Companies have been striving to become more data-driven for decades – with mixed results. Yet the rapidly accumulating evidence on the benefits of big data analytics provides legitimacy to the claim that it will revolutionize many fields. Gathering and analyzing a tremendous amount of data in real-time enables managers to improve decision-making and performance and new datasets open business opportunities that might have stayed untapped. Many studies have revealed that data-driven businesses are, on average, more productive and profitable. The potential value of data is realized in three major areas: improved decision making, enhanced products and services, and new business models (see What are Data-Driven Business Models?). What’s more, the pandemic has further heightened the value of good data for decision making and innovation. Most companies have clearly realized the importance of data and pay lip service to accelerating their data journey. However, though much has been achieved, more remains to be done.
Elaborating on the view of “data as crude oil” that needs refinement emphasizes the essential ties between value creation and value capture in the deployment of big data and analytics. While the perceived value from data depends on an organization’s strategic goals, value creation is accomplished during data refinement, which comprises data cleansing, analysis, and the reintegration of insights into the business context. However, these efforts only lead to competitive advantages and sustainable traits if the generated value is captured by “driving profitable activities.” Without mechanisms to capture the value generated from the adoption of big data, analytics, and machine learning, the prospective benefits will not be gained.
Culture is Key
Refining data from crude (oil) into usable resources was the major challenge for many companies. However, data refinement with data cleansing and analysis is a largely technology related topic. Today, the biggest barrier is the company culture. According to recent Harvard and MIT studies, cultural change is the most critical business imperative. Business users must be encouraged and assisted to find and understand contextualized data by applying a common language to foster data literacy. This trend toward cultural change is further accelerated by self-service big data and analytics as well as artificial intelligence, since individuals now consume information and data when and how they want to (see Power to the Business Users with Data Mesh).
It doesn’t help that the task of being data-driven keeps getting harder. Since new data assets are mostly unstructured, it has become vital to contextualize and classify data. Increasingly, companies must come to recognize and appreciate that data is a business asset that flows through an organization, cutting across traditional boundaries, often without clear ownership. Managing data throughout an enterprise with federated ownerships is thus a major concern. The complexity increases further in consideration of responsible and ethical data use. Governing and managing data while addressing data and artificial intelligence ethics and issues will become a central corporate concern for most businesses in the coming years.
Engaging Business Users
To exploit the strategic business potential embedded in data, companies must enable their business users to realize value from data. While data refinement is accomplished in IT/data departments and teams, value capturing from data is routed in business units. Therefore, engaging the business in data monetization and identification of data-driven business models must be prioritized.
The transition from data as a purely IT-related topic to a major business concern is also observable in the emerging role of the Chief Data Officer. For decades, dealing with data was part of the duties of the Chief Information Officer. With the increasing importance of data for business value generation, however, the Chief Data Officer role has emerged, shifting the data topic closer to business and the executive level. A data-driven company has accomplished the transition of data from a siloed departmental topic to an enterprise-wide concern, shaping the decision making in all areas of the business.
To change business users’ perception of data requires setting the right incentives. Indeed, promoting desired behavior and fostering the treatment of data as an asset with benefits has shown significant results (see Mobilizing Capabilities of Data-Driven Culture). Cataloging data using agile information governance and metadata management practices helps Chief Data Officers/data leads to fuel data thinking and culture in the organization. Assefy catalyzes the engagement of business users in data value realization. Contact us to find out more.