If a company is doing more and more of its business through the Internet, it of course must constantly improve its online experience. That requires continually collecting data about customers (and non-customers –viewers who don’t buy) who connect with it using online channels (the corporate website, ecommerce site, social media sites, mobile apps, email, and many more) and analyzing their behavior across all those digital channels (increasingly, their comments in social media channels). And this implies investing in technologies and analysts who constantly monitor that activity and suggest changes to the website, ecommerce site, mobile apps and more.
In fact, our survey showed that the more business a company does on the Internet, the more it invests in Big Data. We asked respondents to tell us how much of their revenue came from Internet orders. Those who said they generated 76% to 100% of revenue via Internet orders (a group comprising 11 companies) spent a median of $35 million per company on Big Data – about six times the amount spent by companies that generated from 0% to 25% of revenue from Internet orders. Median spending on Big Data by companies generating 51% to 75% of revenue from the Internet (there were 32 such companies) was even greater: $47 million per company.1
Adjusted for company size, companies amassing a higher percent of revenue via the Internet spent more on Big Data. Spending, in companies with 76% to 100% revenue from Internet orders, was higher on a percentage of revenue basis (1.0% of median annual revenue) than it was for companies with 51% to 75% of revenue from the Internet (0.4% of median annual revenue). The more digitally-centric a company is, the more it invests in Big Data. (See Exhibit II-14).
Exhibit II-14: Median Spending Levels on Big Data in 2012 by percentage of Company Revenue That Came Via the Internet
Q2a/Q14: Median Big Data Spending in 2012 Per Company Based on Percentage of Revenue from Internet Orders
Given how much Internet-centric companies depend on Big Data, it is no coincidence that many of the early technologies of Big Data (such as the Hadoop database management system) emerged from these Internet companies. To manage all their Big Data, companies had to build many of the tools from scratch. These companies continue to spend hugely on Big Data and data scientists.
The ROI data also supports our premise that digitally-centric companies are more advanced with Big Data. (See Exhibit II-15) Companies with the largest percentage of revenue from Internet orders expected an average 88% ROI on their Big Data investments in 2012 – nearly double the 46% average ROI for all companies. And it was three times the average ROI of companies whose Internet orders were 0% to 25% of revenue.
Exhibit II-15: Internet-Centric Companies Projected the Highest Returns on Big Data in 2012
Q17: Expected 2012 Enterprise ROI on Big Data by Percentage of Revenue Generated from Internet Orders
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What’s the Return on Big Data?
- Using mean rather than median data, spending on Big Data for companies that generated 76%-100% of sales through the Internet was $304 million (3% of revenue) vs. $89 million for all companies (or 0.49% of revenue). For companies generating 51-75% of revenue through Internet orders, mean spending was $132 million (or 0.5% of revenue). For companies generating 1%-25% of revenue through the Internet, mean spending on Big Data was $47 million (0.2% of revenue). [↩]