The growth of Data-Driven companies

15/12/2020 94

In the new data age we are living in, it is very common to hear the term “data-driven” companies. Is it a fad, is it an invention of technology companies to find new business opportunities, is it really a necessity for companies?

Data growth over the last 10 years has been exponential, and in 2025 the prediction is that it will be 175 times more than in 2011 according to IDC, and most of the increase has been due to unstructured data. Until about 2005, the vast majority were not. That is, they were structured data, with a simple structure to understand, with the same format for all their customers and containing information such as name, address, telephone number, products purchased, sales, nationality…

Since 2005 the data has grown exponentially, mainly due to the growth of social networks and our digital footprint, and this has allowed companies to have much more data than ever about us, their customers. If there are now more than 5 billion consumers interacting with data, by 2025 it is predicted that there will be 6 billion, representing 75% of the world’s population.

This is what has been called Big Data, which is the term used to describe the large volume of data, both structured and unstructured, that is generated every day. The lower cost of storage to store it, as well as the processing capacity is allowing companies to store more data than ever before and be able to use artificial intelligence to obtain information from that data in a much more efficient and fast way, in order to give better service to their customers.

Among the most well known data-driven companies are: Netflix with their custom movie recommendations, or Google with their route suggestions because they know the sites we usually go to or the data Uber has available to make their routes more profitable or to give better service to their customers by knowing where to position their vehicles.  This is precisely what the term “data-driven” companies refers to, to companies that make their decisions based on the analysis and interpretation of data.

A 2019 NewVantage Partners report where a total of 65 companies from all over the world have been interviewed, states that 92% of them are investing in Big Data and Artificial Intelligence and 75% mention the fear of their digital competitors based on data. Only 31% of managers consider having a data-driven company, when all of them understand the value of being one, most of them recognize that they are having difficulties in treating data as another asset, and taking advantage of it to increase their results.

But if all executives see being data-driven as a strategic priority, what are the obstacles companies are having to adapt to these changes? With the most sophisticated analytical tools on the market for data analysis, 77% of executives recognize in a recent HBR study that the adoption of these types of tools is being one of the inhibitors to change. Most of these executives point to the processes and people, who still do not have adequate adoption of these tools, and who still consider this only part of the company’s IT or data department, none of them point to technology as an inhibitor.

Another challenge seems to be the resistance to cultural change in the organization, it is about promoting a culture of innovation, curiosity, different ways of doing things. In companies, you hear a lot about technological changes, but very little about initiatives to change attitude and behavior about data, and not much about how the leaders of the organizations take into account the proposals and ideas of their teams.

Some executives emphasize that the importance of achieving short-term business results leaves medium- to long-term goals, such as the necessary culture change, in the background. Finally, another great challenge is to obtain the real value of the data. Companies have more data than ever, but they analyze a very small percentage of it (5% is currently estimated).

This is produced on the one hand, by the lack of time for analysis, and although many companies apply artificial intelligence to help reduce these times, and allow that analysis faster, not all are getting it. On the other hand, another difficulty to obtain the value of the data is to know the business well and to know how to formulate the right questions to find the answers in the data.

Some companies have created centers of excellence in which they combine profiles of data scientists, with business profiles that have contributed to obtaining greater value from the data, as well as generating new business or predicting new changes.

Regardless of the challenges or inhibitors, data continues to grow and competition is increasing in the market. Consumers are also addicted to data and real time, they want the data on the spot and personalized, and data-oriented companies will be able to give them that value they are looking for.  Many companies are investing in technology but it has become clear that it is not enough, and that companies in general have to pay more attention to the “human side” than the data transformation implies.