Data Analytics / Predictive Analytics , Technology

Gartner: Use Collective Intelligence for Business Value

As technology continues to evolve rapidly, organizations must use data and analytics and harness the power of AI to drive business value and maintain a competitive edge. At the recent Gartner Data and Analytics Summit 2024 held in Mumbai, India, industry leaders and experts convened to share their insights and strategies on using D&A and AI to improve financial performance and business outcomes.

See Also: The Forrester Wave™: Governance, Risk, And Compliance Platforms, Q4 2023

The correlation between high levels of D&A, AI maturity, and superior financial performance has been established. But, business leaders tend to overlook this as they focus on strategy - instead of execution - and ROI metrics - instead of outcomes and business value. To create value, D&A leaders must prioritize execution over strategy, focus on D&A functional benefits, and look beyond ROI toward business outcomes and communicating D&A value to their organization's leadership.

"We have unleashed a new era of collective intelligence, one that combines human and machine intelligence, and it is this new partnership that inspired our collective vision, or a confluence, generating value together," said Gareth Herschel, VP analyst, Gartner.

United Parcel Service has "cracked the code" and noted that it is important to have "the right data at the right time, in the right quality for the right problem, and with the right people," said Mallory Freeman, VP, enterprise data and analytics, United Parcel Service, in a video testimonial at the event.

"My Ph.D. years were spent in solving supply chain engineering problems with the UN World Food Programme," using "data science and AI" to "optimize everything," Freeman said.

The UPS-sponsored research facilitated the creation of an award-winning global supply chain optimization engine for food assistance. The engine has been in production for nearly 10 years, and it is now being used to address supply chain challenges worldwide.

Organizations must ensure that their leadership understands the fundamental role of D&A and AI as core pillars of their business strategy, or "you will be viewed as a cost center and not as a value creator," Herschel said.

Showcasing the Impact: Conveying D&A Value

Communicating the business value of data and analytics has been a persistent challenge for CDAOs.

Gartner's report analyzing the D&A maturity of more than 300 organizations against their financial performance provides evidence that a high-performing D&A function can boost an organization’s financial performance by as much as 30% (See Image 1).

Gartner also analyzed more than 10 years of earnings calls of companies in the S&P Global 1200 list. The analysis showed that companies that described data analytics or AI as part of their strategy outperformed their peers 80% of the time.

"The correlation between high levels of D&A and AI maturity and superior financial performance is there. Collective intelligence allows us to have big aspirations," said Debra Logan, VP distinguished analyst, Gartner, alluding to this research.

The Gartner analysts also said that D&A leaders should be more active in communicating these performance improvements to business leaders.

Redefining Data Governance for Value Creation

CDAOs invest a considerable amount of time in changing culture and creating strategy, according to Gartner. As a result of this, they tend to ignore governance.

"When organizations go to their business partners, the perception of governance is something that feels restrictive and controlling," said Sarah Turkaly, senior principal analyst, Gartner, in her presentation titled "Data and Analytics Governance: Foundations and Future." "This is your opportunity to change the narrative around governance, setting it up for modern foundations. When done well, governance can contribute to your organization's success."

The modern approach mentioned by Turkaly is outcome driven. This approach begins with business strategy, outcomes and drivers, and ends with demonstrable business impact (See Image 2).

"To succeed, we must be clear about which specific governance-related activities we need to focus on, because those are the ones that have been proven to create value," Herschel said.

Striking the Right Balance: Execution vs. Strategy

Most people are caught in the ever-strategizing loop because of their quest for a perfect strategy and perfect data. They feel the data is inadequate, said Eric Donkoh, CDAO, Bermuda Monetary Authority, in a video testimonial.

"There is the feeling that we are not qualified, that our knowledge of how it works or doesn't work is limited. But no one has all the answers. We can only solve this challenge together with our stakeholders, our mentors and our team members," Donkoh said. "The quest for a perfect strategy with all the details ironed out should not keep us from executing a good strategy."

The lesson here is that CDAOs should focus on execution and spend more time working with others across their organizations. Business functions must strive to share data as data sharing is a prerequisite to ensure collective intelligence.

Success Metrics Beyond ROI

Technology and business leaders have - for years - focused only on ROI and TCO instead of focusing on business outcomes, which likely affects the success of D&A projects.

"Firms that apply ROI thresholds too narrowly scoped to D&A projects are likely to be under-investing in critical business and data analytics capabilities for long-term value creation. High-performing firms, on the other hand, look beyond traditional ROI and focus on contribution to business outcomes with long-term value creation initiatives," Herschel said.

Driving AI-Enabled Transformation

In a statement, Gartner reported that 61% of organizations are evolving their D&A operating model because of AI technologies.

By 2026, 75% of CDAOs who fail to make organization-wide influence and measurable impact their top priority will be assimilated into technology functions, according to Gartner. IT will consequently be viewed as a cost center.

"Responding to the rapid evolution of D&A and AI technologies, CDAOs are wasting no time in making changes to their operating model," said Alan D. Duncan, distinguished VP analyst at Gartner. "CDAOs are doing it to support data-driven innovation and accelerate organizational agility, with data governance at the core."

The report showed that CDAOs’ key responsibilities include managing the D&A strategy and D&A governance, according to 74% and 68% respondents, respectively. AI is also within scope for 58% of CDAOs, showing a 24% increase from 2023. According to 49% CDAOs, generative AI is within the scope of their primary responsibilities.

D&A leaders must also lead data-driven change management and cultural change to drive business impact, said Donna Medeiros, senior director, data and analytics, Gartner. By prioritizing execution over strategy, fostering a culture of data sharing, implementing robust data governance frameworks, and effectively communicating the value of data and analytics to top leadership, CDAOs can position their organizations to drive measurable business impact and sustained competitive advantage. The ability to leverage collective intelligence will likely be a defining factor in determining an organization's success in the data-driven era.