Data poorly understood, inadequately valued and badly managed - report
Data is poorly understood, inadequately valued and badly managed by global businesses costing them and their investors billions of dollars every year, according to a new report.
The report, from data valuation specialists Anmut, says this is a big problem because it means most businesses are running on data that is not fit for purpose.
The Anmut Data Leadership Report found that 91% of business leaders believe data is critical to the success of their businesses. However, only one in three (34%) of their companies manage their businesses’ data assets with the same disciplines as other business assets.
These companies spend their allocated data management budget on creating value from their data that in turn helps them scale their businesses and develop their strategies.
The remaining two thirds (66%) are using half of their data budgets to fix problems and errors identified within the data itself. According to the report, the average global business spends between 4% and 7% of annual operating expenses on managing its data. For a global financial services brand, that amounts to as much as $1.5-3 billion annually.
“Time and again we’re seeing international businesses and household name brands coming under fire for reasons that seem preventable with hindsight,” says Herman Heyns, CEO of Anmut.
"Those that succeed do so because they really understand the value of their data, and therefore prioritise and manage it well."
Three quarters of respondents (76%) say their businesses are investing in large-scale data and digital transformation strategies. And, 63% say data is more critical than technology to achieve business transformation. Yet, Anmut's report also finds that technology investment regularly overshadows data investment. Technology gets three times the attention (73%) and five and a half times (88%) the budget as data. This is in spite of the fact that technology is dependent on reliable data to run well.
“The preference to invest in technology over data throws up a fascinating question about what digital transformation really means for businesses all over the world," says Heyns.
"Digital transformation is a term that’s used everywhere, in every annual report and corporate strategy document. Digital transformation is what companies do to become data-driven," he says.
"The advances many companies make might be digital in name, but to create the transformation they're aiming for, they cannot lose sight of the data.”
Chief data officers interviewed for the report regularly cite the challenge to make data something that everyone in their businesses understands, values and knows how to manage. The report finds that one third of company boards (33%) don’t consider data a ‘material asset’. 9 in 10 CDOs (87%) say putting a monetary value on data would enable people within the business to manage that data better.
“A critical issue for businesses’ data leaders is winning senior buy-in. When the board doesn’t appreciate the value of data to a company’s future performance, it’ll lack investment further down the business. That’s where data valuation comes into play," says Heyns.
"When the value of data assets are set out in pounds and pence, data can be thought of as a business asset. Then it climbs up the food chain, gets taken more seriously, impacts C-suite decision-making more readily, and receives greater investment," he says.
"When data is treated like any other asset by assigning a monetary value to it, businesses can make better strategic decisions.”