Big Data holds much promise for CEOs hoping to spot trends that can help them improve products and pinpoint likely customers. It also can be used to identify workplace inefficiencies to optimize performance and cut costs. The technology, however, isn’t always cheap. Nor is finding the people to make it work properly.
More than half of 1,518 executives surveyed by Forbes Insights and EY said they’re planning to spend at least $10 million on data analytics over the next two years. Participants in the study, released Thursday, had at least $500 million in annual revenues, with around a fifth having revenues exceeding $50 billion.
“Global executives that understand the full value of advanced analytics are making it a core element in their business strategies and using them as a competitive differentiator,” the report’s authors said. “That’s why they’re embedding analytics into all parts of their enterprises, beyond traditional pockets like marketing and sales departments.”
So far though, only 7% of survey respondents identified themselves as having a “leading” position, where data analytics was central to their overall business strategy.
Challenges associated with making sense of reams of data can be strategic and cultural, as well as technical. A poll published last year by consultancy ZS found a mere 2% of leaders thought big data had made a broad, positive impact on their businesses.
At a strategic level, experts have recommended that executives make better use of Big Data by identifying very specific problems to which it should be applied, rather than peering into it and hoping for patterns to emerge. Culturally, this latest survey found that respondents identified a lack of collaboration among business units and analytics specialists as a major impediment to progress.
Access to sophisticated technology can give certain business units greater power, potentially causing friction and ultimately resistance from colleagues fearful of losing influence. In such cases, it could be up to the CEO to smooth out tensions and keep everyone focused on clearly-defined outcomes.
“Start by talking openly about the journey and the inherent sense of vulnerability executives are bound to feel as the business model changes,” three senior EY staffers recently wrote in the Harvard Business Review. If there’s still resistance from some executives, it could be a matter of “weeding out the obstinate ones,” they wrote.
For CEOs willing to risk the time and money, the rewards could be significant: around two-thirds of companies in the Forbes/EY survey with well-established advanced analytics strategies reported operating margin and revenue increases of 15% or more.