Clear-cut big data strategy tied to strong financial performance
A report on big data evolution from The Economist Intelligence Unit
By Cindy Turner, SAS Insights editor
When you were a kid, did you have a strategy for how you would grow up? More likely, you matured just by cycling through a jumble of experiences: tryouts and transitions, jolts, bruises and trophies. What about your business? Are you content for it to take a random route to maturity?
Just like kids, organizations have plenty of choices to make as they grow up. One of their most important decisions, it turns out, relates to how they manage big data. There are big payoffs for taking a thoughtful approach on the path to data maturity.
According to a 2015 study conducted by The Economist Intelligence Unit (EIU) with more than 500 global executives, having a well-defined big data strategy is associated with strong financial performance. In fact, 37 percent of companies that consider themselves “strategic data managers” say they are “substantially ahead of their peers” in terms of their organizations’ financial performance for the most recent fiscal year.
So what makes a good strategic data manager – or a good data strategy, for that matter?
The EIU defines strategic data managers as companies with well-defined data management strategies that focus resources on collecting and analyzing the most valuable data. (Only 18 percent of companies polled consider themselves in this category.) Here’s how Karthik Krishnamurthy of Cognizant Technology Solutions explained it to the EIU: “Data strategy is not about all the things that you can, or even want to do, it’s about what you wish to accomplish.”
The age of adolescence for big data strategy
Across industries, the EIU found, most companies today are entering their “data adolescence” phase. They’ve moved past the initial excitement around big data’s potential and have realized it’s time to set priorities. Typically, organizations at this adolescent stage have:
- An elevated stature and ownership of big data strategy.
- A strong focus on the relevance of data and analytics and how those translate into tangible, measurable business results.
For companies that want to become strategic data managers, it’s important to stay focused on specific business problems that can have a significant effect on your bottom line. First, identify the business value of things you can’t do now but should be able to do. Then specify how accomplishing that would give you an edge over competitors.
The survey data from the EIU shows respondents from companies that reportedly outperformed competitors are twice as likely to approach data and analytics initiatives by first stating the business problem and then mining the data for useful insights (29 percent versus 14 percent among respondents who underperform their peers).
But the EIU found that strategic data managers are not just better at strategy. They seem to do much better at applying nearly all of the relevant data and analytics to real business problems. Plus they’re much more likely than their less advanced counterparts to achieve success with big data initiatives. In fact, 90 percent of them claim to be highly or moderately successful.
Roadblocks to strategic data management maturity
Companies confront three daunting challenges to becoming mature data strategists, the EIU found:
- Maintaining data quality.
- Collecting and managing vast amounts of data.
- Ensuring data security and privacy.
Ongoing issues with these fundamental aspects of data management deter efforts to progress to the more advanced, value-added aspects of managing data.
There are other challenges in achieving strategic data management maturity, too. Not only is funding tight, but more than half of executives (54 percent) say they use only about half of their valuable data. And there’s a shortage of talent – not just for data scientists, but also for senior-level executives known as data strategists, or chief data officers (CDOs). These executives are expected to straddle expertise in technology and data science while understanding the business, the markets and the customers.
"Data strategy is not about all the things that you can, or even want to do, it’s about what you wish to accomplish."
– Karthik Krishnamurthy, Cognizant Technology Solutions, as quoted by the EIU
The roles are changing: Who’s in charge of big data strategy?
Because today’s executives recognize that data is core to future business success, data strategy has become a top corporate priority and has earned its seat in the C-suite. But at the same time, data strategy has become everybody’s business. A new, integrated type of partnership is emerging between IT and the business. Now business and IT work together to prioritize, design and carry out big data strategy. Another notable change is the appearance of the relatively new role of chief data officer (CDO). According to Krishnamurthy, CDOs are emerging as “the embodiment of integrated leadership.” These leaders take charge of engaging the business across organizational boundaries, mediating among different agendas and balancing priorities among big data initiatives.
A look at the future of big data strategy
As it compared results from its 2011 and 2015 studies, the EIU drew conclusions about how companies have evolved toward strategic data management maturity and explored future implications for those seeking to become strategic data managers. This excerpt shows a glimpse of what they learned:
“Data initiatives of the future will be about new businesses, about monetization of the data asset. … The ability to predict future outcomes based on data and analytics will further fuel the application of big data to devise machine-learning algorithms and decision-making tools that automate and guide … Ultimately, companies will have to continue to reimagine and reinvent themselves, as their business becomes increasingly digital and their customer value proposition becomes increasingly data-driven.”