Data and Analytics Investment Grows, But Data Leaders
Must Raise the Bar for Business Value

As they increasingly value data-driven decisions and insights, the majority of organizations continue to increase investments in data and analytics. Business intelligence (BI) and data-related initiatives do more than drive direct value. Business leaders increasingly recognize these programs help deliver more value from many different types of strategic business investments. This dynamic presents a great opportunity for data leaders and their teams—as well as high pressure to deliver.

A number of external forces that business leaders must navigate amplify this pressure, including a rising cost of capital, which increases the internal rate of return (IRR) required for new projects and often squeezes BI budgets. As a result, the pace of investment in data and analytics initiatives during 2023 appears to decelerate slightly from 2022. Fewer organizations plan to increase data and analytics investments, and more expect levels to remain flat.

This change does not mean that business leaders consider data and analytics less important. The increase in investment in strategic initiatives enabled by data and analytics indicates the opposite is true. Data show that the top investment areas, which are all growing, have data and analytics at their core or at least as a required enabler. Digital transformation, development of new products, new customer acquisition campaigns, customer retention initiatives, and overall performance management improvements all depend on analytical insights and data-driven decision making.

This is a key insight for data leaders—it is not only about your specific team and its budget but also about how routinely and deeply you can connect your capabilities to the strategic investments business leaders make. In other words, long-term growth and value from BI and data-related initiatives will not stem from deployments that drive value on their own. Rather, it will come from the organization viewing these capabilities as enablers of any business initiative that can benefit from improved data insights and data-driven decision making.

Therefore, data leaders need to make sure that business leaders understand the role BI and data can play in their strategic goals, and identify the strategic business initiatives that capture management’s attention and through which data and analytics capabilities can be attached, justified, and funded. By focusing on the business initiatives that are a priority for a specific industry, geography, and management team, they can best prioritize to align with business strategy and have the best chance of exceeding IRR—which is a fundamental requirement for delivering BI value and a strong contributor to BI success.

Because so many contemporary strategic business investments can benefit from BI and data, data leaders need to prioritize and develop plans for increasing penetration in the enterprise. By assessing potential business benefits and the relative importance of strategic business outcomes as expressed by business leaders, they can focus their efforts on actions that will have the most positive impact. Critically, they must express the value associated with those outcomes in a metrics-based manner and engage with business leaders on an ongoing basis to refine priorities and uncover emerging investment areas in which they also can drive value.

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