Allstate reportedly collects about 11,000 terabytes of data from 1.2 million people every day, with the goal of providing personalized experiences to each. “Allstate is not an insurance company, we are a data company – a customer-centric data company,” CEO Tom Wilson has told recent gatherings.
One can be forgiven for thinking that just about every organization on the planet is also in the same good data-driven hands as Allstate. However, most are just starting on the journey. As a recent survey from NewVantage Partners shows, most companies are still not data-driven, and won’t be anytime soon. Worse yet, these numbers actually have been declining. Only 31 percent of companies could be considered “data-driven” – a percentage that has declined from 37 percent in 2017 and 32 percent in 2018.
Even leading companies are struggling with data-driven business transformation, the report adds. “Companies are investing in big data and AI, but they are not seeing commensurate results. Though 62 percent report measurable results from their big data and AI investments, less than half say they are competing on data and analytics (48 percent), have created a data-driven organization (31 percent), or have forged a data culture (28 percent).
So what’s the holdup? Technology may be ready, but organizations are not. “The low percentage of companies that have achieved data-driven organizations and cultures suggests the need for a new focus,” state Thomas Davenport and Randy Bean in the forward to the report. They note that respondents “clearly say that technology isn’t the problem – people, and, to a lesser extent, processes are. Yet we would guess with high confidence that the great majority of spending on big data and AI goes for technology and its development. We hear little about initiatives devoted to changing human attitudes and behaviors around data.”
Part of the problem is that since the dawn of computing, with the limitations of storage and systems, enterprises have operated with a “scarcity” mindset. Cloud and big data technologies need to be augmented with an “abundance” mindset, according to Tom Koulopoulos, chairman of Delphi Group, and David Friend, CEO of Wasabi Technologies, in their latest book, The Bottomless Cloud. Technology is widely available, but business leaders need to expand their thinking. “Your business is data; it defines your market, it’s your competitive advantage, it drives your innovation, profitability, and customer experience,” they observe. “Our businesses are no longer constrained by the physical limitations of data storage and access, location or bandwidth.”
As a result, they explain, “new business models are emerging that rely on nearly unlimited storage to spur innovation and uncover new opportunity.” These opportunities are being amplified by technologies such as artificial intelligence, machine learning, data science and analytics. What changes, they state, is that “data is not the byproduct if business; instead, the business is built around the data.”
The fallacy in all this is that many executives view data as a “commodity,” just as oil or electricity. “Data is the single most important differentiator in how companies innovate, serve their customers, and gain insight into their markets. Data is not the new oil.”
The value of data is likely to increase with time. Data that may be of low value today may be highly valuable at some point in the future. “The same collection of data can be minded repeatedly in different ways to create new value. Take, for example, a media company that has millions of hours of analog film footage in movies and TV shows, which it has archived. Occasionally a popular show may be digitized and sold to viewers and distributors. In a scarcity model, the process of selecting the shows to convert to digital form would be based on current demand, focus groups, broad social trends, and current events. The likely result would be that 80 percent of the company’s profits would come from a relatively small number of assets, products or services (20 percent).” The rise of cloud and data-driven innovation flips that equation around. “What if the company’s entire film library were suddenly digitized so that there was no additional cost or friction associated with the ongoing access to any video?”
That is a variation of the $64 million question now facing organizations: how to embrace the vast data universe opening up before them, and even understand what it will lead to.
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