Quantifying the Value of Data

These days, the business value of data has been widely accepted, and most companies understand that their decisions need to be, at least partly, grounded in data.

But given the current economic climate, many businesses are finding that their pockets aren’t as deep as they once were, and companies are having to make cuts where they can.

This means that data teams will be scrutinised this year. And because of this, it’s more important than ever for data leaders to know how to prove their value to the wider business, in order to justify the cost of their teams.

But proving data’s value in a tangible, easy-to-understand way can be difficult since data’s ROI isn’t always a straightforward process. So how can data leaders justify the cost of their team, and quantify their data efforts in a way that sells their value to their company?

The first step to quantifying your data efforts is having a clear understanding of the various benefits that data can provide your organisation. Below, we highlight some of the key benefits of data, which we touch on in further detail in our recent whitepaper.

Cost savings: music to everyone’s ears

Whilst investing in data is by no means cheap, it has the potential to save businesses significant amounts of money. According to McKinsey, a European home appliance company used advanced analytics to scan over 12 million invoices and found an opportunity to cut costs by 7.8%. Similarly, Jamie Crossman Smith, Managing Director, Grant Thornton GTUK Digital Hub, has seen banks save half of their annual turnover via data utilisation and automation.

By employing data-driven technology and automation, not only can organisations identify any chinks in the chainmail, but they can also streamline processes and save countless team members invaluable time, allowing them breathing space to innovate.

According to Nick Blewden, Chief Analytics Officer at Ofgem: “Time is money… if you save your people time, you are essentially “soft” saving money.”

And consider the impact on recruitment. Employees want to work for forward-thinking companies that are using the most cutting-edge technology and making business decisions grounded in tangible data – they want to be part of an organisation that is operating optimally, not passably.

Strategy and efficiency

Data provides valuable insights that can guide strategy and through analysis can give businesses the necessary intel to make better-informed decisions that are grounded in evidence, not guesswork.

This allows companies to take calculated risks when charting new territory or tapping into new income streams. Craig Civil, Director of Data Science and Artificial Intelligence, BSI argues: “Even if you incur a bit more cost at the beginning by implementing new tech…it has the potential to reel in a whole new set of customers who wouldn’t have normally gone to you.”

A danger to ignore

To some degree, data investment is no longer a choice, because, in today’s fast-paced corporate world, companies that don’t invest in data will fall behind their competitors. But, more than this, choosing not to invest in high-quality data teams is risky and could be damaging.

Consider the southwest flight for which the data was minimally incorrect – it went miles off course and cost the company $75 million. So, the question is, can you really afford not to invest in data?

Data can predict risks or potential issues, which allows businesses to mitigate problems before they even occur. For example, in the manufacturing industry, companies can use data to keep track of equipment, and quickly identify when a machine needs maintenance.

Without the foresight that data can give, businesses are essentially operating in the dark, throwing things against the wall without any knowledge of what will stick.

Leaders need to ensure that their strategies are laser-focused on a point on the horizon and that their decisions are designed with long-term resilience in mind.

This might mean investing a little more now, to reap the benefits down the line.

For more information on this topic, the full whitepaper on quantifying the benefit of data is available here.