Survey Provides Fodder for Funding Data Projects

Loraine Lawson

What could the world's leading businesses accomplish with an extra $2 billion in revenue each year?

 

Slide Show

Measuring the Business Impact of Effective Data

Improved data usability can have a huge impact on revenue.

A recent study of 150 Fortune 1000 companies shows there are five data-related areas that can have a significant impact on financial metrics. Specifically, a mere 10 percent improvement in one or two areas - data quality, usability, intelligence, remote accessibility or sales mobility-can help finances.

 

Of those, it looks like data quality and usability are the most closely tied to integration issues, although obviously any time you're moving or manipulating data, you're likely to encounter data-integration or migration issues.

 

The benchmark study, "Measuring the Business Impacts of Effective Data," was conducted by researchers from the McCombs School of Business at the University of Texas, in conjunction with the Indian School of Business, and sponsored by SAP's Sybase. What's significant about this research is it shows, for the first time, that IT investments that improve data can can have a significant impact on the company's bottom line.


 

That's why, as CIO Insight points out, the study provides great fodder for selling the CEO on data initiatives.

 

The study is being released in three parts. The first part, which focuses on the financial impact of data, is available for free download on Sybase's site. The second and third parts will be released later this month, according to the press release.

 

The first part lists specific ways data-improvement projects affect finances, including:

  • Improving sales per employee by 14.4 percent with data-usability projects. The study applies this 14.4 percent increase to the median sales per employee of $388,000 to estimate a financial impact of $55,900 per employee annually.
  • Increasing a return on equity (ROE) by 16 percent, an indicator that's specifically related to data quality and sales mobility investments.
  • Improving the return on assets by 0.7 percent, which can be achieved with intelligence and remote-accessibility investments. That translates into an additional $2.87 million of additional income from the business' assets.

 

It was expected that the retail and finance sectors would experience a boost from data investments, particularly when it comes to data accessibility. But researchers were a bit surprised to find other verticals would also see significant benefits, including companies in the automotive, construction and energy sectors, according to this Urgent Communications article.

 

Internet.com's subsite, eCRMGuide.com also has a readable synopsis of the findings, if you'd prefer to skip the full report.

 



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Sep 15, 2010 8:18 AM m ellard m ellard  says:

This is great info - and thanks for the links. I know many data quality folks have been talking up the value of good data for a long time. Hope this gets people listening. There's an interesting companion piece of sorts, a 2009 study conducted by Pitney Bowes Business Insight and Silver Creek systems, that talks about "The State of Data Quality Today" and reports that fully one third of business respondents rate their data quality as poor; and, 63% have no idea what poor data is costing them. Maybe now they'll stand up and take notice - seems long overdue!  (That study can be found at http://www.pbinsight.com/files/resource-library/resource-files/The-State-of-Data-Quality-Today.pdf)

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Sep 16, 2010 11:36 AM Ron Bunn Ron Bunn  says: in response to m ellard

The smart company, when looking for a new ERP will demand all of these and more. How about simplicity, promoting efficeinct and productivity, developing a environment that fosters innovation, Ram Centric Data, Ram Centric User Tools and the ultimate in corporate consolidation, integrated data (instead of integrated modules). One may as well get rid of the complexities while they are at it. When you take all that into consideration the available options are pretty slim.

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