The 3 data trends that are setting leaders apart from the rest

Transcription

1 The 3 data trends that are setting leaders apart from the rest K. R. Sanjiv, Senior Vice President and Global Head Analytics and Information management, Wipro Technologies

2 Table of Contents 1. Introduction Three emerging data trends: broader, deeper, faster Refreshing yesterday's management perceptions Taking the next steps...05

3 Moving towards long-term value Throughout history, information has consistently helped to give certain individuals or groups an edge over their peers or rivals. In 1872, businessman Aaron Montgomery Ward launched the first-ever mail-order catalogue business with little more than several address lists for rural American households and a crucial insight into the steep price disadvantage that these communities faced. This quickly translated into rapid growth, as he carved out a competitive niche and launched a new global industry. Just over a century later, in the late 1980s, a start-up retail bank named Capital One used its appetite for data-driven analysis to find profitable gaps in the credit card market. By segmenting and analysing the sector through extensive test and learn experiments, it spotted a gap for a new type of balance-transfer credit card service. The rest, as they say, is history: Capital One's earnings soared during the 1990s from less than $2bn to well over $50bn, en route to it becoming one of the major US credit card providers today. Throughout history, information has consistently helped to give certain individuals or groups an edge over their peers or rivals. In 1872, businessman Aaron Montgomery Ward launched the first-ever mail-order catalogue business with little more than several address lists for rural American households and a crucial insight into the steep price disadvantage that these communities faced. This quickly translated into rapid growth, as he carved out a competitive niche and launched a new global industry. Just over a century later, in the late 1980s, a start-up retail bank named Capital One used its appetite for data-driven analysis to find profitable gaps in the credit card market. By segmenting and analysing the sector through extensive test and learn experiments, it spotted a gap for a new type of balance-transfer credit card service. The rest, as they say, is history: Capital One's earnings soared during the 1990s from less than $2bn to well over $50bn,en route to it becoming one of the major US credit card providers today. These two examples hint towards a truth that is now becoming increasingly backed-up by empirical research. This is that there is a correlation between the superior use of data and a concomitant impact on overall earnings and business performance. A new study - dubbed The Data Directive - commissioned by Wipro and conducted by the Economist Intelligence Unit, and which draws on a survey of 318 C-suite executives, backs this up. It shows a strong link between earnings growth and the strategic use of data, with a small sample of high growth firms outperforming their low or no growth peers. This is not simply due to the latter group failing to embrace data: all companies in the sample recognise the importance of data, and duly collect lots of it. However, nearly twice as many no growth firms admit to not consistently maximising this information, as compared to high growth respondents (38% versus 20%). In short, the leaders are the ones able to actually tease insights from this. Other research has found related links between data use and performance. A 2011 study from MIT's Sloan School of Management and the University of Pennsylvania found that firms emphasizing data-driven decision-making have output and productivity that is 5-6% higher than what would be expected given the overall IT investment and usage. This is significant. As Erik Brynjolfsson, a co-author of that study and renown technology and economics professor, explains it: a 5% increase in productivity and output is enough to separate winners from losers in most industries. Of course, while these insights are illuminating, they also reflect common sense. Any party trying to make more informed and data-driven decisions would be expected to perform better than another who didn't. Given this, what is truly surprising here is just how few companies today understand how to create a more data-driven business to bolster their competitiveness. For example, uncharacteristically high proportions of executives consider themselves below average in their usage of data, as many as 20% of COOs think so, as do 16% of CFOs. Furthermore, while many companies are now using data to make impressive gains financial companies optimising fraud detection, or legal firms finding new ways to mine documents these are typically found within specific vertical areas, rather than being widespread across the business. Quite simply, as The Data Directive study reveals, for many companies, the real data revolution still lies ahead. 03

4 Three emerging data trends: broader, deeper, faster Why is this? There are many reasons for this, from battles over internal organisational siloes through to technology difficulties and the usual disconnects between IT and the rest of the business. All of these are pain points emphasised by the executives polled in our study. But what is also clear to see is that there is now widespread momentum towards embracing data within the enterprise. Hype aside, many executives now hold a genuine appetite either proactively, to steal a march on rivals, or defensively, to keep up with market leaders to get to grips with a new era of data-driven business. There is a wealth of speculation about what this new era means for businesses, but much uncertainty too. Through our wide-ranging work with numerous Fortune 500 companies around the globe, though, we have seen three broad trends gathering pace, which we've loosely characterised as broader, deeper, and faster. BROADER A shift towards a more broad-based use of data within enterprises. DEEPER A deeper engagement on using data to optimise operational efficiency and the bottom line. FASTER An ongoing shift towards more real-time businesses. BROADER: This is about making data applicable across a much wider set of use cases than before. Historically, corporate data analysis focussed on very specific questions. A product manager at a consumer goods company might consider the focussed question of how a certain product was selling each week, in order to manage the supply of that item or tinker with a related promotional campaign. But as leading companies seek to integrate their information, while also pulling in a richer set of external data, they're finding a much broader set of uses. At Universal Music, for example, the same data that was previously gathered to help manage digital piracy is now helping to bolster the company's ability to understand how a given artist is performing. The point here, which is interrelated with the next trend, is that data that often used to be considered in isolation is now being freed up to support a wider set of uses across the business. DEEPER: Until recently, much of the high-level focus within companies has centred on bolstering revenues: using analytics to discern when to recommend a product for possible upselling, say. The Data Directive outlines wide-ranging examples of this, from Anheuser-Buschto Royal Bank of Scotland. But while there is significant value to be gained here, executives from a range of back-office functions are also uncovering new opportunities to optimise operational performance. One global retailer is now fine-tuning its understanding of how many staff are needed across its thousands of stores at any given time, based on its analysis of a range of new variables, such as specific promotions on the goand the level of automation within the business. This data-driven approach to its workforce planning has not only bolstered both sales and customer experience, but has also cut over $50m in costs. Elsewhere, a leading Asian transport authority found that conducting analytics on its 12m daily usage records has delivered diverse benefits, from a 20% reduction in distance covered and consequent 15% energy cost saving, through to less congestion and shorter waiting times. FASTER: The final trend is about an ongoing shift towards more realtime businesses. This matters: it is one thing gaining insights from data, but it's also crucial to be able to apply those at the best possible moment. To use the example of Amazon, its recommendation engine doesn't work well by highlighting a relevant book a week later; it works by telling you at the very instant you choose to buy. For most companies, this is a huge change. It requiresthem to move from typically batch-driven analysis towards something far closer to real-time. Driven by ongoing technology advances, this is now permitting near instantaneous analysis of vast data sets. While this sounds like something of interest to CIOs alone, the implications can be profound. For example, one global consumer goods company has moved from a weekly, batch-driven view of which products are out of stock to one that refreshes every few minutes. In turn, this completely reshapes how it thinks about its supply chain and refresh cycles. These trends are not all happening in isolation, but are often interrelated. They are also forcing business leaders to rethink how they manage and make decisions. But at the same time, it is also clear that few fully understand how to prepare themselves for this transition. 04

5 Refreshing yesterday's management perceptions Many simply assume that this is yet another task for the CIO, but as our research uncovers, those companies doing best at extracting insight from information - the so-called data outliers - are not necessarily the ones asking their CIOs to lead on this. Rather, there is a clear preference for the CEO or other C-suite leadersto lead on this. This is not to suggest that CIOs don't have a role to play. It is simply the case that other C-suite executives, whether the CFO, chief marketing officer, or other executives, are often driving the conversation when it comes to assessing the value and use of data within the business today. The reasons for this vary. At one extreme, the consumerisation of IT is making a broader swathe of executives more comfortable with such topics. At the other end, getting the most out of data requires a deep grasp of the business issue at hand, an issue that CIOs often lag on. All this is changing the way leading firms think about how to deal with data. For example, 62% of high growth companies we surveyed see a need to radically transform their management techniques to keep pace with what technology is making possible, compared with just 33% of low or no growth respondents. Many companies are now creating a new executive role the chief data officer to provide direct leadership on this. In our work within this field, it is also clear that those leading the charge are doing far more to find innovative ways to visualise their data, not least as the number and variety of data inputs soar. Taking the next steps For those companies only just starting to make this transition, all of this is understandably daunting. But it needn't be. Technology costs continue to fall, while data-related innovation is emerging rapidly. This is providing considerable opportunity for those willing to embrace this. Equally, it is also creating risk for those who fail to adapt. So where to start? In our experience, leading companies first seek to identify which data or key performance indicators could make a difference - if only they could somehow be captured, analysed and acted upon. Such opportunities will vary widely. Consumer goods companies might rightly focus on price optimisation, whereas a regulated energy utility might look at maintenance optimisation. One software company is seeking to find ways to capture and analyse customer service calls on the fly, in order to identify proactive ways to deliver news sales leads for the business, as just one live example. Once these specific opportunities, or pain points, are identified, CIOs then need to start figuring out the gap between the potential prize and the reality of their existing IT systems. This in turn prompts experimentation: running pilot applications or proof of concepts on new approaches, all with an underlyingaim of getting the rest of organisation thinking more explicitly about how and where data can directly benefit. As realisation of the possibilities grows, and managers adapt, these pilots will provide a useful platform to expand upon and open the door to a more data-driven future. What is also clear is that today's big data era is not being built on yesterday's data architectures, but requires new structures and approaches. It also demands fresh perspectives from the CIO and executive leadership team. Much of this skewers yesterday's data beliefs from the cost of storage through to the relative quality of data required for insights in light of what new technologies and approaches are now permitting. Indeed, not only are leading organisations building wholly new ways to store and manage data, but they're also recognising that this is a major business transformation project and allocating necessary resources accordingly. 05

6 About the Author K. R. Sanjiv is the Senior Vice President and Global Head of Analytics & Information Management, Wipro Technologies. He carries P&L responsibility, strategy and operations of this unit globally reporting to CEO. Analytics & Information Management helps customers derive valuable insights out of integrated information by bringing together the combined expertise of Analytics, Business Intelligence, Performance Management and Information Management. The group provides consulting, business centric and technology specific analytical solutions and data management frameworks developed through a complete ecosystem of partners, focusing on industry specific analytics, optimization and operations analytics, Enterprise Data Warehouse, MDM, Data quality and data life cycle management. Sanjiv has over 25 years of enterprise IT experience, including consulting, application and technology development spanning multiple industry segments and diverse technology areas. Since joining Wipro in 1989, Sanjiv has been involved in defining enterprise architectures for organizations that included technical models, transformation program definitions and governance models. He has designed OLTP mission critical systems such as screen-based trading systems for stock exchanges, surveillance systems and order routing systems for brokerage houses. He has spearheaded due diligence exercises in M&A situations for customers and also managed large project implementations in a global delivery model. Sanjiv has spoken at leading CXO summits, industry and academic conferences on varied topics related to Business Technology. He holds a bachelor's degree from Birla Institute of Technology and Science, Pilani. About Wipro Council for Industry Research The Wipro Council for Industry Research, comprised of domain and technology experts from the organization, aims to address the needs of customers by specifically looking at innovative strategies that will help them gain competitive advantage in the market. The Council, in collaboration with leading academic institutions and industry bodies, studies market trends to equip organizations with insights that facilitate their IT and business strategies. For more information, please visit About Analytics and Information Management Services Wipro is a leading provider of analytics and information management solutions - enabling customers to derive actionable business insights from data to drive growth, enhance cost management and strengthen risk management. Wipro works with customers to develop end-to-end analytics and information strategy leveraging process assets and solutions based on analytics, business intelligence, enterprise performance management, and information management. For more information, please visit About Wipro Technologies Wipro Technologies, the global IT business of Wipro Limited (NYSE:WIT) is a leading Information Technology, Consulting and Outsourcing company, that delivers solutions to enable its clients do business better. Wipro Technologies delivers winning business outcomes through its deep industry experience and a 360 degree view of "Business through Technology" helping clients create successful and adaptive businesses. A company recognized globally for its comprehensive portfolio of services, a practitioner's approach to delivering innovation and an organization-wide commitment to sustainability, Wipro Technologies has over 140,000 employees and clients across 54 countries. For more information, please visit or contact us at info@wipro.com 07

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