According to the State of Data Governance report, the top three things preventing companies adopting data governance are:
- Lack of Resources (39.6%)
- Too hard to prove the business case (20.8%), and
- Data Governance not seen as important by Senior Management (18.8%)
The three bullets above are all linked by the fact that Data Management resources put up bad Business Cases. Because the Data Governance Business Case is weak, management refuses to fund it. As a result, you get crappy (or no) resources to work on Data Management. It’s a classic vicious circle.
How to Begin a Data Governance Business Case
The first, and most important thing to do is to find Data that the Executive Team care about. How do you do this? Follow their priorities. Most organisations have a stated Enterprise Strategy. You’ll find it in the Annual Report or in the Investor Relations portal. Or you could just try asking the Executives directly. Once you know what the Enterprise as a whole is aiming to achieve, you can start to dig deeper.
What Strategic Bets Are Your Execs Placing?
Each executive will be working out a strategy that fits into the overall Enterprise Strategy. You need line-of-sight to the strategic bets that each Executive will want to make. You need to find something in their top-5 strategic bets otherwise they won’t give you the time of day.
Strategic Bets are the really big moves your company makes. Think opening a new market. Developing a new Product Line. Acquiring a competitor. The kind of moves that might be newsworthy. Because they are such big news, the execs need to have significant confidence before placing these bets. This is where data comes in.
What Decisions Must be Made to Place a Good Bet?
In other words, how will your Exec work out whether the bet is a winner or not? This could involve decisions on the best products for specific customers. Otherwise you might want to know which processes need to be made more efficient. Or maybe you’re making decisions on developing core capabilities in your workforce. These decisions are likely to involve a big investment or a major reorganisation within the company.
Does your information inspire confidence in making a good bet?
You’ve identified the decisions that must be made. Now it’s time to isolate the questions you need to answer. This step is essential, and as Tom Redman puts it, you’ve got to figure out “what we really need to know“. Once you’ve listed the essential questions like “who are our best performing customers?” or “how can we serve the customer base more efficiently?” you’ll have an idea on what you know right now. As a result, you’ll be able to measure how much confidence your executives have in these decisions today.
If your current data quality and availability is poor, the confidence level is going to be low. You’re looking to bridge the gap between using “gut feel” and using cold, hard facts when making these big bets. Quality information is an essential component of great decision making. It doesn’t matter how much money you throw at BI/Analytics, Big Data, Machine Learning or AI, with bad data you make bad bets. If you put rubbish in, you’ll get rubbish out.
By working through these questions with your Executives, you’ll get to measure how confident they are in what you have today. But that alone is not enough to make a good business case for data governance.
What pay out does the Executive get for a winning bet?
Just how important are these bets to the organisation? This should be stated in the Enterprise Strategy to begin with, but if not, now is the time to price up the value of success.
Firstly, you need to establish what a great outcome is. If we go on to dominate this new market, what’s it worth to the organisation?
Secondly, how much can we claim credit for based on the Information we have provided? This comes down to how much confidence our data provided, and how accurately we were able to forecast the future.
How much does a bad bet cost?
The flip side to the coin above is the cost of failure. What are the implications of making the wrong choice? In business, bad bets can cost a lot more than the initial stake. You don’t just lose the money spent on the project, you can bankrupt the whole business with one false move (hello, Lehman Brothers). Clearly you can’t price in bankruptcy, but there ought to be an understanding of what could go wrong if we place the wrong bet. Having access to high quality, reliable and insightful information ensures your Executives don’t have to fly blind and rely on their instincts.
What would it cost to deliver confidence-inspiring information?
Information is not free, and high quality information comes at a cost. You need to set up information value chains that bridge between your Data Producers and your Data Consumers. These value chains exist to refine and enrich the data you have in your organisation, delivering insightful information to the Executive decision makers.
The cost to do this will depend in large part on your Organisation’s existing Data Maturity level. If you’re at the initial level, with silos of data all over your organisation and little or no controls in place to define data quality, it’s going to cost a fair bit. But again, the level of maturity you need to reach is a function of the type of decision you’re trying to make. If you just need to analyse historical trends and improve operational efficiency, basic levels of Data Maturity are fine. If you’re trying to develop Predictive and Prescriptive Analytical models to make your decisions then you’ll need to get further up the Data Maturity ladder.
To calculate the costs you can tot up staff costs, IT costs, and potentially data acquisition costs if you decide you need to purchase information to answer your questions. Bear in mind you are already paying for the data and information you have in your organisation. Most organisations find that they are over-paying for the poor quality data they have today. As you document, describe, clean and organise your data you are very likely to:
- reduce redundant storage costs, and
- free up staff time that’s currently wasted re-working bad data today
Pull it all together to Build Your Business Case
The Data Governance Business Case is formed by pulling all of these threads together. Because you have picked a topic that your Executives really care about, you’re guaranteed to get their attention and support.
By nailing down the dollar value of success, and by tying that to the availability of great quality information you make it impossible to ignore the need to govern data. Therefore you’ll have hard dollar numbers describing the benefit of high quality information.
You’ll also have hard dollar numbers showing the costs (and benefits) of cleaning and organising your data. When combined these should show a positive value that makes investing in Data Governance a win-win-win activity across your enterprise.
Cognopia’s mission is to remove friction between the Data Producers and the Data Consumers. We’re here to help you make the best quality Data Governance Business Case. Armed with our Business Case you can smash through roadblocks and carry your Data Management initiative forward with ease. If you’d like help with any of the topics raised in this article, we provide the following free services to get you off to a flying start:
- We offer Data Management Maturity Assessments – this tells us where you are today. As a result we can prioritise goals for where you want to be tomorrow
- Data Design Thinking sessions – we work visually to map out your Enterprise Strategy against your Data Capabilities. Check out the video here: https://go.cognopia.com/engage
- Data Profiling – we quickly profile some of your existing data. As a result your Executives know exactly what you have to work with today.