High-growth firms make better strategic use of data: Survey

BANGALORE, INDIA: A survey of 318 C-level executives finds that while all companies are collecting more data than ever before, those from companies where average EBITDA growth over the past three financial years has exceeded 10 per cent are more likely than their less rapidly growing peers to analyse various data sources they collect (eg 58 per cent vs 43 per cent, with reference to third-party data) and to consider themselves effective at extracting useful insights from this analysis (81 per cent vs 57 per cent).

Moreover, they are also far more likely to have to have changed the way they handle strategic decisions as a result of having more data (50 per cent vs 36 per cent), and to have seen improved strategic decision-making as a result of better data analysis (60 per cent vs 38 per cent).

These are among the major findings of 'The data directive: How Data is Driving Corporate Strategy - And What Still Lies Ahead', a new report from the Economist Intelligence Unit, commissioned by Wipro.

"This research is a reflection of how organizations are leveraging data to sustain its competitive advantage for its products/services and be relevant in future. Leveraging the power of analytics, organizations can from prop up their key performance indicators -drive growth, enhance cost management and strengthen risk management", said K R Sanjiv, senior vice president and global head, Analytics and Information Management Services, Wipro.

Key findings of the main report include:

Data has proved most valuable so far for marketing leaders. From better ways to segment the customer base, to rethinking the ideal product mix in a retail store, marketing leaders are finding wide-ranging uses for their data to help improve how they market their company's wares.

Already, 50 per cent of chief marketing officers say they have tried and found a clear, positive difference in using data to improve their understanding of customers, as just one of a range of successful applications. This is a markedly higher proportion than their C-suite peers.

The financial services sector, technology companies, and professional services firms are most prepared for the data age. Three sectors stand out as being most prepared for the data age: the financial services sector (where 22 per cent have a well-defined data management strategy in place); the technology industry (30 per cent); and the professional services sector (40 per cent).

By contrast, such data management strategies are least often found amongst manufacturers (16 per cent) and retailers (13 per cent).

Businesses are stockpiling an ever-growing range of data and expect data gathering to continue to expand rapidly. Whether social media sentiment, machine-generated data via sensors, staff emails, market data or otherwise, firms of all shapes and sizes are now collecting more information than ever before.

At least seven in ten companies collect syndicated third-party data, such as weather information (72 per cent), or government data (70 per cent), while many gather anything from internal staff data (66 per cent) to some kind of location-based information (41 per cent), among many other types.

Two-thirds of business leaders say the range and types of data have expanded in the past two years, while about three-quarters expect this data stockpiling to expand yet further in the coming two years.

Working out which data matters most is the top challenge for firms. For companies seeking to gain more strategic insights from their data, many hurdles await. Whether organisational silos, a lack of skills, the usual disconnect between IT and the business, or worries over data quality, few consider the challenges and gaps easy to bridge. However, clarity on which data matters most, amidst the data stockpiling now under way, is what tops the list of barriers, according to 40 per cent of respondents.

Moreover, 34 per cent of executives worry that the quality of their decisions are actually being impaired by data overload.

Many companies are unsure about the extent of data-fuelled strategic transformation within their business. While 68 per cent of respondents think their strategy has improved in the past two years as a result of having more data, only 18 per cent see a significant improvement in strategy, and few have found ways to use data to make a genuinely transformational shift in the business.

Some 35 per cent of executives agree that data has been more useful with operational choices and actions, rather than strategic ones. Just 22 per cent disagree, while 41 per cent are unsure.