The new Global IBM CEO Study found that almost one-quarter of CEOs say their organizations operate below par in terms of driving value from data.
A consumer products CEO from North America summarized the feeling of frustration brought about by the explosion in the volume data: “We have lots of data, but only 10 percent of it is useful information. And even within that 10 percent, we are not using it effectively. Impactful analytics is not in our genes.”
CEOs interviewed for the study noted the new needs and associated difficulties brought about by the increasing complexity and variety of the data sources:
[A life sciences CEO from Germany] “With thousands of customers, products, and contractual terms and conditions, pricing and incentive models become very complex. Analytics is a key way to get this complexity under control. But we are not yet good enough in this regard.”
[A life sciences industry CEO from Japan] “To increase the business value of information, we need data from various angles. In addition to sales data, we need to know why sales increased. We need to know how and where we are influential.”
The study also notes the new velocity of data, the speed by which it becomes available and by which it needs to be analyzed. In the words of one U.S. CEO from the chemicals and petroleum industry, “The time available to capture, interpret and act on information is getting shorter and shorter.” To do that, companies need to embed big data analytics capabilities into their processes, making them integral and, as one electronics industry CEO from China said, “more systematic.”
The study found that developing these big data capabilities is a key to success: “Compared to their underperforming peers, outperformers have more access to data, greater capacity to draw meaningful insights and, perhaps most important, a stronger ability to act on those insights.”
It looks like most CEOs recognize this and are increasingly looking to use big data analytics to improve their companies’ understanding of their customers: “CEOs are investing in customer insights more than any other functional area — far above operations, competitive intelligence, financial analysis and even risk management. More than 70 percent of CEOs are seeking a better understanding of individual customer needs and improved responsiveness. Given the need for deep customer insight, outperformers have a distinct
advantage. They are far more adept at converting data into insights, and insights into action. Although face-to-face will remain the most prevalent form of customer interaction, CEOs expect a step-change in the use of social media. Over half expect social channels to be a primary way of engaging customers within five years.”
Given the attention CEOs are paying to deriving insights from big data, it is not entirely surprising that of all the external forces that could impact their organizations over the next three to five years, CEOs now see technology change as most critical, up from number six in 2004.