71% of business decisions are made without complete data

As many as seven in ten (71%) high-value decisions made by UK businesses are based on incomplete or partial data, according to a new study from EY.

The research surveyed 250 leaders of UK companies with revenues above £100 million. In the last year, of these companies’ high-value business decisions – defined as decisions involving £50k spend or more and having a measurable impact on a firm’s finances, risk, operations or reputation – only 29% were made with complete and reliable data, while 71% were made without access to this calibre of information. Nearly one in 10 (8%) high-value decisions was made with very limited or poor-quality information.

The study also explores the importance of non-financial data in determining a company’s true performance and value. Nearly three-quarters (73%) of UK business leaders believe non-financial data, including information relating to environmental, social and governance (ESG) performance, is equally important as financial data, such as information on profitability, expenses and overall financial health, in predicting long-term value. Seventy per cent say that integrating financial and non-financial data is the only way to gain a complete picture of an organisation’s performance and value.

Almost two-thirds (65%) of leaders claim that integrating financial and non-financial information gives them a competitive advantage. However, when it comes to accessing real-time data – information generated by company operations such as financial transactions or production monitoring that is available to use immediately – fewer than four in 10 (37%) UK business leaders have access to real-time financial data. While only 14% have access to real-time non-financial data.

When asked about the risks they associated with failing to report non-financial information transparently, more than three-quarters (76%) of the UK business leaders surveyed cited loss of stakeholder trust, including from investors and customers, while two-thirds (66%) said reputational damage and 60% loss of confidence.

Rob Doepel, UK Managing Partner for Sustainability at EY, said “UK business leaders consistently tell us that value creation is becoming more complex, as rapid technological change and the evolving regulatory and geopolitical landscapes are presenting them with an increasing number of high-stakes decisions.

“Our research shows that while the majority of UK business leaders recognise the importance and risks associated with non-financial data and reporting, too many high-value decisions are still made with only part of the picture. Leaders must define the purpose and value that non-financial information can create within their company, in order to support key decisions, implement an effective reporting strategy and help drive value creation.”

Rebecca Donnellan, Partner, Climate Change and Sustainability, at EY, said “Companies are experiencing clear tension between the need to navigate threats, such as supply chain disruption or reputational damage, and to seize the growth opportunities that come their way. Making the right strategic decisions to grow businesses and protect value has never been more critical, whether focusing on digital transformation, mergers and acquisitions, long-term strategies, or broader organisational priorities. And, fundamentally, the quality of these decisions depends on the accuracy and breadth of the information underpinning them.

“We’re encouraging companies and business leaders to put access to this data and non-financial reporting on a par with financial reporting, and hold both to the same standards internally. Organisations that act now to build structured and integrated approaches should be better equipped to meet evolving expectations, enhance performance, and ensure long-term value.”