us that data analysts are hard to find." Paula Rosenblum, Managing Partner, RSR Research

And the best conclusion is: 

Ralph Jacobson, Global Retail Industry Analytics Marketing Executive, IBM

"Of course, internal organizations can manage some of the requirements of their companies’ needs. However, why would you rely solely upon internal staff when technologies can literally replace multiple data scientists more effectively for less expense? ... Internal management needs to look at their core strengths and true data analytics needs, and consult with multiple external experts to help identify the best path forward." 

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Naomi K. Shapiro

About Author

Seasoned strategic market communicator, Naomi headed public information for several academic and professional associations as well as founding Creative Brilliance Associates Market Communications. She created and published Brilliant Ideas for Publishers Magazine and authored popular newspaper trade reference, The Brilliant Book of Promotions, Sales Tools & Special Events. Simultaneously, Naomi savored the world as an adventure travel writer that included trekking on glaciers, fishing with saltwater crocodiles and swimming with piranhas. Naomi holds her M.A. from the University of Wisconsin, including participation in a unique industry-science-technical writing program.
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