Companies aiming to tap the strategic potential of data have begun to measure the value of data governance in new ways. Historically, data governance programmes have been evaluated on metrics reflecting the early emphasis on compliance, accuracy and security.
Management considered data governance protocols successful if they protected customer data, complied with applicable law and met basic standards of reliability. Underpinning this approach was the widespread view among executives that data governance was a cost centre rather than value driver. Today, more companies recognise that their vast troves of information represent an untapped source of business value, and as a result they’re looking to data governance with new aspirations. Although compliance, accuracy and security are still vital, the appropriate governance practices no longer stop there.
“For us, the data governance programme is much more than a data governance programme. It’s a way to deliver concrete value to the business,” says Harry Guez, chief data officer at French entertainment and communications giant Vivendi.
Vivendi is far from alone, according to a survey of more than 500 business executives in North America and Europe, conducted by The Economist Intelligence Unit and sponsored by Collibra. The survey reveals that a growing number of companies are subjecting data governance to the same type of rigorous metrics they apply to other business activities. About 40% of survey respondents say they evaluate data governance based on its contribution to strategic goals, and 32% measure the return on investment (ROI) of their data governance programmes. An undisputable ROI figure has a way of dispelling doubts about the value of data governance. As such, there are several means by which data champions can demonstrate the value of data governance within their companies.
1. Identify areas in which data can explicitly support a business’s strategic objectives.
An American aircraft parts manufacturer, Honeywell Aerospace, for example, has shown the important role of data governance in driving top-line growth, profit margins and capital efficiency. Abhi Seth, senior director of data science and advanced analytics, explains that data governance underpins a predictive maintenance offering that’s bringing in new revenue, reduces the need for expensive plant expansions by improving manufacturing yields, and optimises pricing by giving analysts the information they need to land orders without leaving money on the table.
Honeywell’s data governance efforts “have generated significant value in terms of margins and winning new business,” says Dr Seth.
Similarly, financial services provider American Express, for example, has always been a data-driven company that gleans insights from information to improve the products it offers to customers. However, information has often been siloed throughout the company, and business units pursued independent data strategies without much sharing or co-ordination.
When American Express decided to centralise data in a single repository accessible to all, the initiative needed buy-in from business units accustomed to managing their own data. The head of enterprise data management, Jennifer Curtiss, realised the surest way to win support was to offer better, faster data than business units could produce on their own. The data governance team started by taking over tedious processes of gathering, sorting and improving data. Using advanced technologies, they enhanced data quality and accelerated access to information. Business units soon realised that a centralised system reduced their costs and provided better insights faster.
“We followed the adage ‘build it and they will come’”, Ms Curtiss says, explaining that the central repository “became known as the best place to get data”.
2. Involve business leadership and key internal stakeholders.
Concrete business benefits also pay dividends in another key area: building support for data governance in large organisations where executives at all levels are still wrapping their minds around the notion of information as a revenue-generating asset. Data governance leaders say much of their time is spent building buy-in throughout their companies, a process that often requires full-scale culture change.
“We engage at multiple levels”, says Sanjay Saxena, senior vice-president of enterprise data governance and strategy at Northern Trust, a major trust and custody bank, who calls himself a “change agent”.
Mr Saxena and others emphasise that change starts at the top. Support from C-level executives instils a spirit of co-operation throughout the ranks. If staffers know top officials are committed to data governance, they’re more likely to make the day-to-day behaviourchanges necessary to gather, verify, secure and deploy data strategically. Dr Seth says the wholehearted backing from Honeywell Aerospace CEO Tim Mahoney has been “absolutely critical” in driving the cultural change required for a strong data governance programme.
Business unit leaders play a key role in success or failure. These executives, with challenging financial targets to meet, might view data governance programmes as another set of burdensome ancillary chores. Persuading them that good data governance practices can help them hit their quarterly targets is essential.
Data governance can also help top company leaders execute broader corporate strategy. At Vivendi, for example, internal data-sharing fosters synergies among a collection of businesses ranging from Universal Music and Canal+ television to Havas advertising and Gameloft mobile gaming. Recently, various Vivendi businesses collaborated to maximise value from the company’s “Paddington” franchise. The Canal+ movie studio produced a Paddington film, Havas promoted it and Gameloft created a mobile video game based on it.
“The impact has been huge—Paddington has been a great success,” says Mr Guez. “This is an example of what all the businesses can do when they work together.”
3. Develop formal practices and procedures that integrate data governance into day-to-day company operations.
Integrating data governance into frontline operations is the best way to ensure that sound data protocols become an organisational habit. Many companies assign “data stewards” to business units, where they help staffers implement data governance practices. That’s where the “aha moments” happen. Over time, line workers and managers get a first-hand look at how widely accessible, easily understandable, highly accurate data can reveal patterns, foretell customer needs and open the door to business opportunities.
Formal structures and processes also help companies unleash the power of data governance. At Northern Trust, for example, a data governance committee comprising 15-20 business unit representatives, data stewards and others meets regularly.
“We all get together to discuss opportunities for and challenges to better data usage,” Mr Saxena says.
From identifying use cases to involving leadership and instilling a company culture that supports effective data usage, data champions have ample opportunities to demonstrate the business value of robust data governance. Doing so can support businesses on their path towards growth and operational excellence.
