Is there an economic benefit to using data intelligently?
Even as companies scratch their heads, trying to quantify the benefits of using data in their business, the jury seems to be out. Nasdaq-listed Splunk Inc., in collaboration with the Enterprise Strategy Group, released the Economic Impact of Data Innovation 2023, a global research report that quantifies the economic benefits of mature data practices.
The report reveals an interesting insights. The most data-savvy companies are increasing profits by 9.5%, are 2.9 times more likely to beat the competition to market, and are twice as likely to exceed financial expectations. The global survey was conducted from May to June 2022 in partnership with the Enterprise Strategy Group.
Insights were taken from 2,000 IT, security and business leaders from nine countries which included Australia, France, Germany, India, Japan, New Zealand, Singapore, United Kingdom and United States. The almost 10 per cent increase in profits might come as music to businesses which are seeing some stress due to an economic slowdown in developed markets.
Some in the industry share a similar viewpoint. Mike Hughes, CISO of REI said:
“A strong data foundation is essential to staying ahead of the curve–and we are proud of our proactive approach to extracting innovative value from our data. Our data visibility bolsters efficiency, competitiveness and resilience against an advanced threat landscape and macro challenges.”
Showing you the Money
Data leaders experience increased profits and innovation. With an average increase of 9.5% in gross profits, data leaders report launching nine new products per year that wouldn’t be possible without their data innovation capabilities, compared to the beginner’s average of three new products per year.
They are also more likely to report that applying data innovation to sales, marketing and customer service/support has contributed to increasing customer lifetime value (49%, versus 30% of beginners). In addition, data leaders are more resilient and quicker to identify and remediate security incidents by 11%.
Data leaders beat out their competition. Data leaders are 5.7 times as likely to say their organization almost always makes better decisions than competitors. They are 4.5 times as likely to believe their organization is in a very strong position to compete and succeed in their markets over the next few years.
Data leaders are proactively operationalizing and monetizing their data. Leaders are also more likely to say that their data monetization streams are additive and grow faster. They have operationalized 38% more of their data assets while also deriving 2.3 times as much of their revenue via data monetization.
Virtually every organization is under pressure to keep up with the rapid rate at which data is growing. However, the organizations that feel the most pressure are also having the most success: 67% of data innovation leaders report feeling a high degree of pressure versus only 41% of intermediates and 15% of beginners.
“Data-driven innovation gives you a massive edge,” said Ammar Maraqa, Chief Strategy Officer, Splunk. “Organizations that prioritize investments in collecting and using their data have full visibility into their digital systems and business performance, which makes it easier to adapt and respond to disruptions, security threats and changing market conditions.”
Data Leaders Innovate
Across every industry, data provides an opportunity to increase profit and improve performance, with unique challenges and outcomes. When it comes to the public sector- 20% spend more than a quarter of their IT budgets on solutions and staff that investigate, monitor, analyze and act on data — well above the 8% cross-industry average, the report stated.
For financial services, 79% have adopted AI/ML for data innovation, versus 67% overall. In healthcare, while 9% of surveyed organizations are among the most mature group of data innovators, 11% of healthcare and life sciences organizations achieved leader status.
When it comes to manufacturing, 54% apply data innovation to supply chain and operations use cases, compared to 45% of organizations across all industries. The retail sector has reported that an above-average 10% are data innovation leaders, and (retail) organizations are more likely to report greater brand loyalty, customer lifetime value, revenue from data monetization, product innovation and a multitude of other data innovation-fueled outcomes.