As data becomes the lifeblood of virtually every organization and its processes, data governance is becoming a critical factor for success in 2023. The value of data has been established for years and continues to grow. These advancements have made organizations realize that sound data management practices are essential to their success. This is why data governance has become increasingly important for streamlining business processes, ensuring compliance, and optimizing the use of data to drive value.
Without an effective data governance program, organizations may be at risk of wasting resources and missing out on the opportunities that come with having trusted and qualitative data. Therefore, it is more important than ever for Chief Data Officers (CDOs), regardless of their industry, to acknowledge that data governance enhances an organization’s data reliability and comprehension through stewardship and a robust business glossary, among others. This, in turn, accelerates enterprise-wide digital transformation.
But is data governance really important anymore with AI disrupting businesses? And how relevant will it be in 2023 and beyond?
What is data governance?
At LACO, we define data governance as the organizing framework that establishes an organization’s strategy, objectives, and policies regarding the management of its data assets.
The term “data governance” can have multiple definitions that are only slightly different from each other. At LACO, we define data governance as the organizing framework that establishes an organization’s strategy, objectives, and policies regarding the management of its data assets.
We often use the analogy that data governance provides for data assets what Human Resources (HR) delivers for human assets. This comparison is relevant for several reasons. The main responsibility of HR is to plan, direct, and coordinate the management of their human assets. They are not responsible for the daily operations of the business. HR is responsible for sourcing new employees, preparing them for their roles, managing their employment, and eventually retiring or terminating them. They play a critical role in every stage of the employee journey.
While data governance professionals may not be as hands-on as their HR counterparts, they must still establish policies for acquiring, onboarding, utilizing, and retiring data assets. Just like HR, data governance also needs to take a strategic view. It should provide for the present needs while also planning for the future.
So, data governance provides policy and guidance for defining data, establishing ownership, and managing the strategic data asset of the enterprise. It encompasses the people, processes, and technologies required to manage and protect data assets. This is all to guarantee that the data used in the organization is available, usable, secure, consistent, auditable, and has integrity.
The importance of data governance in 2023
Data governance is highly important for businesses in 2023 because of
- the increased availability of data,
- the rise of digital transformation initiatives,
- and increased regulatory and compliance requirements.
Data is available everywhere and in many different forms. It is no longer just structured data stored in databases; it’s big data, unstructured data, streaming data, and more. This increases the complexity of understanding what a company has and how to use it effectively, which is why having a comprehensive plan for managing data is so important.
Data governance also plays a critical role in digital transformation initiatives. Companies need to understand the quality, origin, and regulatory requirements of their data before they can move it into cloud computing systems or leverage AI and machine learning algorithms. This is why having clear policies and standards for managing data is paramount.
Finally, regulatory and compliance requirements are also increasing. From the GDPR to the European AI Act, organizations need to ensure that they have the right policies in place to protect their customers’ data. Data governance is essential for helping companies comply with these regulations and meet customer expectations around data privacy and security.
Five signs that you need data governance
If your company is facing any of the following challenges, then it’s a sign that you need data governance:
- Lack of clarity about data usage: If you are unsure about where your company’s data resides, who owns it, how it’s being used, or what policies should be in place for handling it, then your company needs data governance.
- Inconsistent data quality: If different departments or teams are using different definitions or standards for the same term or metric, then it’s an indication that your company needs data governance.
- Increased risk of data breaches: The increasing amount of data collected by organizations means there’s an equally increased risk of data breaches.
- Inability to leverage data for decision-making: If you’re struggling to get valuable insights from your data or you’re unable to answer key business questions, then you’re not fully leveraging the potential of your data.
- Difficulty in complying with regulations: As more countries and regions introduce regulations around data usage and privacy, it’s crucial for organizations to comply with these regulations.
Without data governance capabilities embedded in your organization, data assets can become siloed, misused, and neglected. The lack of consistent processes for managing data can result in increasing costs linked to
- operational inefficiencies,
- poor decision-making,
- compliance risks,
- and missed opportunities.
The significant benefits of data governance
Implementing data governance in your company can result in significant benefits that can impact your risk management, cost reduction, and revenue generation efforts.
Data governance mitigates risks
With data breaches becoming increasingly common and regulations around data usage and privacy becoming stricter, having robust data governance practices in place is critical. By having clear policies and procedures in place for managing data, your company can mitigate the risk of data breaches, data theft, and data misuse. It can help you manage access to sensitive data and monitor data usage. So, in terms of risk management, data governance ensures that data is secure, consistent, and auditable. Data governance also helps your company comply with regulations, such as the GDPR and CCPA, reducing the risk of regulatory fines and penalties or even reputational harm.
Data governance reduces costs
Most of the time, data analysts dedicate around 80% of their time to searching for and preparing data for analysis. The remaining 20% is spent on actually performing analytics and gaining insights. Data governance can change that ratio.
Data governance can reduce costs by improving operational efficiency. By streamlining data management processes, you can reduce duplication of effort, minimize errors, and improve productivity. Inconsistent data quality often leads to costly operational inefficiencies. Most of the time, data analysts dedicate around 80% of their time to searching for and preparing data for analysis. The remaining 20% is spent on actually performing analytics and gaining insights. Data governance can change that ratio. Having access to all relevant and trusted data allows analysts to see information in context and make informed business decisions.
By integrating data governance into your company’s processes, you can ensure that data is accurate, complete, and up to date, thereby reducing the risk of operational inefficiencies and decreasing the overall cost of your operations. Additionally, having a clear and shared understanding of the data you have and how it is being used can help you optimize your data storage and infrastructure, reducing costs associated with unnecessary data storage and management.
Data governance generates revenue
Finally, data governance can also generate revenue for your company by helping you leverage the potential of your data. With a clear and shared understanding of data, your company can make informed decisions around product development, customer segmentation, and marketing initiatives. By leveraging data governance to ensure data is comprehensive and timely, your company can gain insights into customer preferences and behaviors, allowing you to make better products, offer more personalized services, and create more effective marketing campaigns. This, in turn, allows you to identify new market opportunities and capitalize on them. With data governance in place, your company can make more informed decisions about product design, launch dates, pricing strategies, and promotional activities that are based on facts, not just assumptions.
The increasing importance of data governance in the future
As the volume and complexity of data continue to grow, so do the risks associated with poor data management.
It’s undeniable that data governance is here to stay, for the simple reason that making business decisions based on data isn’t going anywhere. An increasing number of businesses are turning to data analytics to optimize their performance, but to get the best analysis out of your data, you need to be working with well-organized, clean data sets that every member of your organization can trust.
Moreover, as the volume and complexity of data continue to grow, so do the risks associated with poor data management . The rise of cyber threats, data breaches, and privacy concerns makes it even more critical to have clearly defined policies and procedures for managing data. With increasing regulations, like the GDPR, organizations need to ensure that they have proper procedures in place for their data handling.
Additionally, as more businesses move online and digital transformation continues, the amount of generated data is expected to increase exponentially over time. This means that organizations must develop effective ways of managing all this data, so it remains accessible but secure at the same time. As both technological advancements and new regulations keep emerging, organizations will require effective methods, such as data governance, to ensure they remain up to date on all aspects of handling their information assets safely and securely.
Data governance is not just about rules; it’s about creating an environment where everyone takes ownership of their data assets to derive business value from them.
The significance of data governance is going to rise in the future since organizations need to safeguard and handle their data assets while keeping up with the constantly evolving technology and strict privacy regulations. Any forward-thinking organization that needs trustworthy data to make accurate, data-driven decisions must consider how data governance can help them reach their goals. Data governance is not just about rules; it’s about creating an environment where everyone takes ownership of their data assets to derive business value from them.
To summarize, even in 2023 and beyond, having a solid data governance strategy is crucial for organizations to effectively manage their data assets.
Ready to take control of your organization’s data and harness its true potential?
Senior Data Governance Consultant at LACO