In a world awash with data, many companies have declared goals to become more data-driven, to invest in analytics, and to crunch the numbers to better target their services. Many of which using comprehensive data models like stream processing (learn more about what is stream processing) to efficiently process data. However, the NewVantage Partners’ 2019 Big Data and AI Executive Summary – itself summarized in the Harvard Business Review (“Companies Are Failing in Their Efforts to Become More Data-Driven,” February 5, 2019) – shows that companies are far behind their goals. Among the corporations that responded to the survey:
- 72% of survey participants report that they have yet to forge a data culture
- 69% report that they have not created a data-driven organization
- 53% state that they are not yet treating data as a business asset
- 52% admit that they are not competing on data and analytics.
This comes even as 92% of the respondents report that their investment in data and AI is increasing.
Technology is not the challenge, however. The obstacles lie in people and processes: cultural resistance and organizational structures that are not aligned with a data-driven perspective.
Pilot, take the wheel
What is the answer to breaking through this deadlock? Internal reorganization can help-the establishment of innovation labs and centers of excellence, and the creation of multidisciplinary teams of business leaders, data scientists and data architects-as can an emphasis on starting small pilot projects rather than trying to incorporate analytics into the entire enterprise at once. But with any change management effort, companies need to build a record of identifying and rewarding quick wins. An Inc.com article (“Why Establishing Quick Wins is Critical for Successfully Leading Change,” February 7, 2017) explains why.
Organizational change is hard, and it’s not enough to focus on the long-term to keep teams motivated. The teams must see immediate positive feedback along the way, and these intermediate successes cannot be left to chance. “The commitment for creating short-term wins must be by design and led by the guiding coalition-or transformation task force. The leadership team can’t sit back and passively hope for quick wins, they have to be created. And a clear path to their achievement must be identified.”
Wins enable management to tell a story-to communicate to the company that their efforts are bearing fruit and illustrate the new vision with concrete examples. Moreover, wins enable management to recognize and reward the winners, which creates enthusiasm and buy-in across the company. This in turn allows the transformation to take root and change the internal culture.
Data is money
A successful transformation into a data-driven organization can reap big wins for corporations and economies. The Data Economy Report 2018 from Digital Realty discusses the gains inherent in the “Data Economy,”which it defines as “the financial and economic value created by the storage, retrieval and analysis-via sophisticated software and other tools-of large volumes of highly detailed business and organisational data at very high speeds.” The financial gains for individual companies can come in the form of
- Potential for the realisation of enhanced levels of operational efficiency
- Efficiencies in the management of business procurement and supply chains
- The making of improved strategic and tactical business decisions
- Innovation in the form of new types of products or services that can be sold to existing or new customers.
In the United Kingdom (one of four countries profiled in the report), for example, Digital Reality estimated that the Data Economy added £73.3 billion to the overall economy in 2016, or 4.2 percent of total economic output. However, if all companies were to emulate the best performing companies in their individual industrial sectors, the Data Economy contribution could have been as high as £125.6 billion. “Overall, the UK economy is estimated to be currently utilising only around 58% of the full potential of data to boost revenues and productivity.”
£52.5 billion in unrealized potential is a lot of money to leave on the table. Moreover, based on its current trajectory, Digital Realty expects the Data Economy to contribute £94.6 billion by 2025 (in 2016 prices), but with increased investment in data infrastructure and human capital, it could be as high as £101.6 billion-7.4 percent higher-with a concomitant increase in employment.
It’s all about the Benjamins-and the Sams, the Susans, the Freds …
““Big data” is here to stay. Companies that can harness their data will see improved bottom lines, in terms of greater efficiencies, better products and client targeting, and better competitive positions overall. The problem is not with companies investing in data analytics, however; instead, as the HBR article notes, “Firms must become much more serious and creative about addressing the human side of data if they truly expect to derive meaningful business benefits.” Specifically, they have to make data a part of their corporate culture, to reduce the resistance to analytics (in favor of “plain intuition”), and to train or hire staff to analyze and manage the data as its captured. Ultimately, it is investment in the human infrastructure that will help companies meet their goals of becoming data-driven organizations.