Functional Gains: The organisational data leaders

So far, CMOs are reporting the most clear gains from their companies' data strategies.

Across the sweep of companies surveyed for this report, a diverse array of data sources are being tapped into, as the rush to stockpile information gathers pace. From syndicated third-party data, such as market data (which 72% of companies say they collect; Figure 2), to open data supplied by governments (70% collect), to staff emails or messaging (66% collect), to contact centre data (62% collect), collection from all sources is on the rise. Customer-related information is also increasingly common, from social media feeds (42% collect) through to location-based information of some kind (41% collect).

And this is hardly all. When asked to specify some of the types of information collected, respondents listed examples ranging from competitor information and web sentiment data, through to point of sale feeds, machine-to-machine data, news and media, loyalty information, search engine analysis, census bureau data, and RFID tags, to name just a few.

Overall, two-thirds (67%) of executives say the range and types of data they rely on to make decisions have expanded over the past two years; and three-quarters (74%) expect this trend to continue over the coming two years. In short, it is difficult to find examples of data that companies do not seek to squirrel away for possible use. But which functions within the business are actually making real use of this data?

A marketer's delight
Of all the C-suite roles examined for this report, the function that stands out as the single largest successful user of data appears to be the chief marketing officer. Of those polled, 50% report having tested and seen a clear, positive difference in using data to improve their understanding and segmentation of customers (Figure 3). A further 40% see similar merit in helping to increase sales, among various other benefits. This degree of usage is well ahead of nearly all other C-suite roles.

This is consistent with the views of many marketing and sales leaders interviewed for this report. Ged Brannan, Head of Coutts Experience at the private bank, says that his firm has invested significantly in a new technology platform to create the opportunity to capture and leverage data, as part of a new strategic focus under its latest CEO. The opportunity arising from this investment relates to significantly improving its ability to make use of both financial and non-financial information to better understand clients' behavioural patterns. "We want to serve the clients in the markets we want to be in, rather than trying to be all things to all people," explains Mr Brannan. The core of this is still coming in place, but Mr Brannan is working to create a more evidence-based management approach. One example of the type of opportunity that exists could be tracking the working habits of high performing staff, to discern if any traits can be more widely adapted elsewhere.

At Aon, Mr Clement says the scope of how data can improve marketing is "absolutely huge," as he puts it. Automotive marketers would use analytics to simply try to identify the typical characteristics of consumers who might, say, be interested in a car type - like muscle cars. "Now, it's just the opposite, you literally know who the person is that likes muscle cars," he says. Across a range of interviews, many such examples emerge, especially within customer-centric organisations, of how data are helping improve customer understanding and, ultimately, sales.

Even outside of the sales and marketing function, other executives are often involved in supporting such initiatives. At Royal Bank of Scotland (RBS), some of the most high-profile, data-centric initiatives of the past few years have related to trying to gain a far more advanced understanding of customers. "There's been a huge shift in the organisation, driven by an understanding of how customers bring value to the bank. It might sound obvious, but once you start seeing these values, you start to actually understand all sorts of interesting things," explains Christian Nelissen, the bank's director for customer analytics and decisioning. This helps the bank rethink how it incentivises behaviour internally, to focus more on building the value of the customer relationship through meeting their needs and working to keep them within the bank. "This means staff become interested in how happy the customer is, which changes the dynamic," says Mr Nelissen.

Professor Andy Neely, director of the Cambridge Service Alliance, a group of companies and academics, adds that data provides vast opportunity to innovate on service delivery and sales. "It will go a long way beyond ‘how do I sell more strawberry pop tarts' to actually ‘how do I really deliver value to my customers'," he says.

Back-office boost
Marketing is currently the most immediately visible user of data but other functions in the business are making wide-ranging use of data to support myriad initiatives. As businesses globalise, for example, data has made a clear positive difference to CEOs in how they plan for geographic expansion (40% say they've benefitted from this). For four in ten CFOs, it's opened up a raft of possibilities around scenarios and forecasting. Nearly half (49%) of COOs say data has helped to bolster operational efficiency, while about one-third (32%) of chief strategy officers are using it to help identify new revenue streams or markets or business models. And many CIOs are using it to control IT spending or improve business processes (see Figures 4 and 5 for a full overview).

Across varying roles, there are wide-ranging examples of how data are being used. The CFO of a Fortune 100 chemicals company, who asked to remain anonymous due to the sensitive nature of the work, says his function has been significantly increasing its use of data to improve its competitive intelligence and thus pricing structures. "As we've begun to learn more about data opportunities, it's allowed us to better analyse the competitive set that we play against in terms of pricing, cost structures, the ingredients of their products versus ours, cost positions, and market approaches," he explains. This is all analysed in the pursuit of competitive gaps. Further downstream, it also drives other finance-led forecasting, such as how projected demand is affected by price shifts, the ability to supply that demand, and where excess capacity might lie. "It gives us a better sense of our capacity to respond," he says.

At BP Alternative Energy, CIO Julian Gray notes that his company is a huge user of data, across nearly every part of the business, from seismic modelling in its upstream exploration, through to in-depth farming and meteorological data in its biofuels business. "All of those areas are growing immensely," he says. Inevitably, though, some functional roles take differing views on data. The CFO, for example, is often closely engaged with data issues, given the nature of the role. But as our survey suggests, CFOs often seek to act as the voice of caution on data—many more see a risk that data overload provides false comfort to the business, for example. They are also far more likely to note difficulties in identifying which data are truly relevant to strategy, and which to ignore (a subsequent report will examine the role of the CFO in more depth).

Tactical or strategic?
This chapter has highlighted a few of the key areas where C-suite leaders are making use of data today. But two things stand out from an analysis of this. The first is that for a cohort of typically confident and bullish executives, today's leaders are unusually humble about their grasp of data. Just 15% of CEOs consider themselves "significantly above average" in their use of data, while nearly the same amount think they're below average (Figure 6). One in five COOs regard themselves as below average, as do 17% of CFOs—all unusually high proportions.

The second, more important point that stands out from the survey, and which is confirmed by interviews for this report, is that the use of data today often centres on optimising existing processes and tactics, rather than driving genuine strategic transformation.

For example, although one in two executives agree that strategic decision-making has improved since they began prioritising data, there is far less certainly about the degree to which data are more useful for day-to-day operational issues versus genuinely strategic ones. About one in three (35%) agree that greater use of data has been more pertinent for operational choices and actions, rather than strategic ones, while only about one-fifth (22%) disagree. The biggest proportion (41%) remains undecided. "It's within the day-to-day perspective where the data use is more heavily focussed right now, as opposed to the longer term strategic planning," says the chemical company CFO.

David Johnston, now group chief operating officer at Aimia, a loyalty-scheme management company, agrees that a lot of the data in business today is being used to help optimise processes, versus more fundamental change. Nevertheless, he sees a growing number of examples where it is helping spark new products, ideas or businesses. Take one of his company's latest offerings, a partnership between Yahoo and Aimia's loyalty brand Nectar, which offers customers points in exchange for search-related advertisements that are far more precisely targeted. "We can deliver far more targeted adverts, because we know your purchasing behaviour," explains Mr Johnston. This also enables advertisers to more explicitly match their before and after advertising performance against actual sales for a given audience. "This is one of several other opportunities and new business models we see out there," says Mr Johnston.

While some companies are basing strategic planning and decision making on data, some are yet to leverage data for strategic use. About one-third of executives overall consider their company's strategic planning to be highly data driven, although 42% say it is somewhat data-driven (Figure 7). Fewer think the same with regards to strategic decision-making, where just 25% say it is "highly" data-driven and 30% reckon this is only occasionally or rarely the case. This is not to say that they don't recognise the importance: four in ten consider increased data volumes to be "highly" important for such strategic issues, while only a tiny minority think it unimportant. Instead, this further showcases the fact that few companies have got to grips with how to rethink their companies around data, even as they rush to collect more of it.