Data-Powered Enterprises are 22 Percent More Profitable, Generate 70 Percent More Revenue per Employee
Data is the new oil is an old adage. And so is the impact data brings to any business strategy and growth. However, a lot of enterprises still struggle with it, whether it’s harnessing the data or using it appropriately to make business decisions or leveraging it to improve employee performance or even increase profitability or business presence. The usage of data is uncountable and hence businesses need to learn the tricks faster than ever before. A new report by Capgemini Research Institute titled ‘The data-powered enterprise: Why organizations must strengthen their data mastery’ reveals that while applying data and analytics is becoming a prerequisite for success, less than 40 percent of organizations use data-driven insights to drive business value and innovation.
The report also highlights that data mastery is critical to gain a competitive edge and organizations that don’t take concrete steps to achieve this will struggle to keep up. The importance of data has increased multi-fold in the past few months since we entered the new normal. Risk of survival depends largely on how you strategies your business and mold it to fit with the next normal. Data surely is going to play a pivotal role in tuning the businesses in the new direction, but still only 40 percent of the organizations are able to harness the power of activated data.
The Lackluster Still Prevails
When recently having a conversation with the CEO of a public company in Singapore, he described how he leveraged data to turn his company from a loss making entity to a profitable one. He described how using data reports, he shut the loss making departments and businesses while focused on those adding to the revenue of the organization. This turned his organization profitable within just a year. As per Capgemini report, organizations are making headway on data-driven decision making and auctioning. The research shows that 50 percent of the organizations put data at the heart of decision making. At a country and sector level, data-driven decision making is more prominent in the United States (77 percent), Germany (69 percent), and the United Kingdom (69 percent), and in terms of sectors, banking (65 percent) and insurance (55 percent) are more data-driven.
But the sad state of undermining data is still prevalent in the ecosystem, and Capgemini’s report seconds this. According to the report only one in six (about 16 percent) organizations can be categorized as data masters based on several factors of data mastery, including the necessary tools and techniques required to use and leverage data as well as the appropriate data vision, governance, skills and culture. While progress has been made, a majority (51 percent) of the time, businesses still use historical data (a reactive decision-making approach), meaning they lose out on a competitive advantage. Only 23 percent of the time do they use predictive approaches, while 18 percent of the time they use prescriptive approaches and use an autonomous or self-optimizing approach just eight percent of the time.
Hence mastering the data is no option but critical to business success. Data masters enjoy between a 30 percent to 90 percent advantage in metrics across customer engagement, top-line benefits, operational efficiency, and cost savings. They even realize 19 percent increase in sales of new products and services compared to 12 percent for the rest, a 63 percent improvement. However, there always remains a but in the story.
Major gaps still exist between business executives’ trust of data and the technical executives’ perception of this trust. According to the report, 20 percent of business executives trust the data while 62 percent of technical executives believe their business users do so. Organizations who don’t trust data showed that only 24 percent of them were able to monetize their data assets in companion to 83 percent where it is trusted. These numbers are surely scary and we need to act to ensure it doesn’t turn into a black hole that cannot be time travelled.
So what is leading to this mistrust? It’s the poor quality of data and the inability to segregate and analyze them to make meaningful conversations on decision-making tables. Poor data quality is a major contributor to this mistrust, which can cost the companies between 15-25 percent of their revenue. Only 27 percent of business users are happy with their data quality and only 54 percent of technical executives think their business users are happy with the quality.
Among the enterprises that are considered data masters, 95 percent have an appointed Chief Data Officer (CDO) and 77 percent stated that the CDO had been instrumental in realizing the data vision of their organization. One can realize the importance of this role looking at the fact that 84 percent of organizations surveyed stated that their CDO reports directly to the CEO, CIO/CTO or Chief AI Officer.
“Business leaders fundamentally need to look at their data strategy asand innovation pathway,” says Zhiwei Jiang, CEO of Insights and Data at Capgemini. “We still don’t have enough data-minded leaders at the C-suite level to drive organizations on the right data journey. There’s a lot more at stake for businesses who don’t act; from operations to sales, customer engagement, revenue and profitability. Those that can monetize data and convert these into assets will thrive. Those that don’t will get left behind. A mindset change is needed - leaders must accept and embrace an agile culture of experimentation if they are to achieve data activation.”