Is data governance part of your company's offensive playbook?
Once deemed the core of a good defensive strategy, relegated primarily to aiding in regulatory compliance, data governance has made its way into the offensive playbook as organizations around the world seek to convert data into a competitive advantage.
“Governance encompasses the quality, sources and presentation of data.”
As data emerges as a strategic asset, data governance is in my view a foundational program from which other programs such as data analytics can originate and blossom.
What does data governance mean?
Beyond security – which is paramount and cannot be compromised – governance encompasses the quality, sources and presentation of data.
The competitive advantage provided by data may be monetization of the data – finding ways to turn data insights into real revenue. Data can also help position a company to provide a better client experience, more effective product pricing and targeted marketing programs, ultimately improving business performance.
To achieve these goals, however, requires the data to be understood, authorized and accounted for – in other words, governed.
Benchmarks for data quality can vary when it comes to operational versus analytical data. For some, far more attention is paid to getting the operational data right, whether it is data in a financial statement or data in a report going to a regulator.
Most data governance programs are focused on reporting and remediating the quality of this operational data.
When it comes to analytical data, the standards shift from highly accurate to the best available. I would argue that it should be the opposite.
“The value of a company’s product is directly dependent upon the quality of the underlying data.”
Quality of data required to make decisions about the future should be of the highest importance to any organization. Hence a broad-based data governance program that is focused on both the operational and analytical data is key.
In addition, data governance should extend beyond regulatory compliance to include other master data sets such as client and product.
In fact, though governance solutions were originally intended to aid organizations in their regulatory compliance efforts, they’ve been leveraged increasingly as foundations from which to capitalize on data.
Through greater understanding of the data, organizations are unearthing not only insights but opportunities. In short, retrieving and extracting the right data is empowering.
For example, the value of a company’s product is directly dependent upon the quality of the underlying data. Similarly a firm’s ability to cross-sell, upsell or simply provide better service to its clients is dependent upon the quality of its client data.
While selling new products has a direct bearing on a company’s revenue, improved client service (as a result of better client data) can also be reflected in the fee structure.
Having consistent data quality controls is a prerequisite to a firm’s ability to demonstrate higher data quality and, hence, to its ability to charge a premium for its products.
In the case of Northern Trust, our advice to clients is based on the information we know about their goals and needs. Ensuring that our client data is accurate and of the highest quality directly impacts our ability to suggest the most relevant and personalized investment advice for each of our clients.
In turn, this supports client satisfaction and long-term retention.
Another aspect of the monetary benefits of data governance is the role of metadata. Firms are increasingly focused on collecting metadata about their clients and the products they have purchased.
“Quality data leads to better client relations, better products and better premium pricing.”
Often this metadata is collected to satisfy regulatory needs. Personal data protection and privacy are core components of data governance. Much of the information required to satisfy regulations can also provide insights that will improve client service.
This new dimension further increases the value of good quality and well-governed data.
In summary, data governance is increasingly becoming an offensive strategy. Good data quality gives organizations confidence in their products and services.
This in turn enables companies to make data-driven decisions that lead to better client relations, better products and better premium pricing.
This is true not just for financial services but also for other industries such as healthcare, pharmaceutical and automotive.
The advantages of good data governance can far outweigh its costs by making companies operationally more effective – with a positive impact on the top line.
This article originally appeared on the IBM THINK blog and was republished with permission.
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