Vertical vs Horizontal Integration of Data Analysts
I am passionate about whether a company should vertically integrate its analysts or have them horizontally integrated. There are critical differences between the two that can help drive innovation or clog corporate pipes.
To have your analysts vertically integrated means that each department in your company has its own analytics team. When work needs to be done, you find the department most affected by the analysis and have them do it. When you are horizontally integrated, you go to your BI team, and they will do the work based on the priority of the request. Several key areas will help you decide which way to integrate.
Budget
Ultimately, most companies come down to budget to make their decisions. Vertical integration is the easiest path forward when a company invests in its analytical capabilities. The marketing, merchandise, and operations departments are each given a budget for hiring going into the fiscal year and at the beginning of the data journey, convincing the finance team to create a new department is a big ask. You need to prove the ROI of a brand new team before you want to design and fill a new team that can include analysts, senior analysts, a manager, and a director. That is a lot for many small companies to take on and can be disruptive for big companies.
Creating SMEs (Subject Matter Experts)
The idea of having SMEs is enticing. You can have an analyst who spends their life in the weeds of CRM and knows all the ins and outs. Most members of leadership teams want "their guy" at the helm of research and analysis because they can have an invisible hand ensuring that the analysis will be aligned with their narrative. Being vertically integrated and having analysts focused on specific departments, they can begin to understand the actual intricacies of the data and have time to root out all the nuances. Cross-departmental work, however can lead to real growth in the understanding of data, allowing a company to leap into analytics.
Being able to see the Forest through the Trees
An issue I have with vertically integrated analytical groups is that, over time, they become hyper-focused on their department, and every issue begins to relate to the same primary problem. When you are a hammer, everything you see is nails. By allowing teams to be horizontally integrated and giving analysts time to work in all departments, you create experts of all but masters of none. However, these analysts are exposed to so much of the company that they begin to see how everything is intertwined. When faced with a problem, they are not looking at it through a merchandise or marketing lens; they understand the problem's impact on all departments and know that it isn't just an area affecting performance. It's a compounded effect of all efforts.
Redundancy
In corporate America, redundancy is the efficiency killer. During weekly/monthly/quarterly meetings, the CEO will look at results and ask an off-the-cuff question about performance in a market and how a new initiative interacted with a performance measure. All department leads take notice, move into "Hero Ball" mode, and call upon their analysts. It's a modern-day Helen of Troy story, where the leads set off a thousand ships to answer their leader's question. Analysts from across the company are working tirelessly to get the answer right. Ultimately, each department submits loosely identical findings that lean toward their department being the true heroes. So much time and efficiency are lost in this process as one or two analysts could have worked together in a horizontally integrated environment instead of several more all doing the same work.
Cross-Collaboration and the Silo Effect
The biggest issue in vertically integrated analytical communities is that analysis and testing happen without other departments knowing. Has your company had marketing run a test in a market, and during the readout, they couldn't understand why the impact wasn't what they expected? In the leadership meeting, they are talking about what they did and how the results aren't easy to read, and the operations team mentions they were running a test in the same market! While this indicates more significant issues within the company, a horizontally integrated analytics department would have caught this. When you have a team that works together and collaborates, all of the shadows are brought to light.
Consistency of Message
A company needs different minds to drive tangible results, leading directors to think they must vertically integrate analysts because it will drive a lot of creative ideas. But in reality, it drives inconsistent messaging to the leadership. A CEO can only act when they have a clear picture of what has happened and a consistent recommendation for moving forward. A central analytics leader can still work off the recommendation of several people but help bring together different ideas and deliver the message cohesively and transparently.
Burn Out & Growth
In my experience, analysts who are in a vertically integrated company tend to burn out faster. There is initial excitement when the analyst joins the team, and they dive in and begin to learn everything they can about the department. Over time, requests become redundant, and the analyst falls into a "same stuff, different day" attitude. Employees should always be encouraged to meet with people around the company and learn about other roles. Still, the reality is that most of the time, the analysts don’t have the time to learn. There is a backlog of reports to build and a priority list of ad-hoc analytics that prevents them from having the time to reach out and learn more about the business.
My Recommendation
A horizontally integrated analytics team is the superior option in my opinion. Investing in a quality Business Intelligence leader who can get the most out of your team of analysts is an invaluable asset for a company. It is a skill to consolidate ideas from a broad group of people and present them to leadership clearly and concisely. The efficiencies that are gained far outweigh the benefits of departmental SMEs. You can see your analysts primarily focused on supporting departments, but having regular opportunities to peek their heads out and do other work exposes them to new ideas and keeps your analysts around longer.
