New research from Snowflake reveals business benefits of winning in the Data Economy
Only 6% of businesses globally use, access, and share data and data services in a way that grants them all the business benefits provided by a robust data strategy, according to new research from Snowflake, the Data Cloud company. The study of 1,000 business leaders and technology managers highlights the significant hurdles that the majority of organizations face in participating fully in the data economy.
The data economy, as defined by Snowflake, enables businesses to tackle the most complex business problems and elevate the services they can offer above their competitors. It allows them to build new revenue streams by taking tailored data products and services to their customers, partners, and any other organization participating in the data economy.
At the helm of the data economy, according to the research, are the ‘Data Economy Leaders’, companies which develop strategies that democratize access to data, integrate new technology, and demonstrate the true business benefits of capitalizing in the data economy. While many companies have ambitions to take advantage of data to give them the business edge needed to be successful, these organizations require guidance to lay the right foundations. In fact, according to the study, only 38% of businesses surveyed globally and 40% across APAC are using data to inform the business decisions they make.
As part of the study, Snowflake identified the four key attributes an organization needs to possess to become a Data Economy Leader. These include:
- Providing unimpeded access to data, no matter where the data users reside;
- Using data to inform all or most business decisions;
- Using data to a great or significant extent to advance strategic goals, such as growing revenue and identifying new business opportunities;
- Having the ability to share and access data securely with external organizations.
The organizations that possess these four attributes are considered Data Economy Leaders, and as a result achieve significantly more than those that don’t use, access or share data in these ways. For example, 77% of Data Economy Leaders globally experienced annual revenue growth over the past three years, while just 36% of ‘Laggards’ – the lowest-performing businesses surveyed – can say the same. Moreover, 60% of Leaders saw their market share grow over this period, compared to only 31% of Laggards.
The businesses that aren’t using their data to its full potential are being left behind by the competition, which actively use data to strategically support the company and make critical business decisions. For example, 85% of organizations surveyed globally and 83% across APAC reported that they use data or are soon planning to use data to identify risk and prevent fraud within their business – the most common use for how data is used – demonstrating a growing trend for businesses to use data in a preventative way, to protect themselves and their customers. In addition, 80% of organizations globally use or soon plan to use data strategically to launch new revenue streams or pricing models. Similar trends are seen across organizations in APAC. 82% of organizations globally use or are soon planning to use data to reveal new market opportunities, while in APAC it is 80% of organizations.
“Given the competitive nature of business in APAC, data collaboration, cutting-edge business analytics, and inspiring data leadership are imperative for organisations to survive and win in the data economy”, said Jon Robertson, President of Snowflake Asia Pacific and Japan. Data-driven organisations would be able to solve the most complex business problems, improve customer experiences and crack down on fraud as compared to Laggards that do not have total control over all of the data they possess and are potentially at increased risk of security threats”.
The data economy challenge
To join the data economy, businesses need to first get to grips with their data. However, many struggle to manage and effectively extract value from it. The ability to access all forms of data is an integral part of a data strategy, yet less than half–45%–agree they can easily access all available data through a single system/application and just half agree their data users have ubiquitous data access regardless of their location. “Many organisations also fail to break down internal data silos, impeding data sharing and collaboration across an organization’s business units – only 55% say that sharing can happen freely in their organization.
Asked about the top barriers to using data strategically, a lack of investments from leadership teams was ranked 5th according to 13% of global respondents. 14% of global respondents cited trust barriers, while 15% cited cultural barriers to using data strategically. The top two barriers identified were lack of proper skills (19%), and the right tools and platforms (16%). In fact, just about half (51%) agree that they have a C-level mandate to become more data-driven, whereas almost two thirds (63%) of Data Economy Leaders have such a mandate. Many companies also believe that the technologies they use are not fit for the data economy. An effective data platform must be scalable and elastic and manage a near-unlimited amount of data, yet fewer than one-third of the IT respondents say their data management solutions are easily scalable. More importantly, less than one-quarter say their solution lets them share, access and integrate data in near real-time.
“Organizations which are still using legacy on-premises technology which is not suitable for modern data needs can make the change by implementing platforms in the cloud as well as driving a C-level mandate to cultivate a collaborative data culture. They would be able to progress in their journey to becoming Leaders that can effectively manage data and gain access to near real-time data, ”adds Robertson
Leading the data economy
While only constituting 6% of businesses surveyed, the Data Economy Leaders are present in all industries from healthcare and life sciences to technology to retail and CPG. Once plugged into the data economy, they are part of a mutually beneficial ecosystem, both providing and receiving significant advantages from sharing data and data-driven insights with other participants via data management technologies. A number of Snowflake’s customers are Data Economy Leaders, using data to reveal new market opportunities, streamline processes and deliver a more personalised customer service. Some examples include:
- Pizza Hut’s analytics team used weather and geolocation data to correlate weather patterns and consumer purchasing habits and used this data to optimise target marketing campaigns, getting tailored messages to consumers who are most receptive to them.
- Sainsbury’s launched a service that enables customers to instantly compare its products to those of its competitors.
A deeper analysis of the Data Economy Leaders globally revealed several other areas in which its members considerably outperform their peers, with their strengths exhibited across three main pillars; people, process and technology.
- Strong leadership is essential if a business is to thrive in the data economy. For almost two-thirds (63%) of global Data Economy Leaders, there is a C-level mandate to become data forward.
- Leaders are better at aligning data objectives across teams, with 62% having a data or analytics centre of excellence that coordinates data policies, and 54% enabling users to access all available data through a single system or application.
- At the core of every Data EconomyLeader’s technology strategy is a cutting-edge cloud data platform offering the latest cloud architecture and features. Twice as many IT respondents in Data Economy Leaders (50%) describe the data storage and management technologies they use as ‘easily scalable and elastic’. Leaders draw upon a greater volume of data, in different forms, while breaking down silos and collaborating with both internal and external partners.
To find out more about the data economy, why it matters and how businesses can succeed within it, read the ‘How to Win in Today’s Data Economy’ report here.