Big Data for Business: 5 Ways Data Analytics Powers Productivity & Profit Gains
We’re drowning in data. Astronauts landed on the moon in 1969 using a tiny fraction of the data we have on personal computers today. And the amounts of data we’re producing and have access to is growing exponentially, doubling every two years and expected to increase by more than 30,000% between 2005 and 2020, with a 500% increase between 2010 and 2020 alone, according to market intelligence firm IDC.
The Harvard Business Review reports that more data passes through the Internet every second than was stored on the web as a whole 20 years ago. Both on a broader global scale and at the corporate level, the vast majority of that digital information is falling through the cracks, taking valuable insights with it:
- Only half a percent of the world’s data is being analyzed. (IDC)
- Only 23% of organizations have a big data strategy, while just 19% have access to high-quality, consistent data. (Bain & Company)
- Most businesses analyze only 12% of their data. (Forrester Research)
- Only 4% of companies make good use of data analytics—leveraging the right combination of people, tools, and data with the intent to drive improvements. (Bain & Company)
Do you know how much data your company is producing? Do you have a plan for what to do with it? What if you could tap into that information to boost productivity, increase profits, and gain valuable insights that drive organizational improvement?
Despite the hype around big data’s potential, no one is arguing that it’s some kind of silver bullet solution that can solve all your problems. What is clear, however, is that most businesses don’t collect, organize, and analyze their data effectively, if at all—and they’re missing out on the data-driven, actionable insights that can be derived from it.
What Is "Big Data"—And Is It Worth Having a Data Strategy for Your Company?
At the organizational level, big data refers to the large amounts of information that businesses produce, collect, and store on a daily basis. When these large data sets are analyzed, the resulting patterns, trends, and connections can point the way toward improvements like cost reductions, smarter decision making, and enhanced productivity.
Data is a powerful tool that offers businesses countless possibilities for analysis and improvement. As Andrew McAfee and Erik Brynjolfsson write at the Harvard Business Review, “As more and more business activity is digitized, new sources of information and ever-cheaper equipment combine to bring us into a new era: one in which large amounts of digital information exist on virtually any topic of interest to a business.”
Need to implement budget cuts? Your company likely has data that can be analyzed to find the areas that are best positioned for rollbacks. Need a better picture of your customer base? All kinds of demographic data points are easy to collect. For whatever area you’re analyzing, in many cases, the data is already there, just waiting to be put to be to good use.
Let’s look at some specific categories where research has shown data analytics to be beneficial for driving organizational improvements.
Big Data = Big Impact: The Benefits of Business Data Analytics
Haven’t jumped on the data train yet? The Evolv 2013 Workforce Performance Report, compiled from a meta-analysis of seven years’ worth of research about the performance and profitability of the hourly workforce in the U.S., explains why businesses are going to the effort and expense of analyzing their own data:
“Fortune 500 companies are investing tens of billions of dollars in Big Data initiatives for a simple reason: to save money and gain market share by accurately predicting future behavior rather than guessing at it. Rapidly advancing analytics-based solutions have changed how forward-thinking employers manage their workforces to help them become more productive and profitable.”
Enterprises are responsible for about 80% of all digital information, according to IDC’s “The Digital Universe in 2020” study. That’s a lot of data. Are you ready to explore your portion? Here are five benefits you can gain from it.
1. Data powers continual performance improvements
When it comes to individual and team performance, data can be a great productivity driver. It can show management areas for improvement and help employees be more aware of their work habits and activities.
For example, in an interview with The New York Times, Google's head of people operations, Laszlo Bock, explains how the company collects aggregated feedback on team managers' performance—which can be very self-motivating:
"One of the applications of Big Data is giving people the facts, and getting them to understand that their own decision-making is not perfect. And that in itself causes them to change their behavior."
Rather than a one-time investment in some kind of training or seminar, this kind of data can be an ongoing resource—one that continually reveals new pathways to improvement as more and better data is collected.
So while employee monitoring of one kind or another is already very common, the question is, how can the data from this monitoring be used to enhance individual and organizational productivity?
Sodexo’s 2016 Workplace Trends Report points out one example of how decision-makers can tap into data to make beneficial, productivity-boosting policy changes. An insurance company analyzed group productivity data and found that work-from-home employees were 18–22% more productive than their in-office colleagues. As a result, the company instituted a new work-from-home policy that survived multiple leadership changes based on the strength of its data.
Other studies have also confirmed the link between data analytics and productivity gains. The University of Texas, in partnership with software company Sybase, analyzed the influence that data has on key performance metrics in business and found that small improvements to the data companies already have at their disposal can make a big impact.
The study, titled “Measuring the Business Impacts of Effective Data,” found that just a 10% increase in data usability (enabling clear presentation of data, access across multiple platforms and devices, etc.) increased sales by more than 14%, using sales per employee as a productivity measure.
As another example, one large corporation with more than 40,000 hourly workers featured in the Evolv workforce report tapped into big data to identify processes that could be changed for the better. The results? Customer service outcomes improved by 10%, employee retention by 12%, and productivity rates by 15%.
The importance of transparency in data collection
However, proposals of tracking or monitoring, even for the sake of collecting valuable data that can enable “deep learning about work…that can lead to significant redesign of workflows,” are sure to bring up concerns about privacy and transparency, and rightly so. The researchers behind the “Big Data in the Workplace” section of the 2016 Workplace Trends Report point out that:
“While companies have the ability to closely monitor and track employees, they also need to be very transparent about what data is being collected and how it will be used to improve the company and its results, or it risks just creeping out their employees. Big Data must be coupled with Big Judgment to bring desired results.”
There needs to be organization-wide understanding of what kind of data is being collected and how it’s being used, ensuring proper controls or safeguards are in place. This is important to protect privacy and avoid possible negative side-effects like micromanagement or a work environment that lacks trust.
2. Data encourages well-informed decision-making
As much as business leaders try to make objective, well-informed decisions, everyone is subject to the occasional error in judgement or misguided choice. Data can back up decisions with hard evidence and provide balance in situations where opinions vary widely or emotions run high.
In a press release about Evolv’s workforce report, the company’s CEO and co-founder, Max Simkoff, explained the intention behind the report’s focus on big data:
“Predictive analytics and big data are transforming the way companies work. We developed the research found in the Workforce Report to help today’s operating executives use data and analytics—not intuition and wishful thinking—to identify specific improvement areas within the employee lifecycle, predict outcomes, and ultimately become more profitable.”
Plus, the more data businesses analyze, the more helpful an aid it becomes. As the report points out, analytics engines get “smarter” as they absorb a company’s actual outcomes and connect them to the data being collected—and this happens “without the biases and other limitations that individual decision-makers experience.”
3. Data enables smarter hiring choices
One important category of decision-making where employers can use data to their advantage is in making staffing choices. The hiring landscape out there is tough, especially in high-skill industries like technology and healthcare. From the talent shortage to the skills gap, finding qualified new hires can be challenging.
Josh Bersin of Deloitte Consulting sums up the issue in his report on corporate talent, leadership, and human resources:
“We have clearly entered an economy in which talent is considered a critical and scarce commodity. When this happens, companies should get smarter about every single talent decision. Enter the world of ‘data-driven people decision-making.’”
Bersin explains how data-driven companies like Google have algorithms that predict the engagement of potential employees, which help managers make hiring decisions, determine which management methods will produce optimal performance, and more.
But it’s not only the hiring stage that can benefit from data-driven insights. After employees are already on board, data can contribute to more effective training methods. One example of this concept in action comes from the Evolv Workforce Performance Report, which outlines how a large global corporation analyzed internal data to determine why employees were missing customer service targets.
Based on that analysis, the company changed its recruitment and training processes, which, within only 12 months, produced measurable results, including:
- a 5–10% improvement in customer issue resolution rates, which translated to…
- an estimated $1.2 million in cost savings for each percentage point of improvement, for a total savings of $5–12 million from just a single data-driven initiative
To sum up, tapping into data can help businesses recruit and retain the best talent, then give pointers for how to improve their performance. In this case, better (read: data-driven) hiring and training methods produced a domino effect of benefits, leading to both improved customer service and increased cost savings.
4. Data delivers a competitive advantage
Data and analytics are undeniably a part of the modern workplace, made more accessible by the technology and tools available to put them to good use. But the possibilities surrounding big data for business have grown dramatically in recent years, and more and more organizations are mining their value. Corporations that don’t risk falling behind their more forward-thinking, data-driven competitors.
David Court, a director at global management consulting firm McKinsey & Company, highlights the changes in perspective on the importance and usefulness of big data:
“Big data and analytics actually have been receiving attention for a few years, but the reason is changing. A few years ago, I thought the question was ‘We have all this data. Surely there’s something we can do with it.’ Now the question is ‘I see my competitors exploiting this and I feel I’m getting behind.’ And in fact, the people who say this are right.”
Big data is increasingly an important consideration for companies that want to get ahead in their industry and outperform competitors. A survey of more than 400 large businesses by Bain & Company, another consulting firm, found that organizations that have the most advanced analytics capabilities do tend to pull ahead of industry peers. Not only are such companies twice as likely to be their industry’s top quartile of financial performance, but they’re also five times more likely to make decisions faster than market peers.
But what areas should you focus on to maximize your business potential? Court suggests that “the key is to focus on the big decisions for which if you had better data, if you had better predictive ability, if you had a better ability to optimize, you’d make more money.”
5. Data drives revenues increases
And speaking of money, many business initiatives boil down to one goal: increasing profits. How can data help in that department? Let’s take a look at what the research says, once again drawing from the University of Texas study “Measuring the Business Impacts of Effective Data.”
This study dug into data sets from Fortune 1000 companies in every major industry to analyze the impact data has on key business performance metrics. The results revealed that even making very small improvements to existing data can reap big benefits. Some of the study’s notable findings revealed that the average Fortune 1000 company could:
- increase its revenue by more than $2 billion a year by increasing data usability by just 10%
- increase return on equity by 16% by increasing both the quality of data and the ability of salespeople to access it by just 10%
- Increase return on investment by 0.7% (which equates to $2.87 million of additional income) by increasing both the intelligence and accessibility of data by just 10%
While the growth of information technology has improved data access and quality, the researchers behind this study concluded that “there is still room for major performance gains through additional investments in better data.” Most significantly, the areas for data improvement highlighted here (such as quality, usability, and accessibility) required only very small upgrades to produce financial gains.
Discover the data-driven technology behind Crossover's commitment to workplace productivity
WorkSmart is an app we developed to help high-skill workers (and their managers) tap into the type of data and analytics that drive performance improvements at both the individual and team levels.
We like to think of WorkSmart a personal, data-driven productivity coach for knowledge workers who spend their days online or working in the cloud. Based on a combination of top talent and effective productivity analysis powered by WorkSmart data, we regularly see clients achieving productivity gains that exceed previous results by up to 50%.
Interested in learning more about how a tool like WorkSmart can help your team?