It is a difficult question and few business or IT managers know the answer. Yet, the ability to answer the question has a high correlation with the success of a business. Data itself has no value but actionable insights drawn from it to support business decision-making make data valuable.
Companies with lots of data but without insights drawn from it are like someone going on holiday and buying flights but not booking a hotel and staying at the airport terminal. Part of the investment has been done without any benefits and some of the building blocks for getting the full benefits are already there. Yet going out and doing it all feels too overwhelming. But could you take a sneak peek and see what the value and benefits could be?
Why data and analytics?
Companies emphasizing data-driven decision-making have output and productivity levels that are 5-6% higher than what would be expected given their other investments and information technology usage. An Economist Intelligence Unit survey commissioned by Capgemini found that on average participants had seen a 26% performance improvement from big data and they are optimistic that it will improve performance by an average of 41% in the next three years.
Some industries have seen drastic changes enabled by the use of data. Amazon has long been at the forefront of using customer data and predictive modelling to suggest customers products customers might be interested in based on what they and other people with similar interests have bought. Retailing as an industry is changing fast. Data has enabled personalised offers and pricing that matches what the customer is willing to pay, assortments that resonate with the local clientele and the use of dynamic pricing. Casinos are known for their use of customer data to model the behaviour and optimise (maximise) profits. Have you ever been just about to stop playing the slot machine when you suddenly won some money or almost won a lot of money and kept playing? Or just as you were about to change your phone or internet provider they made you an undeniable offer? Those companies were using actionable customer insights.
New York City uses data insights to cope with the under-resourcing of building inspections. Using various data sets an analyst team led by the New York’s first Director of Analytics built a model that revealed the most dangerous illegal conversions with the highest fire risks. Before only 13% of the inspections were actually real threats while the model increased the hit rate to 70%. This was a revolutionary achievement. It made the building inspectors more efficient and more satisfied with their work, the city safer for the people and fewer fires.
Why are companies struggling to realise the value of their data?
The benefits of using customer data insights are compelling but there still is a huge number of companies not taking advantage of the data they collect every day. It is not necessarily about understanding the potential the data holds, as many of the companies are well aware of the importance of data but they don’t know where to start to get the most value out of it, and how to translate the data into actionable insights. Often data resides in silos and analysing the data is something a data analyst deals with rather than being a shared responsibility and part of the organisation’s culture. Promotion of data-sharing helps to generate a data-driven culture.
Companies can be divided into four types according to their data maturity (Figure 1) and digital maturity (Figure 2). Data maturity is defined by the company’s data management and data analysis capability. Data management capability means having the ability to capture and store various types of data from multiple sources and infrastructure to reflect the needs of big data. Analytics capability means the ability to leverage data to identify the actions for immediate performance improvement and longer term trends to build strategy for success.” Data driven” companies have advanced data usage and analytics capabilities, “known unknowns” have advanced analytics capabilities but poor data usage capability, “Data rich but insight poor” companies obviously have advanced data usage capability but lack analytics capability and “profit by surprise” companies are poor in both data usage and analytics. Digital maturity, presented in MIT and Capgemini Consulting’s Digital Transformation research, is defined by the transformation management intensity and the digital intensity of the company. The four types of companies include digirati, fashionistas, conservatives and beginners.
Figure 1 Companies by their data maturity
Figure 2 Companies by their digital maturity
To get the maximum value from the data a business has to be data driven. Often the problem with becoming data driven is in the understanding of the value of the organisation’s customer data (Figure 3). Investing in data management and analysis capabilities without knowing the value and benefits they will bring makes the business case difficult to sell.
Capgemini in partnership with SAS have developed a “Value Discovery” offer which will provide companies that sneak peek to the value and benefits of the data an organisation holds. It will help to quantify the value and provide a clear roadmap to help understand how they can transform their organisation to be truly data driven.
Figure 3 Building blocks for realising full value from the organisation’s data