Just days after it was claimed data-driven firms are not only handling the Covid fall-out better but face a brighter future, a new study shows those with data at the heart of their business also vastly outperform their peers on multiple financial measures, realising 70% more revenue per employee and driving 22% more profits.
However, it seems the message is still falling on deaf ears for some because while applying data and analytics is becoming a prerequisite for success, fewer than two-fifths (40%) of organisations use data-driven insights to drive business value and innovation.
These are two of the key findings of a Capgemini Research Institute report entitled “The data-powered enterprise: Why organisations must strengthen their data mastery”, which also shows organisations that do not take concrete steps to bring data to the fore will struggle to keep up.
Even so, only one in six (about 16%) organisations can be categorised as “data masters”, based on several factors of data mastery, including the necessary data tools and technologies required to use and leverage data as well as the appropriate data vision, governance, skills and culture.
Organisations are at least making headway on data-driven decision making and actioning. The research shows that 50% of organisations now put data at the heart of decision making.
At a country and sector level, data-driven decision making is more prominent in the US (77%), Germany (69%), and the UK (69%), and in terms of sectors, banking (65%) and insurance (55%) are more data-driven.
While progress has been made, a majority (51%) of the time, businesses still use historical data (a reactive decision-making approach), meaning they lose out on a competitive advantage. Only 23% of the time do they use predictive approaches, while 18% of the time they use prescriptive approaches and use an autonomous or self-optimising approach just 8% of the time.
Data masters enjoy between a 30% to 90% advantage in metrics across customer engagement, top-line benefits, operational efficiency, and cost savings, the report claims. For instance, the research shows that data masters realise a 19% increase in sales of new products and services compared to 12% for the rest, a 63% improvement.
However, major gaps exist between business executives’ trust of data and the technical executives’ perception of this trust: only 20% of business executives trust the data while 62% of technical executives believe their business users do so.
Of the organisations where data is not trusted, the research found that only 24% were able to monetise their data assets in comparison to 83% where it is trusted.
The hoary old chestnut of poor data quality is a major contributor to this mistrust: only 27% of business executives are happy with their data quality while 54% of technical executives think their business users are happy with the quality. However, the consequences of poor data quality are significant, costing companies between 15% and 25% of their revenue, Capgemini reckons.
While many businesses have started on their data journey, fewer than 40% are able to harness the power of activated data. In terms of sectors, 54% of banking business leaders agree that harnessing activated data gave them a sustained competitive advantage, compared with only 32% of retail business leaders.
Of the enterprises that are considered data masters, 95% have an appointed chief data officer and 77% stated that the CDO has been instrumental in realising the data vision of their organisation.
Given the prominence of this role, it is perhaps unsurprising that 84% of organisations surveyed stated that their CDO reports directly to the chief executive, chief information officer, chief technology officer or even chief AI officer.
The “roadmap” to harness data needs not only to be addressed in the technology department, but up to and including the C-suite, the report states.
Capgemini chief executive of insights and data Zhiwei Jiang said: “Business leaders fundamentally need to look at their data strategy and innovation pathway. We still don’t have enough data-minded leaders at the C-suite level to drive organisations 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 monetise 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.”
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