Does well-managed data equal corporate profitability?
A big Yes, says a new study, underwritten by Sybase and conducted by researchers from the McCombs School of Business at the University of Texas and Indian School of Business, which connects the dots between what they called "data usability" and corporate financial performance.
Corporate performance drags when additional processing time is needed to make data valuable to the business. For example, the report illustrates, "consider financial advisors who have to observe raw data streams on multiple screens and manually extract pieces of information from large research documents while advising clients on the phone. The lack of usability of data is likely to slow them down, make their judgment error prone, and be an impediment for them to serve a sufficient number of clients in a satisfactory manner in a given amount of time."
Improve data usability, and the subsequent processing time can be reduced by as much as 10 percent, the researchers say. And this translates into potentially billions saved.
Researchers say data usability can be improved by focusing on the following factors:
- Intelligence of data "can be improved through the accuracy of the prediction, trends analysis, recommendations and profile matching/associations made by the associated applications. For example, what percentage of recommendations made by a business intelligence application results in cross-selling?"
- Remote access to data and applications is essential in an increasingly mobile workforce.
- Sales mobility "involves the ability of salespersons to use portable devices and applications to exchange information related to all aspects of a deal or transaction with a customer."
- Improvements in data quality will result in improvements that "may come through better and timely decisions (which may increase customer satisfaction, loyalty and hence revenues), as well as fewer errors and rework, lower working capital requirements, faster receivables, etc. (which will lower costs)."
The report doesn't mention this, but supporting these capabilities through data services -- as part of a well-governed service oriented architecture -- is a viable path to data usability.
A 10 percent improvement in any one or two of these attributes affects common business metrics, the study says. SOA can bring about that 10-percent edge. And add up to big dollars. Researchers determined that if a median Fortune 1000 business (36,000 employees and $388,000 in sales per employee) increased the usability of its data by just 10 percent, it would translate to an increase in $2.01 billion in total revenue every year, or $55,900 in additional sales per employee annually.
Return on Equity (ROE) could be boosted by 16 percent, and if the average Fortune 1000 business were to increase the mobility of its sales organization's data by just 10 percent, Return on Invested Capital (ROIC) would increase by 1.4 percent as a result of net income increasing by $5.4 million. Also, if the average Fortune 1000 company were to increase both intelligence and accessibility of data by 10 percent, Return on Assets (ROA) increases by 0.7% percent -- "the equivalent of squeezing $2.87 million of additional income out of the average Fortune 1000 business's assets, assuming assets remain fixed."
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