Sage business thinkers have long espoused the value of being data-centric. Data-centric organizations demonstrate better decision making, improved customer experience, and enhanced operational efficiency.
Data-centric enterprises also stand to see higher returns with AI. In Marco Iansiti and Karim Lakhani’s book, “Competing on AI,” they argue that artificial intelligence is reinventing “the modern firm where processes are digitized and enabled by an AI factory that treats decision making as an industrial process.” The aim, they say, is an “AI factory which creates a virtuous cycle between user engagement, data collection, algorithm design, and improvement.” In this way, data is core to the future of business.
So where are businesses in their journey to becoming data centric? A recent survey covered in the Alation State of Data Culture Report, conducted by Wakefield Research, finds that data leaders are increasingly focused on using data in two ways:
- As a revenue generator
- As a solution for marketing and sales problems
These report findings reflect a clear change in how data is used now, as compared to the start of the COVID-19 crisis.
Focused on Growth
CDOs and CIOs are focused on growth. The report finds that 63% of data professionals surveyed believe their CDOs and CIO are focusing their data investment on enabling their businesses to grow. CIOs have told me repeatedly they want to be measured as their CEOs are measured. This report shows that data leaders or organizations are also focused on revival and upswing. Other key drivers for investment in data initiatives include:
- Digital transformation
- Customer intimacy
- Regulatory and compliance
- Operations and efficiency, and
- Product innovation
Without question, many of these are interrelated. For example, digital transformation, customer intimacy, and product innovation have a strong interrelationship, which influences revival and upswing. Key to note is the change in focus, as growth has become top of mind, displacing the COVID-era key drivers of data initiatives, which were retrenchment and maintain. CIO Sharron Pitt described the past year as “more operational, more reactive, more productivity, more future options due to a cultural shift.”
The culture has shifted once more. Now, leaders are focused on growth and customer insights fueled by data. Given the focus on growth going forward, it’s not surprising that 61% of data leaders cite sales and/or marketing as top proponents for data and analytics initiatives. CIO Martin Davis recently claimed that “leaders must be fully engaged and connected with their business customers.”
Data a Determinant of the ‘Right to Win’
The report demonstrates that it pays to be data centric, as data strategy is a key business capability; those with a go-forward ‘right to win’ are much more likely to make data central to decision making. The right to win—a business capabilities way of thinking—means that companies have a better than average chance of succeeding within a market.
Organizations with a data culture outperform those without. Specifically, the report finds that 75% of the top-tier data companies with a data culture, are meeting or exceeding their revenue targets. However, data professionals say that data-culture laggards are negatively impacted in their bottom line, innovations, and reporting and forecasting.
Making Data Part of Your ‘Right to Win’
The study also measured the key things that organizations report they need to overcome. Top challenges include data silos and the need to increase data democratization, which encompasses areas of self-service, citizen data science, and data culture.
CDOs and CIOs have a big role to play in overcoming these issues. They can start by defining key terms. Former CIO Isaac Sacolick says, “CIOs must change the culture by defining what data-driven means at the company and lead self-service and data governance capabilities.”
Yet challenges persist. While CIOs and CDOs say they are focused on both governance and monetization of data, 9 in 10 data professionals (91%) say their company struggles to balance “offense with defense” — through enabling business growth versus protecting the business.
So how do organizations get better at data? How can they make governance not such a chore? According to the Alation State of Data Culture Report, managing governance at the point of data use consistently ranks as the top initiative data leaders cite for fostering a data culture. The Reports also showcases that those at organizations with to-tier data culture also place an emphasis on increasing collaboration between the data and analytics team and the business – the latter ranks second behind the first among those with a top tier data culture.
The top challenges organizations report they need to overcome include:
- Acquiring analytical skills and bench strength
- Data quality, data democratization
- Data silos
- Data discovery
Silos comes as no surprise, as Jeanne Ross has demystified the topic. Ross says that “MIT Center for Information Systems Research (CISR) has found that only 28% of established companies have successfully digitized.” 51% of those that haven’t succeeded remain in silos and 21% remain in band-aids and duct tape. Jeanne summarizes the problem in “Enterprise Architecture as Strategy”, arguing that “data, one of [an organization’s] most important assets, is patchy, error prone, and not up to date.”
For this reason, it is not surprising that the report shows that CDOs and CIOs are focused squarely upon data initiatives which emphasize data quality, data governance, advanced analytics & AI, and other elements of the data pipeline. Without quality, governed data, data has no use in helping the business grow.
Data can empower a deep level of customer understanding. According to my friends, Jeanne Ross and Martin Mocker of MIT-CISR, winners in the digital age have “ubiquitous data which means they don’t guess what customers want, or who they are, or whether they are loyal.”
For most legacy organizations, this is still a goal and not reality. For these data leaders, fixing data is job 1 and with great data, they can move to powering revenue in an increasingly digital economy.