By Ericka Chickowski on 2010-09-27
Researchers from the McCombs School of Business at the University of Texas and Sybase explored the relationship between data management and business results. Improvements in variables including quality, usability, intelligence, remote accessibility and sales mobility were linked to improvements in metrics used to assess financial performance at Fortune 1000 companies. "Despite decades of IT investment in information technology, the direct correlation between those investments and the financial performance of the business has eluded senior decision-makers," Anitesh Barua, distinguished teaching professor and lead researcher at University of Texas at Austin, said in a statement. "This is the first study that quantifies the relationship between incremental improvements in data and key performance metrics of businesses today. Previous studies tell us neither the magnitude of the effect on performance nor what it takes to improve the attributes of data. We are encouraged by our findings and expect the business community to take notice."
1. Employee Productivity
Typically defined and measured by sales per employee, employee productivity grows 14.4% given a 10% increase in data usability.
The median sales per employee at organizations studied was $388,000; improving data management could increase by $55,900 per year.
2. Return on Equity
This key number increases by 16% when goosed by 10% jumps in data quality and sales mobility.
A company with the study's median income of $410.47 million would make an additional $65.67 million per year through better data management.
3. Return on Invested Capital (ROIC)
Efficiency in allocating capital edges up 1.4% with a 10% increase in sales mobility.
A company with $2.144 billion in capital would increase net income by $5.4 million every year through data management improvements.
4. Return on Assets
Efficient use of resources to generate income increases by 0.7 percent with a 10% improvement in intelligence and remote accessibility.
Better data management would net the average Fortune 1000 company an extra $2.87 million in income.