Many companies are still having a hard time using their data. In order to be able to work in a data-oriented manner, companies must commit themselves to treating data as a product and to adapting their corporate culture. […]
For years, IT and data managers have been trying to help their companies become more data-oriented. The majority of IT managers (52%) say that data analytics and machine learning will be the most important IT investments in their company this year, according to the survey “State of the CIO”. However, technology investments alone are not enough to make your business more data-oriented. It takes the right vision, the right culture and the right commitment.
“Many companies have tried to treat data as one project,” says Traci Gusher, EY Americas Data and Analytics Leader. “It cannot be treated as a project; it must be treated as a function. As long as companies do not start treating data as an indispensable operational unit, they will continue to have difficulties in achieving a certain consistency and quality of their data.“
Such strategic missteps can be a sign of an ongoing problem at the management level, where company managers recognize the importance of data and analysis, but do not make the strategic changes and investments necessary for success.
A recent report by Alation and Wakefield Research found that 71% of data executives are “rather less than very confident“ that their company’s leadership sees a link between investing in data and analytics and maintaining a competitive edge, with 51% assuming that they will receive half or less of the funds they deem necessary.
In fact, two-thirds of data controllers said that corporate governance is an obstacle to obtaining the necessary financial resources. 35% of this group stated that there is a lack of support from the company’s management, and 42% said that the company’s management makes promises, but does not keep them.
One remedy for this discrepancy is to give the data a place at the table of the company’s management. Many companies have hired chief data officers (CDOs) in recent years to lead the data initiatives. However, in 2021, the Harvard Business Review found that the average tenure of a CDO is between two and two and a half years.
“It’s not because they’re worn out,” says Gusher of EY. “It’s because they either don’t get the resources they need, they don’t get the funding they need, or they’re seen as ineffective because they’re not making progress. I think this speaks volumes about the kind of commitment that organizations have to show in terms of data in order to actually make a difference.“
What actually works?
So, if financial resources and the attention of the management level are not enough, then what is the key to success?
According to Doug Laney, Innovation Fellow for Data and Analytics Strategy at West Monroe, those companies that are committed to treating data as a product and changing their culture are successful. Laney, a former respected VP analyst at Gartner, studied how companies use their data when he worked for the research firm.
“We found that companies that are more likely to treat data as an asset have a market value to book value ratio that is almost twice as high as the market average. And companies that sell data products or data derivatives have a three-fold ratio of market value to book value,“ he says.
According to Alation, companies that have a strong data culture outperform their competitors. In its survey, Alation found that 90% of companies with a world-class data culture have met or exceeded their sales goals in the last 12 months. The company defines data culture as consisting of three key disciplines:
- Data search and discovery: the ability to quickly and easily find the right data for a specific purpose
- Data Understanding: the ability to draw valid conclusions from data, including understanding the limits of interpretation and awareness of common deviations
- Data Governance: the overarching process by which data assets are managed to ensure trustworthiness and accountability, including compliance with appropriate policies and regulations
Companies with a first-class data culture have introduced all three disciplines across departments, according to Alation.
The trick, of course, is to build a vision and culture around data that gets your business to that goal. The first step, according to EY, is the introduction of a visionary core data strategy. Such a strategy should demonstrate how data will inform, support and drive a company’s short- and long-term strategic business plans.
It should also reduce the threats identified in the company’s risk management plans and help to take advantage of the opportunities that arise. This requires a dedicated data team with leadership, resources and support from senior management, says Gusher of EY.
“All too often, companies think that data is just a technological problem, but that’s just not true,” says Gusher.
Anatomy of a Data Strategy
According to EY, a well-developed data strategy should include several key areas:
- Identification of high-priority use cases: This should serve as a guideline for the data strategy, including clear expectations for the monetization of data and the transformation of data into an asset. This should also include the development of a data offering that includes both internal and external data sources.
- A data management plan: This plan should define how the data is managed, including the policies, management, and operating model for orchestrating appropriate data management.
- An overarching architectural plan: To enable the execution of use cases and governance, the architecture of the organization should be determined by the types of technologies necessary for the integration, transformation, activation and use of data.
- A plan to improve data literacy: The democratization of data throughout the company and the transfer of data to decision-makers at the strategic and tactical level are of crucial importance.
A fifth important element is the correct management of changes, says Mike Giresi, chief digital officer of electronics manufacturer Molex, adding that the key to a data-oriented company is to convey to all employees why they should do things differently.
“I think the main reason for the failure of most of these efforts is that managing the changes shouldn’t just be about teaching people how to do something better,” Giresi says.
“It’s more about making it clear to them why they should do something differently, and then giving them incentives through a culture that reinforces that. This has nothing to do with technology. It has to do solely with understanding the value contribution that the company makes.
And these change efforts must come from the very top, says Giresi, which requires a great commitment from the CEO.
“It’s great for grassroots employees to join in and support change, but ultimately they need to change the mental model of business unit management in terms of their values and the way they support change and create incentives,” he says.
And this makes educating the management level about the importance of data transformation one of the most important CIO tasks of today.
*Thor Olavsrud reports for CIO.com about data analysis, business intelligence and data science.