erwin Expert Blog

Why Data Governance Leads to Data-Driven Success

Searching for new ways to generate value and improve execution, organizations of all shapes and sizes are racing to embrace data-driven approaches that are enabled by advances in analytics.

A perfect storm of events that started in the mid-2000s has morphed into a disruptive force in the economy at an accelerating pace. Data-driven analytics has gained mainstream business adoption. Advances in communications, geo-positioning systems, sensors and computing technologies have combined with the rise of social media and the incredible growth of available data sources.

Leadership teams in the boardroom have become acutely aware of the potential opportunities available for driving innovation and growth.

Although opportunities are significant, many challenges exist that make it difficult to successfully adopt data-driven approaches.

We’re going to explore the rationale for becoming data-driven, how to frame success, and some of the critical building blocks required, including data governance.

Framing Data-Driven Success

Organizational impact helps us frame the concept of data-driven success. Impact is related to an outcome. An impact describes a changed condition in measurable terms. A well-defined impact is a proxy for value.

Stating that you want to “move the needle,” implies that the area of impact can be measured with a metric that represents that needle. By achieving impact in the right business area, incremental value is created.

When investments are considered for implementing new data-driven approaches, it’s essential to define the desired areas of impact. Evidence of impact requires knowledge of the condition before and after the data-driven approach has been implemented.

Areas of impact can be tangible or intangible. They might be difficult to measure, but measurement strategies can be developed that measure most areas of impact. It’s important to frame the desired area of impact against the feasibility of gathering useful measurements.

Examples of measurable impact:

  • Increase process efficiency by 5%
  • Reduce product defects by 15%
  • Increase profit margin by 10%
  • Reduce customer attrition by 15%
  • Increase customer loyalty by 20%

Impact measures relative changes in performance over time. The changes are directly related to incremental value creation. Impact can be defined and managed by organizations from all sectors of the economy. Areas of impact are linked to their mission, vision and definition of success.

Data-driven excellence describes the performance that exists when targeted areas of impact are successfully enabled by data-driven approaches.

Building Blocks of Data-Driven Approaches

Successfully becoming data-driven requires that desired impacts are related to and supported by four categories of building blocks.

Data-Driven Building Blocks

The first category describes the business activities that must be created or modified to drive the desired impact. These are called the “business building blocks.”

The second category describes the new information and insights required by the business building blocks based on analytic methods that enable smarter business activities. These are called the “analytics building blocks.”

The third category describes the relevant data to be acquired and delivered to the analytics methods that generate the new information and insights. These are called the “data building blocks.”

Success at an organizational level requires that all critical building blocks are aligned with shared objectives and approaches that ensure cohesion and policy compliance. This responsibility is provided by the fourth category called the “governance building blocks.”

The four categories form a layered model that describes their dependencies. Value-creating impact depends on business activities, which depends on analytics, which depends on data, which depends on governance.

The Governance Imperative

Data-driven approaches touch many areas of the organization. Key touch points are located where:

  • Data is acquired and managed
  • Insights are created and consumed
  • Decision-making is enabled
  • Resulting actions are carried out
  • Results are monitored using feedback

Governance at a broad level develops the policies and standards needed across all touch points to generate value.  As a form of leadership, governance sets policies, defines objectives and assigns accountabilities across the business, analytics and data building blocks.

Business activity governance ensures that proactive management and employee teams respond to new sources of information and change their behaviors accordingly. Policies related to process standards, human skill development, compensation levels and incentives make up the scope of business activity governance.

Analytics governance ensures that all digital assets and activities that generate insights and information using analytics methods actually enable smarter business activities. Policies related to information relevance, security, visualization, data literacy, analytics model calibration and lifecycle management are key areas of focus.

Data governance is focussed on the data building blocks. Effective data governance brings together diverse groups and departments to enable the data-driven capabilities needed to achieve success. Data governance defines accountabilities, policies and responsibilities needed to ensure that data sets are managed as true corporate assets.

This implies that governed data sets are identified, described, cataloged, secured and provisioned to support all appropriate analytics and information use cases required to enable the analytics methods. Data quality and integration are also within the scope of data governance.

Foundation for Success

Companies that are successful with data-driven approaches can rapidly identify and implement new ideas and analytics use cases. This helps them compete, innovate and generate new levels of value for their stakeholders on a sustainable basis.

Data governance provides the foundation for this success. Effective data governance ensures that data is managed as a true corporate asset. This means that it can be used and re-purposed on an on-going basis to support new and existing ideas generated by the organization as it matures and broadens its data-driven capabilities.

As organizations unlock more value by creating a wider analytics footprint, data governance provides the foundation necessary to support their journey.

The next post in this blog series dives deeper into data governance in terms of scope options, organization approaches, objectives, structures and processes. It provides perspectives on how a well-designed data governance program directly supports the desired data-driven approaches that ultimately drive key areas of business impact.

Data governance is everyone's business