Asset finance companies are being warned that the digital transformation which is essential to provide the platform for innovative new options such as servitization is at risk because so few businesses are managing their key data effectively.
A report by data valuation specialists Anmut found that global businesses waste as much as $1.5 billion a year fixing data errors, despite more than nine in 10 business leaders saying data is critical to business success. This comes at a point where many asset finance organisations are planning a move from traditional leasing contracts towards “pay-per-use” models, which require detailed data on customer profiles and product usage.
Anmut’s data leadership report, based on input from around 100 chief data officers (CDOs) from organisations headquartered on five continents whose collective annual revenues total over $1 trillion, found 91% of business leaders believe data is critical to the success of their businesses. However, only one in three (34%) of their companies manage their businesses’ data assets with the same disciplines as other business assets.
The remaining two thirds (66%) are using half of their data budgets to fix problems and errors identified within the data itself. According to the report, the average global business spends between 4% and 7% of annual operating expenses on managing its data. For a global financial services brand, that amounts to as much as $1.5-3 billion annually.
In general, the research suggested, data is poorly understood, inadequately valued and badly managed, with Anmut claiming this means most businesses are running on data that is not fit for purpose.
Three quarters of respondents (76%) say their businesses are investing in large-scale data and digital transformation strategies. In addition, 63% say data is more critical than technology to achieve business transformation. Yet, Anmut's report also finds that technology investment regularly overshadows data investment. Technology gets three times the attention (73%) and five and a half times (88%) the budget as data. This is in spite of the fact that technology is dependent on reliable data to run well.
Herman Heyns, CEO of Anmut said: "Digital transformation is a term that’s used everywhere, in every annual report and corporate strategy document. Digital transformation is what companies do to become data-driven. The advances many companies make might be digital in name, but to create the transformation they're aiming for, they cannot lose sight of the data. Those that succeed do so because they really understand the value of their data, and therefore prioritise and manage it well.”
The CDOs interviewed for the report identified a key challenge in making data something that everyone in their businesses understands, values and knows how to manage. The research suggested one third of company boards (33%) do not consider data a “material asset”, while 87% of CDOs said putting a monetary value on data would enable people within the business to manage that data better.
Heyns added: “A critical issue for businesses’ data leaders is winning senior buy-in. When the board doesn’t appreciate the value of data to a company’s future performance, it’ll lack investment further
down the business. That’s where data valuation comes into play. When data is treated like any other asset by assigning a monetary value to it, businesses can make better strategic decisions.”
In March, the UK’s Department for Digital, Culture, Media & Sport (DCMS) followed governments in several major economies including the US and Germany that are taking the lead to enforce better data management in business. It published a report indicating plans to create a framework potentially giving government the ability to make interventions into private and third sector organisations to unlock the full value of their data, to support growth and innovation.