To Determine The Business Value of Data, Don’t Talk About Data

The title of this article may seem counterintuitive, but the reality is that the business doesn’t care about data.  They care about their business processes and outcomes that generate real value for the organization. All IT professionals know there is huge value in quality data and in having it integrated and consistent across the enterprise.  The challenge is how to prove the business value of data if the business doesn’t care about it.

There is very little empirical information available in the industry about the business value of data.  There is lots of advice about “how to” determine the value and some anecdotal examples like this one based on an Oracle MDM case or this one about email marketing, but little in the way of benchmark studies with quantified numbers. At Informatica we have some unique insights through our Value Engineering team which has been conducting Business Value Assessments on data-related improvement initiatives for some time. Stephan Zoder, Director in the US-based team, has analyzed 50 of the assessments which is generating a number of useful insights.

The following table provides a snapshot of one dimension of the assessment data.  Specifically, the average annual benefit for the top 20 business use cases by value. To provide a bit more context about where exactly the benefit comes from, let’s take a look at the top three.

  • Improved revenue via higher close rate comes from the use of full, unique client and partner 360 degree views with all key performance metrics around transactions/interactions (contract, order, bill, usage) linked to correct product and contact relationships information. Average benefit of all the assessment use cases in this category to-date is $11.7M annually.
  • Improved revenue from collections and billing results from correct bills and payment terms via a true, hierarchically linked counterparty entity risk and transaction profile with accurate reference data (e.g. reference data around the transaction). Average benefit of all the assessment use cases in this category to-date is $8.3M annually.
  • Improved revenue through prospect identification and conversion is due to enriched, de-duplicated and standardized record for demographic and transaction/interaction linkage. Average benefit of all the assessment use cases in this category to-date is $6.4M annually.

As you scan the list of 20 use cases in the chart below, how often do you see “data” mentioned? Only twice! The lesson to take from this is that in order to determine the business value of data, the analysis must be done in the context of one or more business activities.  It’s only when you APPLY data improvements to operational capabilities does the value become visible and measurable. This article about the difference between Business Value Assessment Versus Data Quality Assessment articles the point well.

Data Driven Business Value Use Cases

For more information, see The Value of Knowing the Value by Stephan Zoder. We will also let you know when Stephan’s complete paper is available. In the meantime, please post a comment or send me a note with your thoughts.