Data Quality Holds the Key to Greater Profits, Finds Report
A new report by Experian confirmed that while businesses are increasingly aware of the potential of their data – with estimates that it could improve profitability by up to 15%- more than 90% still find data improvement challenging.
The research, which interviewed representatives of 1,239 organisations in the UK, US, France, Germany, Spain, Australia and the Netherlands, establishes that most now understand the importance of their customer data and its potential to drive value. But despite this growing level of understanding, many are still struggling to harness the strategic value of that data.
According to Experian, there are two main reasons for this. The first being a lack of ownership and co-ordination – with almost 63% of organisations lacking a coherent, centralised approach to data quality. And the second being the use of outdated methods to check data accuracy – with 29% of organisations still manually cleaning their data.
Boris Huard, Managing Director of Experian Data Quality said: “What is particularly encouraging is that companies are increasingly switching on to the value of their data assets, with 95% of respondents stating that they feel driven to use their data to either understand customer needs, find new customers or increase the value of each customer. They recognise that more emphasis on data management and strategy will enable them to satisfy escalating customer expectations.
“However, there is still some way to go. As the research reveals, many challenges persist – the number who suspect that they have data inaccuracies is up from last year and the majority still think they lack a clear approach to data quality.
“As our Dawn of the CDO research demonstrated, a new breed of data professionals will have a key role at the heart of this challenge. Chief Data Officers, Chief Digital Officers and Director of Insights, are emerging new roles which have come about in response to the pressure and opportunity presented by big data.
“It also means taking a step back and asking some fundamental questions such as, “Why are we collecting this data and what is it for?” Once you are sure about what you need, then you can decide on the technology to support your strategy.
“Of course, putting automated systems in place makes a big difference and will clearly reduce errors. However, the effectiveness of any system depends on how you use it. You will need the right processes and people in place to manage it – not just in IT, but in business roles where it really matters.
“We hope that our latest research will go even further in helping businesses to identify their data goals for the coming year, and how best they can achieve them.”
Businesses see data as a strategic asset
- More than 90% of organisations say they are leveraging both data and data quality to help deliver more interesting and relevant communications to customers and prospective customers.
- Meanwhile, 95% of companies feel driven to use data either to understand customer needs, find new customers or increase the value of each customer.
Data quality is correlated with profitability
- CIOs believed their business could increase their profits by an average of 15% if their data was of the highest quality
- CIOs went on to cite savings from investing in data quality tools to be less than £1million whereas, comparatively, CDOs state this to be in excess of £5million.
Awareness of data problems is growing
- The number of organisations who suspect their data might be inaccurate in some way has increased to 92%, up from 86% last year
- The volume of inaccurate data is also rising. On average, respondents think that26% of their total data may be inaccurate, up from 22% in 2014 and 17% in 2013
- With 23% of businesses saying that revenue has been wasted as a result, an increase from 19% last year.
Businesses are planning to improve
- 92% of respondents say they find some element of data quality challenging
- However, most organisations are making an effort to improve what they do. In 2015,84% of companies plan to make some sort of data quality solution a priority for their business, either implementing a new system or improving what they already have.
A need for greater data sophistication
Organisations were asked how they saw their approach to data quality, ranging from basic understanding and processes to a highly sophisticated system of data management.
- Only 26% of companies placed themselves in the most sophisticated category – and these were mostly larger companies with 5,000 or more employees
- Similarly, only 35% say they manage data quality in their organisation through a single director
- 57% say data quality issues are only found when reported by employees or customers.
Taking ownership is key
- Almost 63% of organisations lack a coherent, centralised approach to data quality
- Many of these companies say they have some level of centralisation, but more than half (51%) say individual departments still adopt their own strategy; while 12% say all departments manage their own data quality in an ad hoc way.
Using technology for maximum benefit
- 88% of organisations have some kind of technology solution in place
- Many already use automated systems such as monitoring and audit technology(34%), data profiling (32%) or matching and linkage technology (31%) to clean their data
- However, a high proportion of companies (29%) are still using manual checking to clean their data
- The findings show improving data quality reaps rewards given that 70% of companies whose profits have risen sharply in 2014 also plan to invest more during 2015.