Big Data Gold Isn't Always Where You Would Expect It
Many companies are focusing their big data initiatives in areas like sales, marketing, customer service and R&D, but other functions like logistics or finance may offer even greater ROI.
Tue, May 07, 2013
CIO — When it comes to leveraging big data, most companies focus their efforts on four business functions: sales, marketing, customer service and research and development. But companies that look beyond the obvious may find even greater return on investment in areas like logistics or finance, says Satya Ramaswamy, global head of Mobility and Next Gen Solutions at Tata Consultancy Services (TCS).
TCS surveyed 1,217 large enterprises in nine countries and four regions (U.S., Europe, Asia-Pacific and Latin America) in December 2012 and January 2013 about their big data initiatives.
Fifty-three percent of the companies surveyed had undertaken big data initiatives in 2012 and 43 percent predicted an ROI of more than 25 percent. About a quarter or the respondents projected a negative return or didn't know what their return was.
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The 643 respondents that had undertaken big data initiatives represented a broad range of investment. Seven percent had invested at least $500 million and 15 percent spent at least $100 million on big data initiatives. Nearly a quarter (24 percent) spent less than $2.5 million. The industries that spent the most included telecommunications, travel-related, high tech and banking. The industries that spent the least included life sciences, retail, and energy/resources.
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Perhaps unsurprisingly, 55 percent of all big data spending goes to four business functions that generate and maintain revenue: sales (15.2 percent), marketing (15 percent), customer service (13.3 percent) and R&D/new product development (11.3 percent). Ramaswamy notes that three non-revenue-generating functions get less of the big data spending pie: IT (11.1 percent), finance (7.7 percent) and HR (5 percent).
But while sales and marketing get the lion's share of the bi data budget (30.2 percent), the highest expected ROI came from the logistics and finance functions. Those functions together only constitute 14.4 percent of the big data budget, but logistics managers said they expected their big data initiatives to generate a 78 percent return, while finance managers expected a return of 69 percent. In comparison, marketing executives expected an ROI of 41 percent on their big data initiatives.
"This data suggests that activities which companies believe have the greatest potential to benefit from big data go far beyond marketing and sales," Ramaswamy says. "In fact, of the 25 highest-rated activities, there are an equal number in logistics and sales (six). In addition, marketing and customer service had four each. In other words, opportunities to capitalize on big data exist in numerous corners of a large, global company.