We generally don’t see data itself as a competitive advantage. However, a new report from the Enterprise Strategy Group (ESG), The Economic Impact of Data Innovation 2023, sheds light on the value of data in enabling innovation, improving business resilience and ultimately increasing profits.
Data is everywhere. Businesses and individuals continue to create data at an exponentially accelerated rate. Every click and swipe on nearly every device in the world generates data. In 2021, 2.5 terabytes of data will be created every day. Experts predict that by 2022, humans will generate and consume 94 zettabytes of data. These numbers are so vast that it is beyond our ability to understand what this even means.
It poses significant business challenges for businesses. Organizations must determine where and how the generated data will be stored, and how to achieve and maintain compliance with the various compliance laws and industry standards that govern data retention and protection. However, as businesses mature, data transforms from an IT infrastructure problem to a seemingly endless source of intelligence and valuable information, fundamentally changing the game and providing a competitive advantage.
The Economic Impact of Data Innovation in 2023
The ESG report was developed in partnership with Splunk. A global survey was conducted in May and June 2022, collecting data from the US, UK, New Zealand, Australia, Singapore, Japan, France, Germany and India.
The report’s press release shared some key findings:
- Data leaders experience higher profits and innovationData leaders report an average 9.5% increase in gross profit, 9 new product launches per year that would not have been possible without their data innovation capabilities, and beginners an average of 3 new product launches per year. They are also more likely to report that applying data innovation to sales, marketing and customer service/support has helped increase customer lifetime value (49% compared to 30% for beginners). In addition, data leaders were more resilient in identifying and remediating security incidents, and were also 11% faster.
- Data leaders beat their competitors. Data leaders are 5.7 times more likely to say their organizations are almost always making better decisions than their competitors. They believe their organization is 4.5 times more likely to be able to compete and succeed in the market in the next few years.
- Data leaders are actively operating and monetizing their data. Leaders are also more likely to say their data monetization streams are additive and growing faster. Their data asset operations increased by 38% while earning 2.3x revenue from data monetization.
Balancing massive amounts of data with existing data security, privacy and compliance requirements while trying to extract value and intelligence puts data managers under enormous pressure. That pressure may not be all bad, though, according to the findings. 67% of data innovation leaders report high stress, compared to only 41% of mid-level data maturity organizations and 15% of startups.
“I think what’s really interesting is how much impact some metrics have on leaders or data specialists versus metrics that are just getting started,” explained Ammar Maraqa, Splunk’s chief strategy officer. “There’s a real financial impact or financial benefit, and it Both the top line and the bottom line.”
Ammar told me that one of the biggest insights for him in the report is that the customers who end up doing well are the ones who focus on the use cases and the outcomes they want to achieve with their data. Historically, many organizations — and even vendors — looked at things from an infrastructure and tooling perspective, and the use cases for data were an afterthought, he said.
He also noted that thinking is changing as enterprise data practices mature. Less established businesses don’t know what they don’t know, so exponential growth in data is unlikely to happen to them at all, or just as a storage capacity issue. Data-savvy organizations are more concerned about their ability to handle ever-increasing volumes of data because of their increased visibility and because they understand the opportunity cost of the ability to effectively access and query data to extract intelligence and value.
Impact the bottom line
How can data give an organization a competitive advantage and help increase profits?
Ammar describes Papa John’s as a digital e-commerce company masquerading as a pizza company. He shares how they use their data to keep their website up and running – learn how to test offers and measure user experience in real time.
He also shared how Accenture built a supply chain control tower on top of Splunk and discussed with their clients the cost of disruption and the importance of using data to simplify the supply chain. Ammar shared an example where Accenture worked with a supermarket chain and applied the solution to analyze their perishable food inventory – produce, hot food, etc. He said they have been able to integrate demand supply signals and understand how distribution, weather patterns, seasonal availability and other factors affect their supply chain and use this information to optimize and reduce waste.
“A strong data foundation is critical to staying ahead—and we’re proud of our proactive approach to extracting innovative value from our data,” REI’s Chief Information Security Officer Mike Hughes said in a press release. “Our data visibility increases efficiency, competitiveness and resiliency against advanced threat landscapes and macro challenges. Splunk is a key element of our overall strategy to ensure we can scale and provide the best experience for our customers.”
Check out the full report for more details. Review the value and benefits highlighted by more data-focused and data-savvy organizations, and consider where your organization is in terms of data maturity and how data practices can be improved.