We don’t generally consider data in and of itself to be a competitive differentiator. However, a new report from the Enterprise Strategy Group (ESG), Economic Impact of Data Innovation 2023, illustrates the value of data for enabling innovation, improving business resilience, and—ultimately—increasing profit.
Data is everywhere. Businesses and individuals create data constantly—at an exponentially accelerating pace. Virtually every click and swipe on every device around the world generates data. In 2021, 2.5 quintillion bytes of data were created every day. Experts predict that humans will produce and consume 94 zettabytes of data in 2022. Those numbers are so massive that they exceed our ability to comprehend what that even means.
It creates a significant business challenge for businesses. Organizations have to determine where and how to store the data they generate, and how to achieve and maintain compliance with various compliance laws and industry standards governing the retention and protection of data. As businesses mature, though, data transforms from an IT infrastructure issue to a seemingly endless source of intelligence and valuable information that fundamentally changes the game and provides a competitive advantage.
Economic Impact of Data Innovation 2023
The ESG report was developed in collaboration with Splunk. A global survey was conducted in May and June of 2022—gathering feedback and insight on data practices from 2,000 IT, security, and business leaders in the United States, United Kingdom, New Zealand, Australia, Singapore, Japan, France, Germany, and India.
A press release for the report shared some of the key findings:
- 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.
Balancing the overwhelming volume of data with existing data security, privacy and compliance requirements, while trying to extract value and intelligence puts data managers under intense pressure. According to the survey results, though, that pressure may not be all bad. 67% of those identified as data innovation leaders reported a high degree of pressure, while only 41% of intermediate data maturity organizations and 15% of beginning organizations felt that way.
“I think what was really interesting was just how impactful some of the metrics were around the leaders—or the data-savvy—versus the ones that are just starting out,” explained Ammar Maraqa, Chief Strategy Officer at Splunk. “There’s real financial impact or financial benefit, and it’s both on the top line and the bottom line.”
Ammar told me that one of the biggest insights for him in the report is that customers that end up doing well are the customers who are focused on the use case and the outcome they want to achieve with the data. He said that historically, a lot of organizations—and even vendors—view the problem from an infrastructure and tools perspective, and the use case for the data is a bit of an afterthought.
He also pointed out that there is an evolution of thought as organizations mature their data practices. Less mature businesses don’t know what they don’t know, so the exponential growth rate of data is less likely to occur to them at all, or only occur as a storage capacity question. Data-savvy organizations are much more worried about their ability to handle the increase volume of data because they have greater visibility and because they understand the opportunity cost of their ability to efficiently access and query the data to extract intelligence and value.
Impacting the Bottom Line
How can data give an organization a competitive edge and help to increase profit?
Ammar described Papa John’s as a digital eCommerce company masquerading as a pizza company. He shared how they use their data to keep their website up and running—understanding how to test offers and measuring user experience in real-time.
He also shared how Accenture built a supply chain control tower on top of Splunk, and are talking to their clients about the cost of disruption and the importance of leveraging data to streamline the supply chain. Ammar shared an example where Accenture worked with a supermarket chain and applied this solution to analyze their perishable food inventory—produce, hot foods, etc. He said they’ve been able to integrate demand supply signals—and understand how distribution, weather patterns, seasonal availability, and other factors impact their supply chain, and use that information to optimize and reduce waste.
“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,” said Mike Hughes, CISO of REI, in a press release quote. “Our data visibility bolsters efficiency, competitiveness and resilience against an advanced threat landscape and macro challenges. Splunk is a critical element of our overall strategy to ensure we can scale and deliver the best experience for our customers.”
Check out the full report for more detail. Take a look at the value and benefits highlighted for organizations that are more data-focused and data-savvy, and consider where your organization is in terms of data maturity and how you can improve your data practices.
The following Tony Bradledy, from 2022 provides their research perspective. HERE