Several prior research studies have looked at the benefits of any point investment in big data and business analytics over no investment at all. Recognizing that a growing number of organizations have already invested in a base level of business analytics technology and capabilities, IDC set out to identify the difference between those organization and others that have invested in using more diverse data types and source, more diverse analytical tools and methods, and in distributing information to more diverse audience of end user types – at the right time. In short, our goal was to identify and quantify the additional value or the data dividend to be gained from investing in a more comprehensive and diverse set of big data and analytics capabilities.
As part of IDC’s research study, underwritten by Microsoft, we surveyed 2,020 large and mid-sized organizations in 20 countries across a range of public and public sector industries, including financial services, retail, manufacturing, health care, government, communications and professional services. 73% of survey respondents were from line of business or executive functions and 27% from the IT function; 62% of respondents had the title of manager or above. In addition, IDC relied on its 50 years of experience in tracking IT markets to assess and develop an economic net benefits model based on GDP, IDC forecasts for IT spending, labor and operational costs as a percentage of revenue, and spending by country on Big Data and Business Analytics hardware, software, and services.
First, our research showed a correlation between better outcomes from Big Data and Business Analytics projects and greater competitiveness of an organization in its industry or a better ability to fulfill its mission in public sector. Although correlation does not equate to causation, a growing body of case-based research shows financial and productivity benefits directly linked to better data-driven decision making enabled by Big Data and Business Analytics solutions.1,2
Second, our research showed that the improved project outcomes accrue to the more innovative organizations that have embraced a data-driven culture, which has resulted in the introduction of:
- More new data types and sources
- More new analytics and new metrics
- More new users with access to big data and analytics solutions
All this, while investing in technology that enables right time access to the freshest available data. (For a more details on the IDC research methodology and results look for an upcoming white paper). Finally, we quantified the difference in benefits between organizations at the High and Low ends of the big data and analytics innovation spectrum and called it the data dividend. IDC research points to a worldwide data dividend of $1.6 trillion over a 4 year period.
We evaluated the data dividend across four business processes: (1) customer facing, (2) operations, (3) product or service innovation, and (4) support functions; and quantified the benefits into three categories: revenue increase, cost reduction, productivity improvement.
As the notion of data as an asset takes root throughout the world economy, there is a greater need to quantify the potential return on the data asset. IDC’s newest research pegs that return or the data dividend to $1.6 trillion over the next four years. At an individual organization level the opportunity, for those who invest in the technologies, data, people, and practices at levels characteristic of the more innovative organizations, is the potential for a 60% improvement on the return on their data assets – a significant increase for any organization – private or public.
To put it simply: (Diverse Data Types and Connections + New Analytics + New Users and Insights) @ the right time = 60% greater data dividend
Stay tuned for a whitepaper and more IDC research in this area.
Dan Vesset, Program Vice President, IDC
Business Analytics and Big Data research
1 Strength in Numbers: How Does Data-Driven Decisionmaking Affect Firm Performance? Massachusetts Institute of Technology Sloan School of Management and University of Pennsylvania, 2011, by Erik Brynjolfsson, Lorin M. Hitt, Heekyung Hellen Kim.
2 Competing on Analytics: The New Science of Winning. Harvard Business School Publication Corporation, 2007, by Thomas H. Davenport, Jeane G. Harris.