The sheer volume of data that exists today, and the myriad ways that it can be used to generate value through insights and improved business outcomes, is an astonishing development in the evolution of data. In the early days, data was mainly a transactional matter. The use or production of data was process-centric, applied or generated from business processing activities and largely limited to IT operations.
However, over time, many organizations realized that data had real potential outside the realm of IT, database updating and data processing. They started to consider ways that data could be elevated from byproduct to business asset through data analysis for decision-making, an evolutionary step that marked the introduction of what is commonly called business intelligence (BI).
Since then, the use cases for BI have grown exponentially, and technological advancements have enabled increasingly sophisticated mining of data for a wide variety of business insights. Data is being used to improve the customer experience, prevent customer churn, increase revenue and enhance operational performance, among other benefits. But as the volume and complexity around data grows it has become more critical than ever for organizations to develop a deep knowledge of their business context and to understand and quantify the value of that data. To set these parameters for data management, data deployment and decision-making based on high-quality data, data governance must serve as an important function in today’s organizations.
The Emergence of Data Governance
Data today represents a critical business asset, and the need to extract value from those assets has moved from a competitive advantage to an essential element of an effective corporate strategy. Its broad array of use cases now requires business professionals to find and manipulate data to quickly perform analytics to solve business problems. But to realize data’s full potential, it must be managed like any other asset before it turns into a liability.
Data governance is about managing data to exert the most out of it. Simply defined, it is the formal orchestration of people, processes, and technology that enables an organization to leverage data as an enterprise asset. Data governance can help answer fundamental questions about organizational data like where the data came from, how old it is, what’s the quality of it, where to find it and how to use it properly.
Take, for example, a third party or licensed data set. How does a user know if they are authorized to use it in their data analysis? How do they know they can trust it? They don’t, unless governance policies and data owners state the scope of its use and metrics define its quality. As businesses generate more and more data, governance will become even more important to ensure an organization has a firm understanding of its data from a business context, can optimize data quality and quantify its value.
The Rising Importance of Data Governance
Data is growing faster than ever before, resulting in a proliferation of business, productivity and decision-making problems caused by mismanaged or misunderstood data. According to a 2017 IBM report, we create 2.5 quintillion bytes of data every day. That means 90% of the data that exists in the world today was generated in just the last 2 years.
The number of connected devices is also growing, resulting in even more data being generated. By the year 2020, about 1.7 megabytes of new information will be created every second for every human being on the planet. Add to this an increasingly complex regulatory landscape where compliance risks can be steep if data and processes aren’t correctly managed. Enterprise data governance becomes more critical and evolving to a data-driven organization is an imperative.
Data Governance Today
While data governance has been talked about for years, formalized data governance is in its infancy. Even definitions of data governance may vary, depending on who is asked. Establishing a universal definition isn’t nearly as important, however, as understanding the fundamentals of what data governance entails, what it intends to accomplish, and how it can serve increasingly essential functions in an era of big data.
Recently, data governance strategies and capabilities have both been refined and expanded. Data governance can now provide unprecedented transparency into a business’s data landscape. This can make it easier to combat increasingly complex regulatory and compliance demands and stand out from the competition.
Data governance can also provide organizations with a standardized, auditable, and automated approach to safeguard end-to-end data quality. Validating data for quality is pivotal to ensure that all systems are in harmony and that business users have confidence to utilize all of the data at their disposal.
However, data governance is often, and mistakenly, branded as just an IT task. To be successful, data governance requires a collaborative, enterprise-wide initiative with the shared accountability, ownership and expertise of both business and IT. A collaborative approach can deliver maximum ROI so that data assets are properly managed, utilized, and leveraged across a business enterprise.
An All-Inclusive Data Governance Approach
Data governance is fundamentally about increasing understanding of data. Business users shouldn’t have to translate technical jargon into business context. It’s not only time consuming, but data is useless without the skills to analyze it, resulting in low-quality data usage. Low-quality data usage builds doubt amongst data users and discourages them from leveraging data assets. When an organization also fails to define data owners or stewards who can field questions and provide clarification, perceptions of data unreliability are exacerbated, further hindering business utilization.
Therefore, organizations need a business-focused, centralized or federated data governance model that focuses on a company-wide understanding of data across the entire enterprise. That, combined with the availability of proper tools, enables business users across that enterprise to easily understand the data landscape, terminology, the data owner, etc. This framework, plus technology, will increase business users’ understanding while eliminating the ambiguities that can limit success as they perform critical business functions.
Beyond core support to enable understanding and utilization across business units, data governance should enable IT and business alike to quickly define, track, and manage all aspects of organizational data assets through straightforward visualizations and easily navigable workflows, encouraging enterprise-wide collaboration, knowledge-sharing and user empowerment. Through the synergy of people, processes and technology, a comprehensive data governance program can ensure that organizations derive maximum business value from their data.
Delivering Maximum Business Value
Data today can be both an appreciable asset and a latent liability. A business-oriented data governance approach delivers trust and confidence in data assets. Trustworthy data is important for risk mitigation and compliance, and reliable data means that users will increasingly leverage data to inform business decisions and improve processes. Those analytical insights they extract are now reliable, valuable BI that will generate better outcomes.
For example, organizations can leverage their data to recognize customers’ behavior patterns, which can be used to identify patterns that indicate upsell or cross-sell opportunities or help detect when a customer is ready to churn so appropriate action may be taken. Preventing churn and knowing when to upsell can help positively impact a business’s bottom line.
Organizations can also leverage their data to improve the customer experience and further differentiate themselves from the competition. An example from the banking industry highlights how to turn insights into action to gain a competitive advantage. Bank customers increasingly want access to their banking information from anywhere and from any device, with the ability to make deposits, transfer money, and even apply for lines of credit without having to make the trip to their local branch. With trusted data, banks can deliver this complete omnichannel experience and ensure that any financial transaction by a customer, whether online or in person, is immediately updated in real time for mobile viewing.
Today, organizations worldwide must ensure that their data delivers a competitive advantage and does not deteriorate into a costly liability. Those organizations that build a data governance foundation focused on business, and understand it represents not just an IT concern but an enterprise-wide collaborative undertaking, are well-positioned to reap the most significant rewards from those data assets.