Investing in data privacy brings positive returns

New study from Cisco shows companies see positive results for investing in data privacy.

Sabrina Palme
Mar 11 · 4 min read
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Source: Cisco 2020, Data Privacy Benchmark Study

As consumers become more aware of the value of their personal data and countries are implementing their version of data privacy regulations, we’ve been reading a lot about businesses struggling to cope with it, as they had to invest large sums of money, time and resources into their data privacy agenda.

Up until now, there has been little research on the Return of Investment (ROI) and the impact those privacy investments had, mostly because not much time had passed yet to measure the outcome.

Three years in, 2020, Cisco has interviewed thousands of businesses internationally to assess the impact of privacy investments — beyond meeting compliance requirements — and they came up with some interesting findings.

But first things first, let’s get the setting right:

How much money did companies throw into the data privacy pot?

$1.2 million! That’s the average annual privacy spend from all respondents of the research, whereas 25% spent up to $500k and 14% more than $2M (2% spent more than $5M). Sums invested also largely vary depending on the size of the company as the table below shows.

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Source: Cisco 2020, Data Privacy Benchmark Study

Those are considerable amounts, given there aren’t many best practices and industry learnings available for companies to evaluate outcomes. As of 2020, privacy investments are broadly considered a preventative measure to avoid fines.

The results?

Beyond compliance, Cisco went to find out whether there have been any other major positive impacts on businesses. Turns out, generally more than 70% saw a “significant” or “very significant” positive business impact on a variety of areas.

So did 72% state they achieved significant improvement in achieving operational efficiency from data controls and 74% said the same for building loyalty and trust with customers.

In financial terms, the survey respondents valued their average estimated benefit at $2.7 million, with an average ratio of benefit-to-spend of 2.7.

This means for every dollar spent, they received $2.70 worth of benefit. Not so bad of a deal!

BUT: Outside of the averages not every company came out a winner. About 8% reported they’re making losses on their privacy investment and a fairly large chunk (33%) said they’re breaking even.

Unfortunately, the report doesn’t explore further as to what exactly made some privacy investments more successful over others. They did draw a parallel, however, between investment sum and privacy return. Those companies who invested more money in comparison to their fellows, also experienced a much greater benefit on average.

Companies change their perception on privacy investment

For the past 3 years Cisco has been conducting this survey to get insights and track changes on perception on the value of privacy investments. Quite remarkably, the percentage of respondents who said they see significant benefits related to privacy investment, such as competitive advantage and organisational agility, was at 40% last year as opposed to the 70% mark this year.

Part of the reason for this drastic increase could be that companies are in a better position to make an assessment on their ROI as many of the benefits seem to be long-term oriented rather than short-term.

Still, while the majority of businesses recognise the ROI, it doesn’t seem to be directly correlated to their readiness for regulations such as the GDPR. Comparing responses from last year and this year, they seem to be almost identical, where 55% said they’re ready, 29% they will be ready within a year, 12% expect to be ready in more than a year and 3% said GDPR does not apply to them.

The report assumes that this either implies companies didn’t make significant progress over the year or that businesses see GDPR as part of their business operations.

The latter seems a bit of an odd assumption. In order to successfully comply with a regulation such as the GDPR, it needs to be part of the business operations. Hence, a company that is ready for GDPR, has successfully implemented processes in their day-to-day to stay on top of it.

In Summary

The Data Privacy Benchmark Study 2020 from Cisco shares some interesting insights and learnings on how businesses benefit from their privacy efforts. For anyone who needs to convince their board on the value of privacy investment or to make a compelling case for data privacy in general, this report is a good source as it shows the benefits for companies who went through the process.

Cisco could go more in detail on how different companies approached data privacy to make it successful and whether or not there are any correlations in between that, but maybe this is something they’ll share in the future as this report is part of their Cybersecurity series.

If you like to read the full report, it’s free to download here.

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Sabrina Palme

Written by

Founder of Palqee and Tech Geek. Writing about Data Ethics, Data Privacy and the Data Sharing Economy.

Data Driven Investor

from confusion to clarity not insanity

Sabrina Palme

Written by

Founder of Palqee and Tech Geek. Writing about Data Ethics, Data Privacy and the Data Sharing Economy.

Data Driven Investor

from confusion to clarity not insanity

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