The Economic Impact of Data Innovation 2023

Global research: Eight key strategies for disrupting competitors, building resilience and gaining a 9.5% profit edge

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Leaders Defined
Success Measured
Industries Examined
Strategies Revealed

Data innovation leaders increase gross profit by 9.5%.

LEADERS DEFINED

Data → Innovation → Profit

Let’s start with the big finish: Data innovation leaders, those with the most mature practices around using data to improve products, services, customer experience, etc., are finding bottom-line success that eludes less mature organizations.

After surveying 2,000 organizations worldwide, we saw that the ones that achieved excellence in six key data maturity measures report a 9.5% increase in gross profits, compared to organizations still at the beginner level.

Leaders also overshoot their earnings targets at twice the rate of beginner-level businesses. Across our survey, all maturity cohorts tended to exceed their earnings targets (turns out we talked to some really smart people), but leading orgs averaged +7.79%, while beginners clocked +3.94%.

How leaders build success

With researchers at the Enterprise Strategy Group, we measured 2,000 organizations in nine countries by how well they classify, aggregate, manage and monitor data. We also assessed the maturity of their teams’ overall toolsets and skills.

Only 9% of respondents reported maturity in all six measures. (For a deeper dive, see the full report.) So we looked at what results data maturity provides. We learned that leaders operationalize a higher percentage of their data. They capture, index and organize more data, and make it accessible for real-time analysis and business use: 66% of all data that their organizations produce, versus 48% among beginners and 57% among intermediates.

Data Maturity Levels

Overall, data innovation leaders are 4.5 times as likely to believe their organization is in a very strong position to succeed. They operationalize 38% more of their data, and see the following results:

Leaders get 2.3x as much revenue from data monetization.

Leaders are 4.6x as likely to drive 20%+ of their revenue from new products/services.

Leaders are 5.5x as likely to say data boosts sales win rates by 10%+.

Leaders are almost 3x more likely to beat competitors to market. (By a year, on average.)

A mature data innovation practice, in fact, has a holistic impact. Leaders were more likely to report success across a range, including data monetization, product development, supply chain/manufacturing, application development and operations, and security. The full report presents the eight strategic decisions that leading innovators employ to achieve this success, along with the concrete benefits that result.

Under pressure

Despite their advantages, leaders say they feel more data pressure.

And “too much data” isn’t even the real issue. The essential challenge is keeping up with fast-changing customer expectations, strong competition and rising security challenges. “More data” is a problem that innovation leaders turn into a solution.

of data innovation leaders

strongly agree that their data is growing faster than their ability to keep up.

of intermediates

and 15% of beginners said the same.

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Data innovation moves the needle. In fact, it moves a lot of needles.

Another area of excellence: software development, which is crucial to any organization’s digital face and back-end resilience.

95% of leaders say they’ve improved the speed of application development, compared to 76% of beginners.
93% of leaders have boosted application performance versus 78% of beginners.

And who doesn’t make software part of their business? The kid next door’s lemonade stand has a robust website and takes Venmo.

SUCCESS MEASURED

Separating the winners from the serious winners

Where Data Innovation Is Driving Improvement

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Customer service and support

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Supply chain/ manufacturing/ operations

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Product/service development/launches

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Sales and marketing

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Application observability/ availability/ development

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Direct data monetization

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Security operations

Innovating a market-leading customer experience

Data innovation leaders set the standard for CX. Leaders understand their customers more deeply and apply that insight to their marketing and support.

Leaders are more likely to report that applying data innovation to sales, marketing and customer service/support has contributed to:

Greater brand loyalty (48% of leaders vs. 30% of beginners)
Increasing customer lifetime value (49% versus 30%)
Improving customer satisfaction (53% to 43%)
Generating positive word of mouth (45% to 22%)
Converting leads to sales (leaders: 65% win rate; beginners: 39%)

Leaders Know What Their Customers Want — And Make the Right Offer

My org is strong/very strong at:

Developing real-time customer segments to directly route customers to relevant information or send proactive notifications

Developing real-time customer segments to directly route customers to relevant information or send proactive notifications

Using customer purchase data to predict interest in upcoming products and making real-time recommendations to drive sales

Using customer purchase data to predict interest in upcoming products and making real-time recommendations to drive sales

Show me the data monetization

Nearly all (98%) leaders monetize data (resell it, provide data as a service, etc.). Intermediates report a very strong 92%, while beginners trail at 65%. Leaders also report that data monetization is:

More profitable than other business lines (according to 68%, versus 47% of beginners)
Easier to sell (67% versus 45%)
Growing faster (74% versus 49%)
Differentiated (56% versus 47%)

Leaders report that their data monetization businesses are growing more than twice as fast as beginners — 40.5% annually, compared to 20%.

Leaders win at product innovation

On average, leaders report launching nine products per year that wouldn’t have been possible without their data innovation capabilities. Which stacks up nicely against beginners’ average of three new products per year. An average of 20% of leaders’ revenue comes from products launched in the last year, more than triple the 6% of beginners. But wait, there’s more. Leaders enjoy:

Higher customer satisfaction (according to 36% of leaders, versus 21% of beginners)
Entry into new markets (33% versus 16%)
Engagement of customers in new channels (30% versus 16%)
Increased customer wallet share (32% versus 13%)
Higher win rates (34% versus 17%)
improved customer retention (35% versus 18%)
Better brand standing (35% versus 17%)

Unkinking the supply chain

Using data to innovate around supply chain challenges delivers a measurable advantage. Leaders, unsurprisingly, see greater improvements from applying data to supply chains: 79% of data innovation leaders said they had reduced costs, versus 60% of beginners. And 73% of leaders said they had reduced supply chain disruptions, compared to only 51% of beginner-level organizations.

Advantage, resilience, optimism

Data innovation leaders are more resilient, have a leg up on the competition (several, actually), and know it. We could do this all day, but here are just four more highlights:

Leaders make better decisions.

They are 5.7 times as likely to say their organization almost always makes better decisions than competitors.

Leaders are more profitable.

While Fifty-eight percent of leaders say they beat their most recent fiscal year revenue goals by 7% or more, just 23% of beginners can say the same.

Leaders are more hopeful.

Seventy-seven percent of leaders say their organization is in a very strong position to compete and succeed in their markets over the next few years — 4.5 times the 17% of beginners who feel the same way.

Leaders are more resilient.

They report that it took 17 hours to investigate, identify root cause and take corrective action to resolve application availability/performance problems stemming from a security issue. Beginners: 19 hours, making leaders about 11% more efficient.

With numbers like this, the business case for pursuing data innovation maturity writes itself. (But we’re happy to help.)

INDUSTRIES EXAMINED

Industry insights

See our companion report for highlights on seven key industries. Here are some highlights of the highlights:

Financial Services

79% have adopted AI/ML for data innovation, versus 67% overall.

Retail

Data innovation has helped 80% optimize supply chain costs and 74% minimize supply chain disruption.

Communications

An above-average 40% rate their organization's ability to use data to understand and market to their customers well.

Public Sector

20% spend more than a quarter of their IT budgets on solutions and staff that investigate, monitor, analyze and act on data — well above the 8% cross-industry average.

Manufacturing

54% apply data innovation to supply chain and operations use cases, compared to 45% of organizations across all industries.

Healthcare

11% are data innovation leaders, two whole percentage points more than the average. However, 70% struggle to recruit talent with the right skills.

Technology

Technology organizations launch 5.8 new products and services on average annually thanks to data innovation, compared to the 4.9 cross-industry average.

STRATEGIES REVEALED

The eight strategies that drive data innovation

What, specifically, do leading organizations do that puts them at the top of the maturity scale — and earns them the significant, measurable benefits detailed so far? We’ve broken it down to eight core virtues, and the first, of course, is to line up your strategy.

1. Prioritize data innovation.

Leaders are really taking this value-of-data stuff seriously: 60% of them say that their single most important business and IT priority for the next 24 months is to better uncover and use their data. Only 34% of intermediates and 13% of beginners say the same.

Leaders deliver on this commitment by reshaping their organizations around data success.

Top 5 Actions Taken at Leading Orgs to Advance Data Innovation

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IT roles have been goaled or incentivized based on progress

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Created new KPIs/metrics to track progress of initiatives

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CEO or board has asked for more regular briefings on the topic

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More emphasis on increased data-centric training/certifications

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Line of business roles have been goaled or incentivized based on progress

2. Invest for success.

You’ve gotta spend money to make money, the maxim goes, and certainly creating an innovation engine requires an up-front investment. Data innovation leaders allocate 53% more of their technology budgets for solutions and staff aimed at data investigation, monitoring and analysis than beginners: 20% on average, versus 17% among intermediates and 13% for beginners.

(The favored technologies are cloud analytics, AI/ML, edge computing and observability. For more, see the full report.)

3. Bring innovation to the executive level.

More than 90% of leaders have C-level roles around customer success, data governance, data strategy and innovation — considerably more than among beginners.

Data Innovators Have C-Level Support

CX: We have a chief customer officer

Data stewardship: We have a chief data governance officer

Data strategy: We have a chief data officer

Innovation: We have a chief innovation officer

4. Establish a center of excellence.

Leading orgs advance data initiatives with centralized, rather than distributed, teams: 57% of leaders say they always rely on CoEs, compared to 33% of intermediate orgs and only 15% of beginners.

5. Prioritize tech-centric data streams today.

Interestingly, leaders were more apt to cite tech-oriented data when asked which sources had most fueled their innovation recently. Leaders’ top three sources for innovation were network, application and business service transaction/performance data. Beginners put customer and sales data first.

6. Pivot to “know your customer” data next.

Leaders seem to focus on building up the infrastructure to subsequently make the most of that more human-centric data. Looking to future innovations, leaders were more apt than beginners to report that sales data (25% vs. 16%), customer data (23% vs. 17%) and business service transaction and performance data (31% vs. 20%) have the most potential down the road.

7. Commit to either speed or success when it comes to product innovation.

Beginner and intermediate organizations are more likely to say that they balance innovating at top speed with investigating how their innovations will be received by the market. Leaders hate that approach, and are about equally likely to prefer speed or certainty. The lesson: Better to excel at something than to be just okay at everything.

Choosing Between Speed or Quality

“We prioritize speed of innovation over sure market fit”

“We balance speed with confidence in market fit”

“We prioritize market fit over speed”

8. Cultivate a broader sense of paranoia.

Leaders are most likely to be worried about disruptive competition. Everyone keeps an eye on established rivals (61% of leaders, 63% of intermediates and 59% of beginners), but leaders worry more about the sudden arrival of:

Enterprise-class competition (78% of leaders, versus 72% of intermediates and only 51% of beginners).
Startups (52% of leaders, tied with intermediates, but trailed by beginners at 35%).

Leaders also more often think that data itself will be a disruptor.

75% of leaders expect that data will be used to further optimize and refine how organizations in their industry function, versus 69% of intermediates and 61% of beginners.
69% of leaders predict that data will trigger a major change in the goods and services that their industry provides, versus 65% of intermediates and 47% of beginners.

On the upside, leaders are more confident (65%, versus only 45% of beginners) that new uses for data will drive them to compete in industries they haven’t entered (or that don’t exist) yet.

But the overall takeaway is that vigilance is the price of leadership.

Here comes tomorrow

This report arrives at a time of economic instability driven by inflation, supply chain disruption and global conflict.

As business leaders assess how to position their organizations in the event of a prolonged downturn, data innovation leaders are much more confident, not only in their ability to continue innovating, but in their resilience in the face of adversity.

They’re 4.5 times as likely as beginners to say their company is in a very strong business position.

A Harvard Business Review study¹ following the 2008 recession found that the companies most likely to thrive — a top-9% cohort, the same percentage that achieved leadership in data innovation maturity in our study — do not drastically cut costs or otherwise wait out the storm. They combine prudent efficiencies with strategic investment in growth.

In other words, digital transformation doesn’t take holidays. The ever-increasing importance of data is, um, ever-increasing. Data innovation leaders have found a formula to enhance success. We hope their insights will help you take your organization forward as well.

¹ “Roaring Out of Recession,” Harvard Business Review, March 2010

of leaders

“believe my company is in a very strong business position”

of intermediates

“believe my company is in a very strong business position”

of beginners

“believe my company is in a very strong business position”

The Economic Impact of Data Innovation 2023

Data → Innovation → Profit

How leaders build success

Data Maturity Levels

Leaders get 2.3x as much revenue from data monetization.

Leaders are 4.6x as likely to drive 20%+ of their revenue from new products/services.

Leaders are 5.5x as likely to say data boosts sales win rates by 10%+.

Leaders are almost 3x more likely to beat competitors to market. (By a year, on average.)

Under pressure

of data innovation leaders

of intermediates

Get more from the research

Separating the winners from the serious winners

Where Data Innovation Is Driving Improvement

Innovating a market-leading customer experience

Leaders Know What Their Customers Want — And Make the Right Offer

Show me the data monetization

Leaders win at product innovation

Unkinking the supply chain

Advantage, resilience, optimism

Leaders make better decisions.

Leaders are more profitable.

Leaders are more hopeful.

Leaders are more resilient.

Industry insights

Financial Services

Retail

Communications

Public Sector

Manufacturing

Healthcare

Technology

The eight strategies that drive data innovation

1. Prioritize data innovation.

Top 5 Actions Taken at Leading Orgs to Advance Data Innovation

2. Invest for success.

3. Bring innovation to the executive level.

Data Innovators Have C-Level Support

4. Establish a center of excellence.

5. Prioritize tech-centric data streams today.

6. Pivot to “know your customer” data next.

7. Commit to either speed or success when it comes to product innovation.

Choosing Between Speed or Quality

8. Cultivate a broader sense of paranoia.

Here comes tomorrow

of leaders

of intermediates

of beginners

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Economic Impact and Industry Insights