September 27, 2010 – Small tweaks and incremental investments in data accessibility and intelligence can have big returns in revenues, growth and innovation, according to findings from a study of Fortune 1000 companies released today.
Touting millions of dollars in added revenue possibilities and avenues of business, the study – entitled “Measuring the Business Impacts of Effective Data” – was conducted by Sybase, an SAP company, and the University of Texas, in conjunction with the Indian School of Business. It reviewed large, global corporations and surveyed their positions and plans for data management systems.
When data accessibility and intelligence are increased by 10 percent, revenue generated from new customers grew by 0.7 percent, or, as applied to the median organization in the study sample, $14.7 million. As far as revenue from new products and services – a common measure of business innovation – a 10-percent increase in development of data accessibility and intelligence registered 0.81 percent increase in revenue, which, for the median organization in the study - $17 billion in annual revenues with $2.1 billion coming from new products in services – meant an additional $17 million for the year.
Anitesh Barua, lead researcher with the University of Texas, says the summary of additional dedication to data should spark a dollars-and-cents interest with top level managers and executives as well as IT officers and CIOs.
“We’re not suggesting it’s low-hanging fruit. It’s almost a mindset change,” Barua says.
Companies finding gains from investment in data – or not taking advantage of the possibilities – cross all business sectors. In particular, the petroleum market has the most to gain from enhancing its data quality, with a 14-fold increase in revenues from even a slight jump in company-wide, usable data, according to the study.
Referencing fiscal advantages from changes to data use and understanding by employees made by Charles Schwab following an economic downturn in 2001, Barua said that corporations stand to make even greater gains with improvements and investment in data at all levels.
“We’re saying at the end of the day, it’s still a lot of data and we’re drowning in transaction-level data. But, if you can make that meaningful – not just accurate and timely – you can reap a lot of benefits,” he says.
Still, the importance of usable, clear data is largely relegated to IT departments, the researchers concluded. For example, only a “lowly” 3.7 percent of large companies reported that investing in data accessibility and intelligence was part of their development of revenue streams and method of acquiring new customers, Barua says, alluding to a resistance or ignorance of data quality or advancing technology with many successful businesses.
These findings were the second release in a three-part installment quantifying the relationship between effective data and a company’s performance. The first installment, release in July, reviewed the connections between incremental investments in data and the key financial indicators of an enterprise’s health and profitability. Later this fall, researchers will release the final portion of findings on the operational impacts of effective data with a focus on improving the accuracy of planning and forecasting.