• Using data has a positive impact on a business’ bottom line

  • Those that use their data are 8% more productive

  • Firms that perform deeper analyses of their data also see a boost in profits

New evidence shows that businesses can become more profitable and productive if they use their online customer data - information gathered from web sources including marketing campaigns, social media and web analytics - effectively. This evidence is published today in a report called Inside the Datavores from Nesta, the UK’s innovation foundation.

Big data has been touted as a vital resource for business but until now there has been little hard evidence of its positive impact on the bottom-line. The research found that businesses that make greater use of their online customer data – those that collect, analyse and deploy data – are eight per cent more productive as a result (measured by value added).* One data activity in particular – the analysis of data, using a variety of methods – has the greatest impact on performance: those firms that are more analytical are 11 per cent more productive than the average.

Greater data analysis is associated with higher profitability too. It generates a return on equity that is 4.3 percentage points higher than the average and a boost in profits of £3,180 per employee.

The report also found that businesses that grant their employees greater autonomy to make decisions report a productivity premium from data use that is almost four times as high as those with centralised decision-making.

Hasan Bakhshi, director, creative economy, policy and research, Nesta, said: “Believe the hype. Today’s report shows that data has clear benefits for businesses but collecting it alone is not enough. Businesses must analyse their data and create an environment where workers are empowered to use it to generate positive returns. Our report makes a strong case that no business should ignore its data. 

500 businesses from a variety of sectors, including information and communications; wholesale; business support services; retail; professional activities; knowledge-intensive business services; manufacturing and financial services were surveyed for this research and their responses were matched with historical performance measures taken from a company accounts. 

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For any media inquiries please contact Christine Crowther in Nesta’s press office: [email protected] / 020 7438 2611

Notes to Editors:

Inside the Datavores builds on the research Nesta published in November 2012, which looked at how only a small minority of UK businesses use data analysis despite the significant benefit it brings. This work is called The Rise of the Datavores and can be read on Nesta’s website here.

This report measures profitability using EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization.

*The report expresses differences in levels of data activity between firms using standard deviations: a business is described as having greater levels of a data activity if it is one standard deviation above the sample average in its score for that data activity. For illustrative purposes, 16% of companies in the sample are one standard deviation above the average in their score for data use.