Executive summary

Do companies with more user-friendly and accessible enterprise resource planning (ERP) systems enjoy more positive business outcomes? Are they more profitable? Do highly effective ERP systems help create a sharper upswing of revenue growth? How much difference does effective data really make to business success?

To answer these questions, Sage commissioned IDG Research Services to conduct a study of medium-sized businesses in North America and Europe to explore the business implications (in US dollars) of improving data access and usability, and better understand the associations between the overall effectiveness of the ERP infrastructure and business profitability, revenue, projected growth, and so on. In other words, how do key business outcomes change as accessibility, usability, and insight into business information improves—even by small increments?

The research aimed to explore how investments in ERP solutions that address four data attributes—accessibility, usability, quality, and intelligence—can impact key business outcomes, such as revenue growth, profitability, sales (including sales to new customers and of new products/services), operational efficiency, and market penetration.

The study validated the theory that improvements in the accessibility, usability, quality, and intelligence of data have a direct and positive impact on critical business outcomes:

• Companies with more effective data grow 35% faster.
• Only 40% of companies rate their ability to process customer demands on the road as excellent.
• More intelligent data means more revenue
• a 20% improvement brings $9,216 more per employee.
• Companies with better intelligence are 2.2% more profitable.
• Companies with better intelligence are 4 times more likely to optimize inventory levels.
• Companies with better data improve consistent quality delivery to customers by 9%
• Companies with more usable data increase productivity by 10%.
• Companies with mobile access to data increase sales of new products by 5%.
• Companies with mobile access to data sell 3% more to new customers.
• Successful companies are 4 times more likely to process orders remotely.

Moreover, companies with highly effective ERP systems that provide more usable and accessible data are more likely to realize these outcomes.

Businesses ranking in the top third for overall data attribute scores consistently achieve higher performance—a fact that should be noted by other companies looking to improve their performance. The return on investment (ROI) in an ERP system that maximizes these data attributes would be significant given the potential impact on business outcomes.

Improving insight into which data attributes positively impact outcomes for medium-sized businesses can help address their pain points. The key findings section of this report further illustrates the effects of data accessibility, usability, quality, and intelligence on business performance and outcomes.

Conceptual model

This study of medium-sized businesses in North America and Europe set out to validate a relationship between improvements in data attributes including accessibility, usability, quality, and intelligence, and one or more business outcomes. Figure 1 shows the conceptual model developed to assess the impact of data attributes on business outcomes. The components of the model are (i) data attributes and (ii) business outcomes.

Defining the data attributes

IDG Research Services studied four data attributes: accessibility, usability, quality, and intelligence. Within each of these multifaceted attributes are several separate, but related, characteristics that significantly affect the ability of decision makers to act quickly and effectively.

Accessibility:

• The extent to which users can access data remotely/outside the office
• The extent to which users can access data from mobile devices
• The extent to which salespersons can access customer data/process demands from a mobile device

Usability:

• The extent to which users can personalize the way data is presented
• The ease with which data can be shared with external partners/stakeholders

Quality:

• The extent to which data is accurate/error-free
• The extent to which data available is sufficient to cover most users’ inquiries
• The extent to which data is received on time to take action/make decisions
• The degree to which data is up to date relative to the event(s) of interest

Intelligence:

• The availability of data users need at the time they need it most
• Data provides insight into demand patterns
• Solutions provide real-time visibility into key performance indicators
• On-demand access to business intelligence and reporting

Defining the business outcomes

The selected business outcomes reflect a comprehensive, well-rounded assessment of how well a business is performing across a variety of key measures, including financial performance, customer-focused issues, and operational effectiveness.

Key findings

The research findings validated the hypothesis: Improved data attributes do lead to superior business outcomes. Business leaders know that data affects performance. But how strong is the association between the data attributes studied and important business outcomes? Here’s what the research showed.

Companies with more effective data grow 35% faster.

Improving performance on all four data attributes drives positive financial returns. In fact, a highperforming company can expect to gain 35% more in incremental revenue year over year than a low-performing company.

For example, the median annual revenue among the medium-sized businesses surveyed is $42 million. Based on this median, a high-performing company can expect average year-over-year revenue growth of 8.9% or +$3.75 million, while a low-performing company can expect average year-over-year revenue growth of 6.6% or +$2.77 million. For the typical medium-sized business surveyed, moving from a low-performing to high-performing organization could result in a net gain of roughly $980,000.

In addition to the positive financial impact, top-performing medium-sized businesses15 consistently achieve higher performance on all operational and customer-focused business outcomes.

Increases in year-to-year revenue and profitability are associated with improvements in each of the data attributes. Companies with high levels of data effectiveness are likely to have increased revenue (or profitability) from one year to the next. This includes both lowrevenue and high-revenue companies.

The single data attribute with the strongest positive relationship to revenue/profit growth: intelligence.

According to the research, each of the data attributes has an impact on various business outcomes.

• Accessibility: Direct and positive impact on innovation and market penetration
• Usability: Direct and positive impact on time spent on nonproductive tasks, resource optimization to improve sales, and operating abroad
• Quality: Direct and positive impact on delivering consistent quality to customers, compliance, risk evaluation, and timely/accurate reporting
• Intelligence: Direct and positive impact on revenue and profitability growth, time to market, mobilizing sales, planning/forecasting accuracy, and upsell opportunities

It’s important to note that there is some degree of interdependency among the four attributes. Data accessibility, for example, does not occur in a void and often occurs in conjunction with usability, quality, and intelligence. The close relationship among the four data attributes means that all four will play a role in building a successful environment.

Furthermore, ERP solutions that improve data attributes will have a positive impact on the business in key customer-focused or operational outcomes (i.e. time to market, upsell opportunities, or innovation). The right ERP solution can improve data accessibility, usability, quality, and intelligence, enabling businesses to analyze performance and identify opportunities to enhance customer relations or operational efficiency.

How data can address business pain points

According to the research, medium-sized business strengths include consistently meeting compliance, delivering consistent quality to customers, and delivering products/services on time. Their challenges?

Operating abroad or in the global market, reducing time spent on nonproductive tasks, mobilizing sales, and improving time to market.

Understanding which data attributes positively impact business outcomes can help address the challenges and pain points of medium-sized companies.

Data intelligence

How does improved data intelligence affect business outcomes at medium-sized businesses?

Of the four data attributes, intelligence positively impacts the broadest set of business outcomes, including revenue and profitability growth, time to market, mobilizing sales, planning/forecasting accuracy, and upsell opportunities.

A 20% improvement in data intelligence will result in:

2.6% increase in year-over-year revenue.

This increase is solely due to improved data intelligence and is in addition to changes in yearto- year revenue that may have occurred due to other factors. Based on the average revenue per employee of $354,482 for medium-sized businesses in the sample, a 20% improvement in data intelligence results in an increase of $9,216 in revenue per employee year over year.

More intelligent data means more revenue - a 20% improvement brings $9,216 more per employee.

2.2% increase in year-over-year profitability.

A medium-sized business with an annual profit of $2 million would see a $440,000 improvement in profits year over year.

Companies with better data intelligence are 2.2% more profitable

11.6% improvement in time to market. Based on this data, a company that currently takes 12 months to launch a new product or service could expect to reduce that time by 42 days.

In addition, improvements in data intelligence positively impact outcomes20 such as:

• Enabling sales to directly process customer demands anywhere, anytime.
• Improving planning/forecasting accuracy.
• Optimizing resources/inventory levels to minimize costs.
• Maximizing revenue through upsell opportunities to existing customers.

Companies with better intelligence are four times more likely to optimize inventory levels.

Data quality

How does improved data quality affect business outcomes at medium-sized businesses? Data quality directly and positively impacts several important business outcomes—in particular, delivering consistent quality to customers, compliance, and reporting.

A 20% improvement in data quality22 will result in:

9.0% improvement in delivering consistent quality to customers.

A medium-sized business that delivers consistent quality to customers 70% of the time could expect that to increase to 76% with better data quality.

6.4% improvement in consistently meeting regulatory/compliance requirements.

A medium-sized business that consistently meets 85% of regulatory/compliance requirements now could raise that to 90%.

In addition, improvements in data quality positively impact outcomes23 such as:

• Increasing risk evaluation accuracy.
• Improving reporting timeliness and accuracy.

Companies with better data improve consistent quality delivery to customers by 9%.

Data usability

How does improved data usability affect business outcomes at medium-sized businesses? Improving the ability to personalize and share data directly and positively impacts productivity, resource optimization, and inventory management.

A 20% improvement in data usability will result in:

10% improvement in time spent on nonproductive tasks.

A medium-sized business employee who spends a third of his monthly work hours—about 53 of 160 hours—on administrative or nonproductive tasks would cut that time to 48 hours. In addition, improvements in data usability positively impact outcomes such optimizing resources or inventory levels to improve sales and operations in global markets.

Companies with more usable data increase productivity by 10%

In addition, improvements in data usability positively impact outcomes27 such optimizing resources or inventory levels to improve sales and operations in global markets.

Data accessibility

How does improved data accessibility affect business outcomes at medium-sized businesses? Improving data accessibility—specifically out-of-office and mobile access - directly and positively impacts the ability to innovate by selling new products and services and to penetrate new markets.

A 20% improvement in data accessibility will result in:

5.0% increase in sales of new products/services.

On average, among the businesses surveyed, 29% of annual revenue or $12.2 million is derived from sales of new products/services. Based on this data, companies that improve data accessibility by 20% could expect a $610,000 increase in sales from new products/services.

3.0% increase in sales to new customers.

On average, among the businesses surveyed, 29% of annual revenue or $12.2 million is derived from sales to new customers. Improving data accessibility by 20% would increase market penetration, resulting in an incremental $366,000 in revenue from new customers.

Conclusion

This study of medium-sized businesses in the North America and Europe validated the theory that even marginal improvements in the accessibility, usability, quality, and intelligence of data have a direct and positive impact on critical business outcomes.

Moreover, companies with ERP systems that provide more usable and accessible data are more likely to realize these outcomes; in other words, companies with highly effective ERP solutions will be more profitable, enjoy a sharper upswing of revenue growth, and benefit from improvements in key customer-focused or operational outcomes such as time to market, upsell opportunities, or innovation with new products or services.

From revenue and profitability gains to new customers, better quality, and increased operational efficiency, businesses ranking in the top third for overall data attribute scores consistently achieve higher performance - a fact that should be noted by other companies looking to improve their performance. Considering that modest mean values for each of the data attribute scores - accessibility 6.6, usability 6.7, quality 7.3, and intelligence 6.932—there is considerable opportunity for data improvement. The return on investment (ROI) in an ERP system that maximizes these data attributes would be significant given the potential impact on business outcomes.