Data drives innovation and improves business resilience

We generally do not consider data in itself a competitive differentiator. However, a new report from the Enterprise Strategy Group (ESG), The Economic Impact of Data Innovation 2023, shows the value of data in enabling innovation, improving business resilience, and – ultimately – increasing profits.

Information is everywhere. Businesses and individuals are constantly creating information – at a high rate. Almost every click and swipe on devices around the world generates data. By 2021, 2.5 quintillion bytes of data will be created every day. In the year Experts predict that by 2022, people will produce and use 94 zettabytes of data. Those numbers are so huge that it is beyond our ability to understand what this means.

It creates a huge business challenge for businesses. Organizations must decide where and how to store the data they generate, and how to achieve and comply with various compliance laws and industry standards governing data retention and protection. As businesses grow, however, data transforms from an IT infrastructure issue to an endless source of information that can fundamentally change the game and provide competitive advantage.

The economic impact of data innovation 2023

The ESG Report is produced in partnership with Splunk. A global survey was conducted in May and June 2022—gathering insights on data practices among 2,000 IT, security, and business leaders in the United States, United Kingdom, New Zealand, Australia, Singapore, Japan, France, Germany, and India.

A press release for the report shared some of the key findings.

• Data leaders experience increased profits and innovation. With an average increase in gross profit of 9.5%, data leaders report launching nine new products per year that cannot be attributed to their data innovation capabilities, compared to the startup average of three new products per year. They are also more likely to report that applying information innovation to sales, marketing and customer service/support has contributed to increasing customer lifetime value (49%, versus 30% startups). In addition, data leaders are 11% stronger and faster at identifying and fixing security problems.
• Data leaders have won the race. Data leaders are 5.7 times more likely to say their organization almost always makes better decisions than its competitors. They are 4.5 times more likely to believe that their company is in a very strong position to compete and succeed in their markets in the next few years.
• Data leaders are actively processing and monetizing their data.. Leaders are also more likely to say their data monetization streams will grow more and faster. They put 38% more of their data assets to work, earning 2.3 times more revenue through data monetization.

Special insights

Balancing the enormous volume of data with existing data security, privacy and compliance requirements puts data managers under enormous pressure as they try to extract value and intelligence. But this pressure may not be a bad thing, according to the survey results. Of those identified as data innovation leaders, 67% say they are under a lot of pressure, compared to 41% of mid-data maturity organizations and 15% of start-up organizations.

“I think some of the metrics around leaders — or the data savvy — are just starting to have a lot of impact with metrics,” said Ammamar Marka, Splunk’s chief strategy officer. “There’s a real financial impact or financial benefit, and it’s both on the top line and the bottom line.”

Amar told me that one of the biggest insights 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 results they want to achieve with the data. Historically, many organizations and even business people have looked at the problem in terms of infrastructure and equipment, and the use of data is a small issue.

He also pointed out that there is an evolution of thinking as organizations develop their information systems. Less mature businesses don’t know what they don’t know, so the exponential growth rate of data is less likely to happen to them or only happen as a question of storage capacity. Data-savvy organizations are more concerned about their ability to manage the increase in data volume because they have greater visibility and understand the opportunity to access and query data more efficiently and extract intelligence and value.

Impacting the bottom line

How can data help an organization gain a competitive edge and increase profits?

Amar describes Papa John’s as a digital ecommerce company like a pizza company. He shared how they use their data to keep their website running—understanding how to test offers and measure user experience in real time.

He also explained how Accenture has built a supply chain control tower on top of Splunk and is talking to customers about the value of disruption and the value of using data to streamline the supply chain. When Amar Accenture worked with a supermarket chain and implemented this solution, they were able to manage their perishable food inventory—produce, fresh foods, etc. He shared an example he used for analysis. They are able to integrate demand supply signals and how distribution, weather conditions, seasonal availability and other factors affect their supply chain, and use that information to optimize and reduce waste.

“A strong data base is essential to staying ahead of the curve – and we pride ourselves on our initiative to extract innovative value from our data,” REI’s Mike Hughes said in a press release. “Our data visibility strengthens agility, competitiveness and resilience against advanced risk landscape and macro challenges. Splunk is a critical part of our overall strategy to ensure we scale and deliver the best experience for our customers.”

See the report for more details. See the highlighted value and benefits for more data-centric and data-savvy organizations and consider where your organization is in terms of data maturity and how you can improve your data practices.