Companies that empower executives with access to real-time Business Intelligence (BI) will experience substantially better year-over-year improvement in operating profit, organic revenue, as well as outstanding customer retention rates according to a new study.
The recent Aberdeen Group research report – The ABCs of Executive Analytics: A-List Performance Using BI in the C-Suite – said that “Best-in-Class” executives are able to use BI to recognize and capitalize on opportunities in their business environment, and make fact-based decisions in real-time independent of IT assistance.
The research report, based on a survey of over 350 senior executives between January and February 2011, divides respondent organizations into three categories:
- Best-in-Class (Top 20% of aggregate performance scorers)
- Industry Average (Middle 50% of aggregate performance scorers)
- Laggard (Bottom 30% of aggregate performance scorers)
The Best-in-Class are distinguished from Industry Average and Laggard companies by six main performance criteria:
- Ability to achieve improvement in operating profit
- Ability to increase organic revenue
- Ability to increase cash flow
- Ability to achieve ROI for marketing initiatives
- Customer retention rates
- Employee retention rates
Characteristics of Best-in-Class
The survey indicated that Best-in-Class organizations are:
- Sixty-five percent more likely to have executive-level ownership of BI strategy
- Fifty-six percent more likely to align operational activity to a strategic agenda
- 1.3 times more likely to automate the generation and delivery of standard reports
The report also found that those organizations successfully delivering real-time self-service BI to executives (Best-in-Class) were also more likely to be using Mobile BI:
- Twenty-seven percent of Best-in-Class have already implemented and are using Mobile BI deployments, compared to 14% of Industry Average companies, and 7% of Laggards.
The report revealed the top pressures driving executive investment in BI initiatives as:
- Failure to recognize new growth opportunities
- Poor understanding of, and ability to, oversee routine daily operations
- Inability to access crucial decision-making information when needed
Inhibitors to efficient data management
The report states that, as an over-arching principle, the ability of Best-in-Class organizations to generate actionable intelligence from their data stores, and successfully apply data analysis to real-world business situations, separates them from other enterprises.
An earlier Aberdeen benchmark report from December 2010 – Data Management for BI: Fueling the Analytical Engine with High-Octane Information – identified the top five inhibitors for the delivery of timely and relevant data analysis as:
- Lack of IT resources (52%)
- The expense of software and services (45%)
- Poorly defined end-user information requirements (42%)
- Lack of management support/sponsorship of projects (38%)
- Business need is not considered high enough to justify expenditure (24%)
Benefits of comprehensive executive use of BI
The report identified several key significant benefits of real-time self-service executive access to BI, including:
- Improved operating profit: Best-in-Class companies achieved a 42% year-over-year increase in operating profit, compared to 11% for Industry Average companies, and a 7% reduction in operating profit for Laggards.
- Increased organic revenue: Best-in-Class companies achieved a 41% year-over-year increase in organic revenue, compared to 12% for Industry Average organizations, and a 5% decrease for Laggards.
- Increased cash flow: Best-in-Class companies achieved a 34% year-over-year increase in operating cash flow, compared with 9% increase for Industry Average, and 6% decrease for Laggards.
- Good ROI for marketing initiatives: Best-in-Class companies achieved a 20% year-over-year increase in ROI for marketing initiatives, compared to 9% increase for Industry Average, and 4% decrease for Laggards.
- High customer retention rates: Best-in-Class companies managed a 94% customer retention rate, compared to 92% for the Industry Average, and 77% for Laggards.
- High employee retention rates: Best-in-Class companies achieved a 96% employee retention rate, compared to 91% realized by Industry Average organizations, and 76% for Laggard enterprises.
All results were measured over a 12-month period.