From an Afterthought to a Core Business Asset: The Journey of Data
In recent years, the phenomenal growth of connected devices and advanced data technologies, along with the availability of affordable data storage, transfer, and processing capabilities, has enabled businesses to gain competitive intelligence on demand.Despite recognizing the strategic potential of data, many businesses face challenges due to data silos and lack of understanding among stakeholders. This KPMG Advisory shows what is hindering data from becoming a business asset.
In What is Data Value and Should it be Viewed as a Corporate Asset?, author Asha Saxena shares an interesting anecdote. Steve Todd of Dell EMC conducted a survey to gauge the value of data, where highly profitable companies were found to be:
“Focused more on the challenges of storing, protecting, accessing, and analyzing massive amounts of data, and not as much on transforming or quantifying its business value.”
Asha further states that data is still not featuring on company balance sheets as an asset.
Stephan Zoder, a Forbes contributor, discusses the consequences of not managing customer data like a real asset. He says it is not enough to give data a strategic importance in business — it is equally important to analyze and measure the worth of individual data elements to understand what value each brings to customer-service operation. While most organizations realize “data” is a strategic asset, few know how to organize and manage “data attributes,” which may be costing businesses lost revenue opportunities.
Treating Data as an Asset
Today, as more businesses begin to view data as one of their core assets, which may be as critical to business growth as manpower or machinery, they begin to evolve their business models around data and data technologies. Data, undoubtedly, is the key driver of a digital economy,
where entire business infrastructures are built on data platforms with advanced technological setups; think all online businesses selling digital products and services.
Amazon CTO Werner Vogels said, “data are at the core of value creation, whereas physical assets are losing their significance in business models.”
The List of Top 10 Companies’ ranked “market value,” seven are data companies — see the list here. This is an indication that data-driven business models are the future of global business.
From agriculture to fintech, every industry sector now relies heavily on data for business growth. On the flip side, one shortcoming with data use felt by most businesses is the lack of alignment between business goals and data applications.
The “technology handicap” is another roadblock to developing data as an asset. The advanced AI technologies like machine learning (ML) and deep learning (DL) require thorough use case analysis to determine which types of models are best suited for specific business applications. According to Karpagam Narayanan, Forbes Councils Member, the AI use-case mapping is still at a nascent stage, which is why businesses have not been able to derive the full benefits of data.
In an interview with McKinsey partner Roger Roberts, Anil Chakravarthy, CEO of Informatica, a global Data Management services provider, stated that “most successful businesses have developed the ability to manage data as an asset across the whole enterprise.” During the interview, Chakravarthy explained what constitutes “managing data as an asset.” Modern businesses are investing resources and efforts in performing Data Quality checks, data privacy checks, and data source checks before collecting data for specific applications. With the enforcement of new data regulations (General Data Protection Regulation), Data Governance is more important than ever.
The Role of the Chief Data Officer
Businesses that invest in a well-planned Data Strategy are generally far better positioned to manage data as an asset than their competitors. Data Strategy – Plans Are Useless but Planning Is Invaluable provides a discussion on Data Strategy with special focus on its prerequisites, why Data Governance is necessary, and a repeatable process outline.
In a Big Data Executive Survey, 41.4 percent of the survey respondents believed that a Chief Data Officer’s job is to “manage and leverage data as an enterprise business asset.” The businesses that have attempted to treat data as an asset have invested in a Chief Data Officer (CDO), who plays a critical role in developing an enterprise Data Strategy, which is basically setting the stage for better insights, improved decision-making, and enhanced business performance with data.
The Data Strategy, when properly aligned with the overall business goals and objectives, is expected to drive superior results. The Evolution of Data Assets highlights decentralized data asset management (DDAM) with the promise of easier data flow without compromising privacy.
The Future of Data-Driven Businesses
As data and advanced technologies increasingly become economical and accessible to businesses of any size, it is expected that the data-driven culture will gradually permeate through the global business landscape. The Evolution of Analytics with Data suggests that “data and analytics” are two most “commonly used words in the last decade or two.” With the sudden growth of multi-type data and advanced analytics platforms, it is just a matter of time before businesses begin to compete just on the strength of their data assets.
For a business to achieve an enterprise-wide data-driven culture:
- The entry-level employee buy-in is more important than C-Suite buy-in because daily work is conducted by ordinary employees.
- Data technology awareness has to be carefully fostered within the business culture, so that Data Science is truly democratized.
- An individual employee can make a big difference by enforcing data-driven practices in their work area.
- The decision-makers at all levels must be willing to explain the reasons behind their decisions in terms of data.
Other major developments expected for the future:
- McKinsey’s Analytics Comes of Age suggests that open data-sharing between organizations will help develop “digital ecosystems,” dissolving geographical borders.
- Data will propel the rapid advancement of AI and associated technologies.
- Hopefully, over time, careful planning will lead to complete alignment between Data Strategy and overall business strategy.
A notable quote from Analytics Comes of Age:
“Successful analytics organizations give as many people as possible access to the data, while making sure there is a single source of truth, so that employees can play with them and come up with new ideas, or discard old ones that are past their prime.”
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