We generally don’t view data by itself as a competitive differentiator. However, a new report from the Enterprise Strategy Group (ESG), Economic Impact of Data Innovation 2023, illustrates the value of data in driving innovation, improving business resilience and ultimately increasing profits.
Data is everywhere. Businesses and individuals are creating data all the time, at an exponentially accelerating rate. Virtually every click and swipe on every device in 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. These numbers are so massive that they exceed our ability to understand what that even means.
This creates a significant business challenge for companies. Organizations must 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 data retention and protection. However, as businesses mature, data transforms from an IT infrastructure problem into a seemingly endless source of intelligence and valuable insights that fundamentally change the game and provide 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 2022 to gather feedback and insights on data practices from 2,000 IT, security and business leaders in the US, UK, New Zealand, Australia, Singapore, Japan, France, Germany and India.
A press release for the report shared some of the key findings:
- Data leaders benefit from increased profits and innovation. With an average increase of 9.5% in gross profit, data leaders report launching nine new products per year, which would not be possible without their data innovation capabilities, compared to the average beginner in three new products per year. They are also more likely to say that applying data innovation to sales, marketing and customer service/support has helped increase customer lifetime value (49%, vs. 30% of beginners). Additionally, data stewards are more resilient and faster to identify and resolve security incidents by 11%.
- Data leaders have beaten their competitors. Data leaders are 5.7x more likely to say their organization almost always makes better decisions than their competitors. They are 4.5 times more likely to believe that their organization is in a very good position to compete and succeed in their markets over the next few years.
- Data leaders proactively operationalize and monetize their data. Leaders are also more likely to say their data monetization streams add up and grow faster. They operationalized 38% more of their data assets while earning 2.3x more revenue through 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, however, this pressure may not be all bad. 67% of those identified as data innovation leaders reported a high degree of pressure, while only 41% of organizations with intermediate data maturity and 15% of organizations starting out felt this.
“I think what was really interesting was the impact of certain metrics on leaders — or data savvy — versus those who are just starting out,” said Ammar Maraqa, chief strategy officer at Splunk. “There’s a real financial impact or financial benefit, and it’s on both revenue and bottom line.”
Ammar told me that one of the biggest ideas for him in the report is that the customers who end up doing well are the customers who are focused on the use case and the result they want to achieve with the data. . He said that historically, many organizations — and even vendors — see the problem from an infrastructure and tools perspective, and the use case for data is a bit of an afterthought.
He also pointed out that there is an evolution in thinking as organizations mature their data practices. Less mature companies don’t know what they don’t know, so the exponential rate of data growth is less likely to occur to them, or only arises as a matter of storage capacity. Data-savvy organizations are far more concerned about their ability to manage the growing volume of data because they have greater visibility and because they understand the opportunity cost of their ability to access and query data effectively. data to extract intelligence and value.
Impact on net income
How can data give an organization a competitive advantage and help increase profits?
Ammar described Papa John’s as a digital e-commerce company masquerading as a pizza place. He explained how they use their data to keep their website up and running, including how to test offers and measure user experience in real time.
He also shared how Accenture built a supply chain control tower above Splunk and spoke to 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 inventory of perishables – produce, hot food, etc. seasonal availability and other factors impact their supply chain and use this information to optimize and reduce waste.
“A strong database is essential to staying ahead – and we pride ourselves on our proactive approach to extracting innovative value from our data,” REI CISO Mike Hughes said in a press release. “Our data visibility enhances efficiency, competitiveness and resilience in the face of an advanced threat landscape and macroeconomic challenges. Splunk is a critical part of our overall strategy to ensure we can scale and deliver the best experience to our customers.
See the full report for more details. Examine the value and benefits highlighted for more data-driven and data-savvy organizations, and determine where your organization is in terms of data maturity and how you can improve your data practices.