Data strategy is essential
According to a 2014 McKinsey survey, businesses that use customer analytics are 19 times more profitable. So it’s no wonder that now in 2021, data science, data insights, analytics, machine learning and AI continue to be topics that businesses are focusing on. But one thing underpins them all and must be addressed first – and that’s data strategy.
A simple fact of the digital era in which we all live, is that without good data, nothing works. So to become truly data-driven, businesses need to understand what role data plays in achieving the business’s goals. We describe this as ‘knowing what jobs your data needs to do’ Once that’s clear, businesses must then also understand how to manage and work with data in ways that mean the data is able to the job it needs to do, whilst also managing data costs and risks.
An effective data strategy combines all of these aspects in a way that shows the business what specific range of capabilities are necessary to achieve its data-driven goals, as well as the way forward to acquiring those capabilities. But many businesses still struggle to devise an effective data strategy. So what’s the right approach?
Common data strategy challenges
Let’s take a look at some common challenges that any business devising a data strategy, will need to overcome.
- Complexity. Data is a big and complex subject, filled with numerous and varied topics such as storage, architecture, technology, security, access, standards, leadership, science, regulation, culture, and much, much more! It’s no wonder that the task of devising a data strategy, can so often feel so daunting.
- Practicality. With a subject as complex as data, it can be hard to know where to start. And how can an approach be embraced that is both realistic and feasible? After all, a strategy that is impossible to implement, is worthless.
- Priority. Of the myriad possible steps that the business should or could take with its data, what must be done first, and why?
- Sponsorship. Finally, but perhaps most importantly, there’s the challenge of ensuring that your business’s data strategy is fully supported by your business’s leadership. Getting your leadership behind a data strategy is essential for ensuring that it is implemented, rather than just gathering dust on a shelf.
How to overcome data strategy challenges
We want to share with you a specific data strategy approach that we’ve used with a number of large businesses, as it’s a simple approach that has proved to be highly successful. In one large insurance firm, this approach drove a 45% increase in data capability strength, in less than one year. The approach works by tackling challenges 1 and 2 first, to minimise complexity and maximise practicality. That then makes challenges 3 and 4 much easier to tackle next. A simple and practical strategy, is one that is both straightforward to prioritise and easy secure leadership backing for.
This is how here at Acrotrend, we create data strategies that help our clients to acquire more customers faster, and hold onto them for longer by keeping them happier, by building a foundation of safe and high-quality data, that supports the creation of actionable insights right when they are needed most, to enable well-informed and timely customer-focused decisions.
This data strategy approach fundamentally focuses on data capabilities, as the core ingredients of what a business must develop or acquire, in order to manage and use data in ways that drive achievement of the business’s goals. The key to this approach is to categorise data capabilities into the following four fundamental groups.
- Data compliance. Before your business uses data for anything, you must ensure that your data is safe to use, by complying with regulations and being free of unnecessary data risks.
- Data governance. As mentioned earlier, your business’s data has a job to do. It’s not there just for the sake of it. This means that the quality and availability of your data must be sufficient to enable the data to successfully fulfil its job.
- Data operations. It’s vital to ensure that your data is cost-effective to own and use. You want your business to be data-driven, not just data-busy.
- Data value. Just knowing what job your data has to do is not enough. Data needs to work hard to achieve your business’s goals. Our core principle at Acrotrend is ‘know what, so what, now what’, which means knowing what data to use, uncovering the ‘so what’ behind the data, and enabling business value by knowing ‘now what’ needs to be done with the data.
When you start to group data capabilities in this way, you’ll see that everything that any business must do with data, to ensure that data drives achievement of the business’s goals, can be aligned with one of these four categories. This fact is the key to minimising the complexity and maximising the practicality of any data strategy.
Bringing it all together
Data capabilities form the core of a successful data strategy. But for your data strategy to be effective in enabling your business to become more data-driven, data capabilities must be wrapped in some other essential strategic aspects. If this all sounds like something you think your business should be doing, let’s start the conversation.