MARKET | Feb 14, 2017

New business models for Data Driven companies

How will Big Data and Data-Driven change the business models of enterprises? What is the situation today?

According to Gartner, 90% of companies by 2019 will have hired a Chief Digital Officer to gain a competitive advantage in the marketplace. Furthermore, in Italy, according to Microsoft-Ipsos Mori research, 66% of Italian SMEs already have skills and instruments to manage business information and 50% plan to continue investing in data analytics. In fact, companies are beginning to understand the enormous potential that an adequate analysis of Big Data could provide in terms of competitive advantage and be a useful instrument for the evolution of business models.

Italian companies which adopt data management are two times more likely to have positive expectations about improvement of their financial situation over the next 12 months. 46% of companies already managing their data are more optimistic about growth prospects, compared with those companies that are still unable to aggregate and interpret data.

The companies that are equipping themselves with the skills and technologies useful for extrapolating strategic insight from corporate information assets are those that will drive economic growth in Italy, given that, according to the research, they are those most likely to launch new products or services (46% versus 17%) on the market, or also address foreign markets (43% versus 17%). This trend follows the European frame of reference where the companies most attentive to data management are also those most inclined to product innovation (45% vs 27%) and to internationalization (32% vs 18%).

The in-company value of data

The corporate functions which most use Big Data are marketing and sales, finance and control, information systems, purchasing, production and supply chain. 26% of organizations have a Chief Data Officer, 30% plan the personnel figure of the Data Scientist, even though the responsibility for analytics mostly remains with the CIO or other IT decision-maker.

According to research by the Digital Innovation Observatory of the Polytechnic University of Milan, in 2015 alone Big Data Analytics increased by 34%, followed by the sector of Business Intelligence (+11%). But, according to McKinsey, in order to take full advantage of data and analyses, companies need at least three capacities: be able to identify, combine and manage multiple data sources; be able to build advanced models of analysis for the prediction and optimization of results; know how to create a clear strategy to take advantage of data so that they effectively lead to better decisions.

New business models, new professionalism

In recent years, business models based on data have been focusing mostly on how companies can use the vast amount of data collected in order to obtain a competitive advantage in the marketplace. Companies collect data from a variety of sources and are learning to tell stories with such data. Analyst and consulting firms are pushing companies to rely on data for guiding decision-making and letting the observations and intuition of managers drop into the background. Moving towards business models based on data corresponds to an increasingly greater use of qualified data; but, in order to define business strategies, it is necessary that change be first of all cultural and only later instrumental. This process of in-company digital transformation affects not only every industrial, production and administrative field and sector, but also all organizational and managerial contexts within the same enterprise.

This transversality also makes the entry of the Chief Digital Officer into Italian companies necessary, as forcefully noted by the Gartner study. Nevertheless, despite the continued expansion of digitization at every corporate level, consolidation of this profession is not immediate and appears to have assumed a transitional role in extending the digital skills needed to address the changes taking place to the entire workforce. Many companies, for example, have focused on the training of their managers rather than going to the market for acquiring the new professionalism of the CDO, while others have preferred to stimulate all-round innovation by introducing the concept of Digital Accelerator Team, or an operational unit which has brought together various in-house professional figures and allowed them to acquire the necessary digital skills through on-the-job training.

Critical issues to be overcome for better governance

According to TechTarget advancing data governance and BI skills development research, do-it-yourself Business Intelligence instruments are no longer sufficient for managing complexity in the data field. This is because the new functionalities requested by users and companies constantly increase and at a frenetic pace, so the instruments cannot be definitive but must be able to accommodate multiple needs and be flexible and effective at the same time. In fact, new tools have arrived on the market that seek to improve communication and front-end activities.

One of the major critical issues comes from the lack of an in-house organizational vocabulary and above all of a vocabulary common to the various departments or sectors dealing with a single aspect inherent to the data. Business and IT units do not speak the same language and sometimes even they a different perception of goals and especially processes of improving efficiency initiatives, particularly when they are not integrated and shared within a shared strategy. A strategy that must take into account different approaches and paths: one top-down generated by the CEO or managerial levels, the other bottom-up implemented by strategic initiatives of the IT branch and integrating them.

Modern Business Intelligence should also be able to develop skills related to the storytelling of the value of data. According to the report, every company should be able to implement and develop a kind of transformation of its team through three main phases:

  • identify the people who have the potential and desire to learn new Business Intelligence techniques for testing new models
  • support and encourage this new team and recognize its credibility within the company, in order to generate the start of a virtuous circle
  • develop and enhance the skills related to leadership because, if the data have a strategic value, this team should also be able to outline corporate strategies and visions for the future.

Emma Pietrafesa