While data and analytics are now board-level agenda items, the C-suite gives a lot less attention to some of the tougher aspects of these activities. Data governance is a prime example - it is fundamental to the success of data and analytics projects, yet it is also demanding, long-term and hard to see the value in. That is a mistake because, done right, data governance could be a new source of competitive advantage.
Here are three reasons why data governance should be pushed firmly into the boardroom spotlight, not kept secret in the backroom.
1. Customer trust
Companies which are upfront with their customers about the data they need and what it will be used for find it easier to win trust. Aimia set the pace way back in 2011 with an upfront statement of its data values as TACT - transparency, added value, control, trust. Members of the Nectar loyalty scheme know exactly why they are providing personal information, what value they will see in return and how that data will be protected. That is frontline data governance in action.
Last year, Guardian News and Media set a new standard with its “Why we need your data” programme. The media owner discovered that the values at the heart of the business actually translate into effective data governance policies and statements. If you believe in independent journalism and also value free access to the content it generates, why wouldn’t you trust the Guardian with your data?
That is exactly why many organisations do not want to be transparent and open about their data strategy, of course. Customers have often bought a product or service without a clear understanding of how asymmetrical the relationship will be, with the company treating it as their asset to be exploited and traded however it sees fit. Until very recently, that model (which was at the heart of traditional direct marketing) was still viable. In the trust economy, it is no longer sustainable.
2. Employee participation
Great data governance runs from top to bottom and from the back office to the front line. It requires staff to understand governance policies and enact them, not because they are rules which have to be obeyed, but because they enable key business processes and support positive outcomes.
At a recent data governance event, one practitioner from a local council had kick-started a programme by asking any staff member who demanded access to personal information outside of established controls to sign a personal waiver taking responsibility for any liability which might arise. That type of initiative soon gets buy-in to the formal data procedures.
As well as understanding that there are consequences, staff also need to know the upsides. Barclay’s data governance programme is constantly communicating how customers benefit, what staff get out of it and why the company needs data to be managed in a certain way. With a view of the big picture, it is easier for employees to accept how their small part of it adds up to success.
3. Shareholder value
Data continues to struggle to find a place on the balance sheet as a genuine asset. So giving a hard financial value to data governance is doubly difficult. Yet without some proof of the impact it makes to the bottom line, it will remain vulnerable to cost cutting.
Aldemore Bank found a useful proxy by comparing the actual risks stemming from data quality issues against the risk appetite within the business. So regulatory data is required to be 100 per cent correct in order to avert the risk of a fine for non-compliance, while marketing data can operate at 95 per cent accuracy without a similar level of financial consequences. Across customer, regulatory, reputational and financial value at risk, this provided a viable financial case for ongoing investment into data governance.
With investors ever more keen to see data and analytics at the heart of the businesses where they place their money, making the business case will need to become more central to what practitioners do. Luckily, it is no secret that there is a direct link between customer trust, employee participation and shareholder value.