The list of CIO priorities has grown exponentially as technology chiefs drive digital innovation and steer business transformation in a post-pandemic era. Yet, along with security, new experiences to support a highly distributed workforce and the ongoing push for advanced analytics, CIOs need to get serious about monetizing back-office data. This means shifting focus from data capture and management to enabling improved business outcomes.
Companies of all sizes are sitting on mountains of customer, sales and operations data swept up into core enterprise systems. That data has real monetary value. We’re not talking about packaging up and productizing data to sell for additional revenue streams, although that is always an option. Rather, a viable monetization opportunity lies with dusting off back-office data the organization already owns to create insights that drive measurable business results and increase overall competitiveness.
Despite all the lip service paid to data’s value, many companies are not thinking about their data reserves in that way. Even fewer are monetizing data to its full extent, effectively leveraging insights in day-to-day operations to boost revenue, improve operations, accelerate product delivery schedules or optimize financial terms. According to NewVantage Partners’ Big Data and AI Executive Survey 2021, only 39.3% of respondents say they are managing data as a business asset and 41.2% are competing on analytics.
Consider the impact of data insights and smarter decision-making when it comes to supply chain and logistics—an area that companies across industries have been struggling with over the course of the Covid-19 pandemic. The ability to leverage data from back-office systems to know exactly which customers to prioritize after being alerted to a supplier delay, for example, can ensure the most profitable and enduring customer relationships are nurtured and protected. What about understanding that a below-average delivery rate was not caused by shipping delays, but rather “polluted data” that presents partially delivered orders as active and expected to be delivered versus the rounding errors that the supplier considers complete. With that insight in hand, business users can adjust accordingly instead of operating on wrong assumptions.
There are countless examples of how data insights translate into real dollars. On the accounting front, a company could improve its days payable KPI with an insight that shows invoices paid in standing with typical commercial terms didn’t map to receipt of goods due to shipping delays. Armed with that knowledge, it’s easy to recalibrate the system to make the right adjustments to payment terms in certain instances, maximizing a company’s cash reserves.
CIOs who rise to the occasion and successfully wring value out of existing data to substantially reduce inventory carrying costs, improve on-time delivery rates or manage customer expectations, have plenty to gain. IT organizations boost their credibility and start to be seen as profit centers, not cost centers. For their own part, the CIO’s personal stock rises among C-Suite peers, cementing their seat at the table and underscoring their strategic value to the business.
Yet beyond the upside for IT, the truth is CIOs are best positioned to grab the reins of data monetization. Few, if any, functional departments are data experts and even fewer have the background and expertise to analyze data with a holistic view and proper context across the entirety of the business. In contrast, CIOs are the central C-level owner of back-office data. They reside at the critical juncture between the data captured in source systems and the platforms trying to make that data accessible to business constituents. It’s only natural that the responsibility for unlocking data’s value falls to them. To get started, CIOs should consider the following:
Invest in the right tools. If current systems are not delivering to aid in back-office data monetization, it’s time to retire technical debt and find new innovative tools and platforms that can help. To achieve a holistic view, it’s important to have a business-oriented data model that provides context so business users can understand and make connections without having to rely on data scientists and modeling experts.
Break down data and departmental silos. Data silos are a key inhibitor of data monetization success, but departmental silos are equally problematic. If you think about the reality of servicing customers, many departments work in concert, often supported by multiple systems (e.g., ERP, CRM and Customer Support solutions), to get the job done. As companies start to leverage data to make smarter decisions, be careful not to fall into the trap of looking at a problem from a departmental view. CIOs play the conductor role, leveraging relationships and getting people and departments to work together.
Automation is key to success. Limited budgets and the on-going talent crunch mean CIOs can’t attract enough data scientists fast enough to achieve their data monetization goals. The workaround is to invest in automation tools that enable data flows that will translate insights into action.
There’s no doubt CIOs have a lot on their plate right now. Cloud migration, cybersecurity issues and fine-tuning a strategy to accommodate remote and distributed work are all top priorities on the CIO agenda and should remain so moving forward. But translating data into valuable business insights should also be up there on the CIO to-do list. CIOs who understand this and can lead the charge are creating competitive advantage that will differentiate in the new data economy.