How companies use big data to yield higher ROI

by CXOtoday News Desk    Jul 02, 2013


Companies use big data in various ways. Media companies especially have use big data to cash in on viewership. Satya Ramaswamy, vice president and global head of Tata Consultancy Services’ Digital Enterprise group, writes in the Harvard Business Review about how some companies use big data to their advantage and gain greater revenues than their competitors.

Tata Consultancy Services surveyed 1,217 executives in December 2012 and January of this year, from large companies (revenues of more than $1 billion) in a dozen global industries in North America, Europe, Asia-Pacific, and Latin America. The study found that companies that invested heavily in big data were generating excess returns and gaining more competitive advantages.

The study also showed that companies who used big data to yield greater ROIs used differentiated methods. Some of findings are as follows:

Leaders are more Internet-centric: On an average, 42 percent of total revenue of the ROI leaders came from customer orders received via the Internet, compared to just 29 percent for the laggards.

Leaders panned for gold in several places: ROI leaders see greater potential from big data to improve a number of marketing, sales, R&D and service activities. Companies such as Procter & Gamble and Netflix are using big data to identify new product opportunities.

Leaders are more aggressive in exploiting unstructured and external data: The ROI leaders make such unstructured data a bigger part of their data mix, almost 55 percent of their digital data is unstructured or semi-structured) as compared to 46 percent for the ROI laggards. And on another measure, 37 percent of leaders use a higher percentage of external data than 26percent for laggards. Retailers that want mobile location data of their shoppers must get that “external” data from the telcos.

Leaders are more likely to create a home for their big data professionals: Instead of embedding data scientists in business functions, ROI leaders centralized their analysts. In comparison with 79 percent of the ROI leaders put their analysts in a dedicated big data group or in IT, to 68 percent of laggards.

Ramaswamy also goes on to suggest that while big data can help businesses identify unnecessary costs, cost-reduction strategies face diminishing returns. Companies such as Netflix, General Electric and LinkedIn have revealed potential in using big data in sales, marketing, R&D and other revenue-generating activities to drive growth.