How the recession is impacting Analytics and Data
For some years there has been a rising demand for data scientists but some industry experts are suggesting that this level of demand may be changing. The pandemic has had a number of impacts on economies worldwide, and as a consequence unemployment rates have increased. Businesses are starting to manage the economic slowdown and how this influences both investments and strategic decisions. One question some industry experts are asking is whether the historical demand for analytics and data science professionals will remain high or possibly slow down. Previous studies have suggested that the number of analytics and data science professionals was expected to rise dramatically over the next few years. In 2019, ‘data scientist’ was ranked as the leading position by LinkedIn in the US based on available job openings, salaries and career progressions opportunities. The considerable rise in data and demand by industry for more information has been highlighted as a key factor in driving this demand for analytical talent.
Studies suggest that as businesses start to create a new way of thinking post-pandemic, there will be a number of key factors that will determine decisions on the level of investment in analytics and data science. Clear return on investment will be one of the core metrics that businesses will closely observe to determine what remains during a period of recession. Businesses or projects that show little or an unclear return on investment will potentially be removed as a cost-saving process.
ROI is a challenging metric for data science as in reality many algorithms are unlikely to be implemented. Some studies suggest that over 80% of big data projects are unsuccessful. A report from McKinsey states that while investment into analytics is rising, many businesses are yet to see a clear ROI as they expected. The challenge is implementing analytics from a small scale project base to a wider business and integrating it in everyday processes.
In some cases, data groups that have shown clear value could thrive. Business leaders will explore analytics and data groups for support during a recession if they have a proven record of adding data-driven value. The level of support for creating a data-focused culture is another important element in determining the level of investment in this industry during a recession. If top-level support has created a data-driven culture then analytics and data will likely form a vital part of the company strategy.
For some leading businesses, the data and analytics side of their activity is vital during an economic downturn. What is critical for data and analytics is being capable of clearly emphasising what value it brings to a business. The leading players in the industry are in this position because of their ability to communicate their value to the wider organisation.
Based on feedback from a number of industry leaders, the clear ROI is inevitably the biggest factor in determining whether businesses will expand or reduce their focus in data science and analytics. For those that have shown a clear, strong and positive ROS, the demand for data and analytics may actually increase during this period.
The latest employment figures do show a gradual decline in new job postings but interestingly, the rate of decline in data science and analytics remains above the market average. In some markets, such as in finance and insurance, new job postings within analytics and data science has actually increased.
Despite the number of challenges and implications of a recession, many industry professionals are confident that data science and analytics will remain a critical part of delivering competitive success for many businesses.