Data, Analytics and AI - Key to Value Creation BUT CDOs aren't delivering!

Data Analytics and AI (DAI) Leader Survey

Executive Summary

?The advent of AI, and in particular Generative AI opens the door to businesses transforming to be fully data enabled and AI powered, to drive competitive performance and by that standards our survey shows that (Data, Analytics and AI) DAI Leaders have a very long way to go!?

As part of my Doctor of Business Administration (DBA) Research, I conducted this survey of Data and Analytics Leaders with the support of DataLeaders (www.dataleaders.net ) Members during H2 2023.

?Our survey shows that DAI Leaders think they are driving Strategy they are far from driving sustained competitive performance.? 50% of DAI Leaders believe they are shaping business strategy, but only 36% think CXO and Business Leaders in their organisation use Data to drive key decisions and only 30% believe they operate in a Data Driven Organisation.? There is a clear acknowledgement that their business is making poor use of Data to Sense, Seize and Transform in VUCA times.? Only 32% use Data to sense opportunities, whilst 50% use Data to seize opportunities, but only 33 % use it to support transformation.

?Core Data Tactics are still being developed - 45% have effective Data Governance and 46% think Data is Democratised in their organisation.? That said based on many of the traditional measures of a Chief Data Officer, it appears that much of our core work is done. Almost 70% have established Data Governance and over 75% can bring data from multiple sources into a Data Lake and/or Enterprise Data Warehouse for customer and market analysis!

In summary, most organisations have yet to embed Data, Analytics and AI capabilities into their Corporate DNA.? Without that, there will be a continued failure to deliver value and lack of credibility when organisations are facing the biggest transformation in our lifetime!

?Background to the Research

?Until now, despite many hundreds of articles and case studies in Forbes, HBR there is no manual for how to deliver Sustained and Sustainable performance using Data, Analytics and AI.? This is particularly important as we swing into a new wave of Data and AI hype, with Generative AI.? Eddie Short, who has been a global lead Consulting Partner and Chief Data & Analytics Officer for multiple international companies, set out to try and address this through a Doctoral programme starting in 2021.

• There is no clear methodology or framework to enable an organization to deliver sustained and sustainable competitive performance through Data & Analytics.? Furthermore, leading industry experts and analysts have provided very little empirical evidence to show how ‘data driven’ organisations outperform their competitors.
• Why – Data is both the fuel of the business, and the material from which insights are derived to better improve decision making in the business.? It is therefore the primary means for improving People, Process and Technology performance in your organisation – in other words Transformation.? When your Transformation is ‘done’, you will have reached a state of perpetual evolution and/or adaptation, what I’ve called an ‘Intelligent Business’.

?The Intelligent Business

The Intelligent Business is an organisation that utilises predictive and adaptive insight to dynamically reconfigure itself, in response to the expected needs of its customers, and simultaneously anticipate and respond to changes and events in the external environment.

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• To answer this challenge, we have compared industry best practice and academic research to understand the levers of business performance that Data & Analytics can drive.? We have investigated the capabilities of Data and Analytics within the organisations of DAI Leaders.? To understand how their organisations are performing we have leveraged three management theories,
• Resource Based Theory (RBT), which aims to show the unique capabilities an organisation has developed, they can be described as Valuable, Rare, Inimitable (Difficult to Copy) and Organisationally embedded (VRIO).?
• Resource Orchestration which extends RBT and considers managers' roles in the selection and configuration of resources, and it aims to explain the process of achieving a competitive advantage.
• Dynamic Capabilities, which focuses more on the issue of competitive survival in response to volatile and rapidly changing business conditions, which are the norm in the 2020s.

We received responses from over 80 DAI LEADERs/CDAOs to our survey from across Europe and North America.?

?The research shows that the majority of organisations have yet to embed Data, Analytics and AI capabilities into their Corporate DNA.? Without that, there will be a continued failure to deliver value and lack of credibility when organisations are facing the biggest transformation in our lifetime!

Research Findings

DAI spend too much time on Tech and too little on people and value creation!?

Many Data Leaders (50%) think they are critical to driving Strategy, but the question remains as to whether they are driving action?

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• This is concerning given the VRIO points of Resource Theory, and to be truly differentiating a capability needs to Organisationally Embedded.
• 49% say that their company uses data to identify changing Customer Needs and 62% to identify new market Opportunities.

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Our DAI LEADERs believe they are delivering value, but the question remains whether they help to drive improved Executive Decisioning and Action:

• 38% think their companies outperform in Profit vs 21% who believe they are underperforming competitors
• In terms of their investments, 44% believe they deliver Return on Investment vs 14% who believe they don’t.

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Our research shows the importance of Dynamic Capabilities, especially in the VUCA times we are living in.? Dynamic Capabilities are essential how companies, sense, seize and transform to respond to those changing and complex market and environmental conditions.?? In these circumstances our DAI Leadrers say they and their companies are not doing so well

• Just over a third (35%) of organisations use Data to sense opportunities, which is quite concerning given the amount of external data available.
• On a more positive note, 52% use Data to seize opportunities, once they have been identified, But
• Only 34% use Data to support transformation.? This is very concerning – organisations are looking for more predictive and prescriptive insight to help them navigate change – it seems most are not getting that.

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The research shows that in terms of the basics DAI Leaders are delivering almost 70% have established Data Governance and over 75% can bring data from multiple sources into a Data Lake and/or Enterprise Data Warehouse for customer and market analysis!? That said the core Data Tactics are still being worked on in many organisations.

• Only 42% think they have Good Data Governance and likewise only 44% have Democratised Data to make it fully available across the organization.
• Alignment with the business is positive with 59% agreeing that, but with the critical stakeholders in Finance and IT the situation is much worse.? Only 45% DAI Leaders think they have strong alignment with their CFO, and only 27% think they have good alignment with IT.? Given the importance of these relationships, in terms of delivering Data capabilities and understanding the value they create, these numbers are very concerning!
• This concerns us given again VRIO.? DAI Leaders spend too much time on Technology which is neither Rare, nor difficult to copy, and hence not a source of competitive advantage, struggle to define Value (to the CFO) and are failing to get capabilities Organizationally embedded!

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In terms of Skills, tools and technologies, the survey shows a mixed bag of results, which could indicate that Data teams, whilst equipped to solve existing problems are poorly equipped to solve the problems that the business really faces in the VUCA world:

• The majority of DAI Leaders think their teams (77%) have the right skills,
• 57% think their teams have access to the right tools and 49% use COTS over bespoke Data Tools!
• That said this is at odds with the view that only 28% believe they have modern tools, BUT 47% think they have an Enterprise Architecture for Data.

Additional Highlights

Our ultimate goal of helping organisations become Data Enabled and AI Powered, involves making Data the Brain of the Business.? Our survey shows we have far to go to achieve this:

-?????? Only 43% have made significant progress with Data Science and Machine Learning and only 36% think their projects are given sufficient time to deliver and achieve key objectives!

-?????? Whilst 52% say the Board has recognized Data as a critical asset, only 36% see their business leaders making the majority of their decisions based on data and only 33% see a business leader change a decision if the data contradicts their intuition or gut instinct.? Ultimately only 25% say they are able to acquire new and relevant knowledge!

-?????? Only 30% think their organization is organized effectively to leverage data and similarly only 35% think their Data organization is at the right size and scale to service the organization.

-?????? Only 33% have developed a Data Literacy and Culture programme to promote the value of data around the business.

-?????? Only 32% use Data to drive external market sensing capabilities.? Only 45% use customer data to analyse whether product development is in line with customer needs.

-?????? Only 39% think their Data and Analytics leader is a peer of other C-suite leaders in helping to determine how the business should allocate its resources.

-?????? 52% see their DAI Leader as able to advise the Board on Data and Analytical regulatory matters (in partnership with the Legal Counsel)

-?????? Only 39% say their organisation can successfully adjust their business processes in response to shifts in our business priorities, and only 29% can successfully reconfigure business processes in order to come up with new productive assets.

-?????? HR is only able to successfully use data to help the business in 28% of organisations.? HR can only effectively supports the Data team in 37% of organisations and only 26% see Employee Engagement in the Data organisation on par with the rest of the business.

Sol Rashidi Vin Vashishta Mark Stouse Tom Davenport Samir Sharma Bill Schmarzo Pascal Clement Malcolm Hawker Nick Whitfeld George Bagley George Johnston Lee Smith Kay Schwabedal Jon Cooke Heather Wade Kyle Winterbottom Jeremy Wyatt Tim Ellis Caroline Zimmerman Benny Benford ?? Lisa Rabone - Sustainability in Data (SiD)