If you are pitching to your board for investment into data, having strong evidence of its benefit to the business is critical. Proving that there will be a positive uplift on the bottom line is not always easy, however. So being able to show third party evidence for the advantages that data can bring can help to fill the credibility gap.
It is notable that a growing number of industry analysts are starting to identify the link between using data and business performance. Nesta, the Lottery-funded innovation foundation, has just published the first of a two-stage report into how UK businesses analyse and use online data based on research among 500 selected organisations (www.nesta.org.uk).
“Rise of the Datavores” tells a compelling story. It identified a segment comprising 18 per cent of firms which are intensively gathering customer data online, running sophisticated analyses and applying the findings to their business. As a result, they are more innovative in both products and processes.
Analytics of all types are being deployed more widely by these leaders, from basic use of business intelligence (84% among Datavores against 64% for others) and data visualisation (82% v 49%) through to more advanced techniques such as A/B testing (39% v 25%) and data mining (39% v 23%). The one area where even Datavores are slow to adopt is regression analysis and propensity modelling, which only 21% are doing. But that is still nearly twice as high as in other types of business (11%).
Next year, Nesta will analyse how Datavores have benefited financially by looking at the company accounts of the firms it researched. In the meantime, there are some useful tips for any business that wants to become a leader (and avoid getting eaten by a rival in the process).
A significant difference between leaders and laggards is the level of training carried out on data analytics. Among Datavores, three-quarters have trained their staff against 55% elsewhere. Embedding data into the culture and process by having relevant skills sets at the very heart of the business is a better guarantee of success.
That does present some challenges and highlights a major issue for the data industry. Currently, much of the heavy lifting in data analytics is being carried out by third party service providers. Although an important way to gain benefit without investment, outsourcing in this way does not turn a company into a Datavore. Only building in-house skills can do that.
Recognition is growing that the shortfall in skills starts long before an individual enters employment. Nesta notes that “policymakers should ensure the education system produces [skilled talent with a good mix of data and business skills]”. The IDM is aiming to help fill that gap through its University outreach under new CEO Mike Cornwell.
For now, commercial companies can help by explaining to those policymakers how data skills are essential to what they do. Ever invited your local MP to tour your company? If not, do it now and show them how important it is to be able to employ data-literate workers.
Line-of-sight uplift on revenues from investment into data is not always easy to achieve, outside of specific marketing campaign results. The bigger picture is of a company transformed through being fully engaged with data and analytics. Proving the benefit of that is a considerable task.
Yet Nesta reports that “the positive connection between online analytics adoption and business impacts is statistically significant”, even after it has controlled for the different sectors and sizes in its sample. The second stage report which will use actual financials to make the case will be yet more valuable in proving this.