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Research from Melbourne Business School and management consulting firm Kearney has found that 50 per cent of companies struggle with data reliability despite an increase in data volume of 20x over five years.
The annual Analytics Impact Index measures the impact that data analytics has on an organisation’s growth and profit.
The index surveyed 300 global companies across 33 industries with a median revenue of $US330 million.
It found that more mature participants spent 20 per cent of their data budget on improving data reliability, which allowed them to reach 83 per cent of their data accuracy and reliability objectives. In comparison, less mature participants only spent 5 per cent and could only meet 14 per cent of their objectives.
“In the challenging times that we currently face, organisations can leverage their data assets to compete, but the extent to which they can compete is limited by the reliability of their data assets,” said Professor Ujwal Kayande, Director of the Centre for Business Analytics at Melbourne Business School.
“The increase in data volume is not so surprising as more organisations and customers connect into the internet of things and high-speed networks. Moreover, moving data into the cloud has removed the barriers that organisations previously faced in terms of being able to access and store data.
“However, more data does not necessarily mean better insights, as data reliability continues to be a major issue for organisations around the world. Organisations face challenges in being able to aggregate data across legacy systems that don’t always talk with each other. To be able to integrate and leverage data across systems requires a strong sense of the purpose of the data. Once that is addressed, organisations find it easier to integrate and leverage data, thereby resolving reliability issues.”
The index also found that investment in AI was not predictive of a company’s success.
More mature companies (Leaders/Explorers) invested a similar amount to less mature companies (Followers/Laggards), however the Leaders/Explorers had a 4-5 times higher uplift in value from AI pilot deployment and also deployed AI pilots in half the time.
“AI for many companies is becoming an essential capability to deliver superior outcomes. However, we have seen that currently only Leaders and Explorers are effectively launching AI pilots,” said Kearney Partner Enrico Rizzon.
“What we found was that whilst the investment in AI was similar between the two groups, only the Leaders and Explorers were reaping true value from their AI pilots. This implies that you simply can’t expect superior results just by injecting more capital into your AI program and expecting it to be successful.
“Companies need to be highly aware of other influencing factors and work on enhancing them. As an example, we found that AI pilots were successful for Leaders because of their culture of experimentation and other differentiating factors such as having leadership and buy-in from the C-suite.”
When compared to previous years’ findings, the index shows that less mature companies could potentially generate up to 81 per cent more profit if they invested more in analytical maturity.
“To compete for a customer’s business and see opportunities, an organisation needs to know what customers want and how to service those wants, which data can enable. So my expectation is that analytics is going to become more valuable to organisations, although I also expect the range of that value to increase. Some organisations will do far better, but others will do far worse,” said Professor Kayande.