An executive’s guide to data
This executive’s guide to data covers what you need to know to turn this operational by-product into organisational and market value.
Data, strictly speaking, has no value. Data can be a graphic or a piece of video. It can be a sequence of alphanumeric characters, eg. an address, or just a date. Often it details a characteristic of something relevant to your organisation, eg. Flight number, purchase date or heart rate. Sometimes it is less granular, such as a PDF document, video or graphic. Your organisation is likely awash with data, much of it stored electronically.
Like crude oil, its value is derived. A database full of client data has no real value. However, being able to search it based on some criteria enables us to extract value, eg. a list of all prospects who need to be contacted today. The value from data comes from the insights we draw from it. Such insights are also referred to as information.
Information and data are often conflated. It is important to distinguish between them.
One is valuable and one isn’t. One can’t exist without the other. This confusion comes at a cost. Organisations that overly focus on acquiring the best analytics tools and data scientists are wasting their time if the quality of the underlying data is suspect. Rubbish in. Rubbish out. With that in mind, do not get seduced by the allure of data scientists. An overhyped and misleading term.
Why you need to know this
Many organisations think they are data-driven because of their investment in data warehouses, big data and / or data lakes. The reality, particularly for large enterprises, is that the lack of integration between their disparate data sources has given rise to what might be called a data cesspit. Drawing from this cesspit in support of decision-making poisons the organisation.
More positively in an increasingly volatile and uncertain world, if well managed, data provides the sensory information needed to enable your organisation to make sense of its environment and advance accordingly.
The emerging Internet of Things (IoT) and the associated proliferation of cheap electronics will lead to a quantum jump in respect of the data flooding into our organisations. Big data is about to get much bigger. This will only lead to better insights and decisions if your organisation has the tools to process and make sense of this incoming torrent within the context of its existing data pool(s).
The data emanating from IoT devices has a role to play in both improving the products, services and experiences that your organisation offers through real-time feedback on their consumption. Furthermore, some of this data can be packaged and presented to the consumer as further value. Health trackers create value by harnessing the users’ own data. The watch simply being the enabling analytics tool.
Data can increase customer intimacy.
It has the power to transform old school manufacturing companies from offering products that necessitate a couple of client interactions per year into service providers whose interactions are daily, if not more frequently. Think agricultural machine manufacturer who now offers weather, livestock and grain commodity pricing via their app.
If your organisation is not data-driven and you are not offering data-services, you are at risk in the digital age.
These various ‘data’ terms, again including data scientists, in my mind are misnomers. If the automotive industry were to adopt the same naming convention, they would describe car management as transport energy management. Again, I could offer you a car battery or a barrel of fuel, but it is of no use until it is fed into a vehicle.
I think this reflects a problem the IT industry has in general of focusing on technical features, rather than business benefits. My point is that it is the analytics tools that deliver the benefits. Whilst I have been a little hard on data from a value perspective, it would be wise to see data as an asset class. In the digital age, business leaders need to be sweating their data in the same way as they sweat their cash and their brand. I would say that despite data’s techy connotation, it is a subject that every executive needs to be on top of.
Data management does not require a new executive role. We do not need a Chief Data Officer. We need the Chief Information Officer to focus more on eliciting value from data, ie creating information, as the job title suggests, and less time on ‘run the business’ technology management.
Your five-point data plan
Here are five action points to keep at the forefront of your mind as you develop a data-driven organisation:
- Ensure your enterprise data model is optimised for success. If you have, say, five CRM systems, to what extent are they synchronised? Could they be consolidated into one system? Get this wrong and as mentioned your data will poison your decisions.
- Consider data as an as asset and nurture it accordingly. It may not show up on your balance sheet, but it is nonetheless an intangible asset. In this sense, each member of your senior leadership team must become familiar with the value of your data and how to increase the return on that data.
- Consider the impact of IoT on your business model and enterprise data model. You might think you are dealing in big data volumes today, but this is only a warm-up act for what is to come. IoT will have a bearing on how you manage your data and the tools you use to extract value from it.
- Consider how you can refine and repackage your data to deliver more value to your markets. Possibly you can charge extra for this service. Possibly you can use it to refine your service, eg. monitoring the data emerging from your cars so that they are only called for servicing when they genuinely need to be serviced.
- Keep security and privacy front of mind. Poor data security can damage your brand and the bottom line, as can poor data privacy.
The world is becoming increasingly data driven. If your organisation is to harmonise with this emerging world, it too will need to be data driven. Data is not some detailed aspect of IT management. With careful cultivation, it will create value for you and your market.
In the next few years we are likely to see the power axis shift in respect of data ownership.
GDPR in Europe is a step in that direction. This will create a whole new set of data-related threats and opportunities. This executive’s guide to data has hopefully helped you see data in a new and more strategic light.