Posted on 04/26/2011
It's Only 5 or 6 Percent
We all understand that information is the raw material of new products and services, smarter decisions, competitive advantage and greater growth and productivity. Okay, so maybe some missed that memo, but the evidence of a “data payoff” is found in new research from the Sloan School of Management at MIT. It found that those companies that adopted “data-driven decision making” achieved productivity that was 5 to 6 percent higher. Next time you drop by the big guy's office, ask him if 5 or 6 percent would make any difference to your company's bottom line? He will of course fire you for being so daft but he would hire his ex-wife's mother if he thought it would increase productivity by 5 or 6 percent. So here's how you save your job (you're welcome).
It seems that decisions based mainly on “data and analysis” were better than those based on “experience and intuition." Who knew? And the study found that a "5 percent increase in output and productivity is significant enough to separate winners from losers in most industries..." The study also found that the spread of such "data-driven" decision making is just getting started, even though the data surge began at least a decade ago. The productivity payoff from new technology comes "only when people adopt new management skills and new ways of working."
You Don't Say...
Is any of this really new to you? Of course not. Anyone with a pulse knows that there has been an explosion of information. And we have all faced the challenge of how to deal with it. But in MIT's defense, their study is the first real evidence of a “data payoff” across the corporate world. So now you have more data upon which to base your decision whether to take on those BI projects. We've talked about the importance of Enterprise Analytics, and we know you've made some progress on that front. But to the extent you need any help in justifying this line item expense, here it is.