Data-Powered Enterprises Significantly Outperform Peers: Report The roadmap to harnessing data needs to be addressed beyond the technology department, including up to the top leadership
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Capgemini Research Institute in a report, titled "The data-powered enterprise: Why organizations must strengthen their data mastery', showed that data-powered enterprises vastly outperform peers on multiple financial measures, realizing 70 per cent more revenue per employee and driving 22 per cent more profits entitled.
The survey has found while applying data and analytics is becoming a prerequisite for success, less than 40 per cent of organizations use data-driven insights to drive business value and innovation.
In the research, Capgemini surveyed technical executives working in IT/data functions such as IT, information management, data management and analytics, and business intelligence from 500 organizations. Additionally, the institute surveyed business executives working across business functions from 504 organizations. Both surveys were conducted in August 2020 and covered organizations with at least $1 billion in revenue for the previous financial year.
Data mastery is critical to gain a competitive edge and organizations that do not take concrete steps to achieve this will struggle to keep up, highlights the report. Only one in six organizations can be categorized 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.
"Business leaders fundamentally need to look at their data strategy and innovation pathway," says Zhiwei Jiang, chief executive officer insights and data, Capgemini. "We still do not have enough data-minded leaders at the C-suite level to drive organizations on the right data journey. There is a lot more at stake for businesses who do not act; from operations to sales, customer engagement, revenue and profitability. Those that can monetize data and convert these into assets will thrive. Those that do not 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."
According to the study organizations are making headway on data-driven decision making and actioning. The research shows that 50 per cent of organizations put data at the heart of decision making. At a country and sector level, data-driven decision making is more prominent in the US by 77 per cent, 69 per cent in Germany and the UK, and in terms of sectors, banking and insurance are more data-driven. While progress has been made, a majority 51 per cent of the time, businesses still use historical data, meaning they lose out on a competitive advantage. Only 23 per cent of the time do they use predictive approaches, while 18 per cent of the time they use prescriptive approaches and use an autonomous or self-optimizing approach just 8 per cent of the time.
Data masters enjoy between a 30 per cent to 90 per cent advantage in metrics across customer engagement, top-line benefits, operational efficiency, and cost savings. For instance as the study shows that data masters realize a 19 per cent increase in sales of new products and services compared to 12 per cent for the rest, a 63 per cent improvement.
The report also maintains that major gaps exist between business executive's trust of data and the technical executive's perception of this trust; only 20 per cent of business executives trust the data while 62 per cent of technical executives believe their business users do so. Of the organizations where data is not trusted, the research found that only 24 per cent were able to monetize their data assets in comparison to 83 per cent where it is trusted. Poor data quality is a major contributor to this mistrust as only 27 per cent of business executives are happy with their data quality while 54 per cent of technical executives think their business users are happy with the quality. However, the consequences of poor data quality are significant, costing companies between 15-25 per cent of their revenue.Another key finding of the report is that while many organizations have started on their data journey, less than 40 per cent are able to harness the power of activated data. In terms of sectors, 54 per cent of banking business leaders agree that harnessing activated data gave them a sustained competitive advantage, compared with only 32 per cent of retail business leaders. Of the enterprises that are considered data masters, 95 per cent have an appointed chief data officer (CDO) and 77 per cent stated that the CDO has been instrumental in realizing the data vision of their organization. Given the prominence of this role, it is perhaps not surprising that 84 per cent of organizations surveyed stated that their CDO reports directly to the CEO, CIO/CTO, or chief AI officer. The overall roadmap to harness data needs not only to be addressed not only in the technology department, but up to and including the C-suite.