by Thor Olavsrud

CEOs Have Rosier View of Data Initiatives Than Rest of Management

Jan 22, 20155 mins
AnalyticsBig DataIT Leadership

A study by the Economist Intelligence Unit reports hat CEOs tend to have a much more positive view of the current status and benefits of data initiatives than lower-level management in their organizations.

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CEOs may have a very different — and far more positive — view of the current status and benefits of data initiatives than the rest of management in their organizations, according to a new study by the Economist Intelligence Unit.

The study, conducted in September and October of last year, found that CEOs are much more likely to believe data and analytic tools are available to the broader organization: 47 percent of CEOs believe all employees have access to the data they need, compared with only 27 percent of other survey respondents. Additionally, 43 percent of CEOs believe relevant data are captured and made available in real time, while only 29 percent of other respondents feel the same.

CEOs also have a rosier perception of employees’ ability to extract insight from data: 38 percent of CEOs think employees do so, compared with 24 percent of the rest of respondents. Lower-level management — vice presidents, senior vice presidents and directors — have an especially gloomy view on this front; only 19 percent of them think employees extract relevant insights from data.

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“What I strongly suspect is the classic scenario where the CEO is always going to get the rosiest picture painted for him or her by the person below them,” says Bill Franks, chief analytics officer of Teradata, which sponsored the report. “I think part of it could be the fault of the chain of communication in terms of not wanting to deliver bad news to the C-suite.”

But Franks cautioned that respondents closest to data initiatives may also have an overly pessimistic view.

“The people that are closest are going to know every strength and weakness of that data,” he says. “When you deal with it every day, you’re aware of all those warts. People might be overly pessimistic.”

As an example, Franks mentions a large supermarket that started extracting data from its point of sale (PoS) system. However, its deli counter was not on the same PoS system, so a worker there would keep track of daily sales and enter them into a register as lump amounts at the end of the day — 10 lbs. of ham here, 15 lbs. of cheese there, etc. That was fine for tracking overall sales, but completely fell apart when the supermarket wanted to analyze individual shopping baskets.

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“Depending on your use of the data, a given use or flaw of the data may or may not matter,” Franks says.

Do CEOs Overvalue Data?

The Economist Intelligence Unit also found that CEOs may overvalue the benefits of data initiatives. For instance, 53 percent of CEOs think data utilization has made decision-making less hierarchical and has empowered employees, but only 36 percent of other respondents feel the same way.

Fifty-one percent of CEOs feel data availability has improved employee engagement, satisfaction and retention, but only 35 percent of the rest feel the same way; 58 percent of CEO believe data deployment has improved the quality and speed of execution, but only 47 percent of the rest agree.

The gap may seem mystifying, even if the CEO’s reports are giving him or her skewed results, but it may also be a function of a CEO’s wider view. Franks notes that just as some NFL teams may be considered to have a top-notch defense and running game but weak passing game, so too might enterprises do exceptionally well with data in certain divisions and poorly in others.

“You often can have a team that’s near the top of the rankings in one or two categories, but stinks at another,” he says. “In large enterprises, lots of different departments have different needs, different offices and different cultures. Certain divisions may be very good with analytics while others aren’t.”

The report is clear that data-driven organizations tend to outperform and be more innovative than their competitors. The Economist Intelligence Unit found a high correlation between a company’s propensity to rely on data when making decisions and its profitability and ability to innovate: 59 percent of data-driven companies outperform their competitors in profitability compared with 40 percent of companies with low reliance on data, and 63 percent of data-driven companies have a culture of creativity and innovation compared with 37 percent of companies with low reliance on data.

Still, becoming data-driven is no small challenge. Franks notes that aside from CEOs’ generally rosy picture of data initiatives, companies are struggling to make data available and convert data into insights.

The majority of survey respondents (57 percent) believe their company does a poor job of capturing and disseminating important business data. Underperforming, less innovative and less tech-reliant companies struggle the most, according to the survey, but even the most data-driven and top-performing companies struggle to make data available evenly across the organization. Nearly two-thirds of respondents say some departments have much better access to data than others, and this grows more pronounced at larger companies (with more than $500 million in annual revenue).

The Trouble With Data

There are also types of data that are causing many organizations grief. Daily transaction data is considered the most useful (by 61 percent of respondents) and also highly available (77 percent of respondents agree), but the picture is very different when it comes to data about customer demographics and behavioral patterns.

This data is considered the next-most-valuable, but only 28 percent of respondents feel it is widely available. Forty-five percent of respondents also see external market data as relevant and useful, but only 36 percent of respondents feel it’s readily available.

The Economist Intelligence Unit surveyed 362 respondents globally for its study. Fifteen percent were chief executives or presidents, 29 percent were in other C-level roles, 25 percent were managing directors, executive directors or heads of business units, and 31 percent were senior vice presidents, vice presidents or directors.

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