Just finished to read an interesting paper by Erik Brynjolfsson (MIT Sloan School), Lorin Hitt (Penn University) and Heekyung Kim (MIT) on the impact of data driven decision making on enterprises performance.
Based on surveys they made the result shows a 5-6% performance increase and that tiny gain can make the difference between success and disappearance in this very competitive world.
They note that systems included in the enterprise processes since the end of the nineties are producing an ever growing quantity of data, about their internal processes, their providers and their customers. Many companies nowadays are in the PB range, whilst only ten years ago only a handful had such large data base.
The information available at company level is estimated to double every 14 months and this begs the question if there is value to be mined in this growth or not. Most companies today accrue data but very few are exploiting them.
IBM has bought 25 companies involved in data analyses in these last few years, spending about 14 billion $, with a work force of 8,000 consultants and 200 mathematicians, clearly indicating that they believe data analyses is the biz to be in.
In the paper the authors point out that we have just begun in understanding how to leverage data and that in the future a real increase in performance will be possible once the enterprise will transform itself to take this data analyses as an integral part (and not as an add on) to its processes.
This reminds me of the situation we faced in the eighties when people wondered how to capitalize on information technology investment. All companies had started to invest heavily on IT but the results in terms of increased performance were not evident at all. What was needed was a radical re-enginnering of the enterprise processes to take advantage of IT.
It was eventually understood that IT is not an add on that can be used to increase some process speed, rather it was something that allowed to kill several processes and completely redesign others.
I guess we are facing the same situation now. We need to take these data and their analyses for granted and redesign the enterprise accordingly. And not just the enterprise! This applies as well to institution, eGovernment, health care, education…. There is no area that is not affected, all of them have to be redesigned from scratch. And, of course, there is plenty of biz in this redesign…