The companies with the most advanced data analytics strategies say their operating margins spiked by at least 15 percent, according to a recent report from Forbes and EY Global.
Data & Advanced Analytics: High Stakes, High Rewards uncovered the role a sophisticated data strategy plays in boosting corporate performance, with two-thirds of companies surveyed saying their strategies bumped up revenue growth by at least 15 percent.
In a survey of 1,518 C-level executives around the globe, nearly half said their data analytics strategy is beginning to shape into a key strategy for their enterprise. Just 7 percent were identified as “leaders” in this space, with advanced analytics practices already in place.
For the nearly half of respondents that are either developing their analytics strategies or lagging in that arena, Forbes and EY highlighted the importance of getting that initiative off the ground. But that’s not without its own challenges.
The most common barrier businesses identified is a corporate culture in which intuition trumps data when the organization looks to initiate change or make decisions. A lack of collaboration between management, along with regulatory restraints, are also common concerns, researchers found.
Investment is on the way, though. Researchers found that half of the survey’s respondents said they will invest at least $10 million in data analytics technology over the next two years (85 percent of the survey’s top performers in this area said the same).
“Looking to the future, enterprises … would be wise to improve cross-functional alignment and collaboration when creating or enhancing their data and advanced analytics operating models,” the report stated. “But the research shows this remains a significant pain point for the leaders and lagging organizations alike.”
Only 35 percent of businesses surveyed said their data and analytics groups are “well-established” within the organization. Nearly half said that these groups are only just emerging or are informally a part of the enterprise. Executives cited a lack of expertise and training in data and analytics as major pain points when looking to develop a data and analytics operating model within their firms, the report said.
“The findings also show that certain challenges rise to prominence at each stage of the maturity cycle,” the report explained. “For example, lagging organizations are more likely to struggle with alignment and collaboration issues as well as process and governance problems.”
The Financial Potential
Revenue generated from advanced analytics solutions stem beyond customer retention and satisfaction. Many of the executives surveyed are looking to sell insights from that analytics to new customers, for instance, or to strike partnerships with other businesses, researchers found.
More than a quarter of survey respondents said they are looking to boost sales or revenue through the integration of sophisticated data analytics solutions.
There are multiple challenges for the organization looking to realize these financial benefits of data and analytics, however, from changing corporate culture to ensuring the enterprise deploys the right strategy to integrate new technologies like AI and machine learning.
According to Chris Mazzei, EY global chief analytics officer and emerging technology leader, businesses will need to work through these challenges and remove barriers to this initiative — which often come from within the enterprise itself.
“Traditional process-driven organizations are now being disrupted by the new era of businesses that use data as a strategic asset,” he said in a recent interview with SCMR. “Companies have moved from pilot projects that originated in business units or countries to using data and advanced analytics at an enterprise level to rethink and reimagine their entire business to identify new opportunities.”
In a way, businesses need to get out of their own way to take full advantage of data analytics potential.
“The top pain points in successfully embedding analytics strategically throughout the business continue to be the human element, not the technology,” said Bruce Rogers, Forbes chief insights officer. “Collaboration, culture and skills were cited as key hurdles throughout the business life cycle, creating a wider divergence between organizations that are focusing on the people aspects — and separating winners from losers.”