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WHAT COMPANIES GET WRONG ABOUT DATA TRANSFORMATION


LATEST NEWS APRIL 2023





By CIO

For years, IT and data leaders have been striving to help their companies become
more data-driven. By most accounts, companies are making the necessary
investments, as evidenced by the majority of heads of IT (52%) saying data
analytics and machine learning will drive the most IT investment at their
organizations this year, according to CIO.com's State of the CIO survey.

But technology investment alone is not enough to make your organization
data-driven. It requires the right vision, culture, and commitment.

"A lot of organizations have tried to treat data as a project," says Traci
Gusher, EY Americas' data and analytics leader. "It can't be treated as a
project; it has to be treated as a function. Until organizations start to treat
data as an imperative operational unit, they're going to continue to struggle to
get any kind of consistency and quality in data."

Such strategic missteps may signal an ongoing issue at the C-level, with company
leaders recognizing the importance of data and analytics but falling short of
making the strategic changes and investments necessary for success.

A recent report from Alation and Wakefield Research found that 71% of data
leaders are "less than very confident" that their company's leadership sees a
link between investing in data and analytics and staying ahead of the
competition, with 51% expecting to get half or less of the amount they say they
need. In fact, two-thirds of data leaders said company leadership was an
obstacle to getting the funding they need, with 35% of that group citing a lack
of support from company leadership and 42% saying company leaders make promises
but don't follow through.

One remedy for this disconnect has been to give data a seat at the C-suite
table, with many companies over the past several years hiring chief data
officers (CDOs) to helm data initiatives. But in 2021, Harvard Business Review
noted that the average tenure of a CDO is between two and two-and-a-half years.

"It's not because they're checked out," says EY's Gusher. "It's because they
either are not getting the resources they need, are not getting the funding that
they need, or they're being viewed as ineffective because they're not making
progress. I think that speaks volumes to the type of commitment that
organizations have to make around data in order to actually move the needle."


WHAT ACTUALLY WORKS

So if funding and C-suite attention aren't enough, what then is the key to
ensuring an organization's data transformation is successful? Companies that
commit to treating data as a product and to transforming their culture are the
ones that succeed, says Doug Laney, innovation fellow of data and analytics
strategy at West Monroe. Laney, a former distinguished VP analyst at Gartner,
studied how companies used their data when he was with the research firm.



--------------------------------------------------------------------------------

> We found that companies that treat data more as an asset have a market-to-book
> value ratio that's nearly two times higher than the market average. And
> companies that sell data products or data derivatives of some kind have a 3x
> market-to-book value ratio.



--------------------------------------------------------------------------------

"We found that companies that treat data more as an asset have a market-to-book
value ratio that's nearly two times higher than the market average. And
companies that sell data products or data derivatives of some kind have a 3x
market-to-book value ratio," he says.

According to Alation, companies that have a strong data culture outperform their
peers. In its survey, Alation found that 90% of companies with top-tier data
cultures met or exceeded their revenue goals over the past 12 months. The
company defines data culture as consisting of three key disciplines:

 * Data search and discovery: the ability to quickly and easily find the right
   data for a specific purpose
 * Data literacy: the ability to draw valid conclusions from data, including
   understanding the limits of interpretation and awareness of common biases
 * Data governance: the overarching process by which data assets are managed to
   ensure trustworthiness and accountability, including compliance with policies
   and regulations

Companies with top-tier data cultures have widely adopted all three disciplines
across departments, Alation says.

Of course, building a vision and culture around data that gets your company to
that point is the trick. The first step, according to EY, is to adopt a
visionary core data strategy. Such a strategy should connect how data will
inform, support, and drive an organization's short- and long-term strategic
business plans. It should also reduce threats identified in enterprise risk
management plans and help capitalize on opportunities. This requires a dedicated
data team with leadership, resources, and executive support, EY's Gusher says.

"All too often, companies think of data as a technology problem, and it's just
not," says Gusher.


ANATOMY OF A DATA STRATEGY

Specifically, EY says a well-developed data strategy should include several key
areas:

 1. High-priority use case identification: This should serve as a guiding light
    for the data strategy, including clear expectations on data monetization and
    informing the transformation of data as an asset. It should also include the
    development of a data supply, including both internal and external data
    sources.
 2. A data governance plan: This plan should specify how data will be managed,
    including the policies, stewardship, and operating model for orchestrating
    fit-for-purpose data management.
 3. High-level architecture plan: To enable the execution of use cases and
    governance, the organization's architecture should be informed by the types
    of technology needed to integrate, transform, enable, and consume data.
 4. A plan to increase data literacy: Democratizing data across the enterprise
    and getting data into the hands of decision-makers at strategic and tactical
    levels is essential.

A fifth vital element is getting change management right, says Mike Giresi,
Chief Digital Officer of electronics manufacturer Molex, adding that the key to
making your company more data-driven is helping everyone understand why they
should do things differently.

"I think the primary reason the majority of these efforts fail is that the
change management aspect shouldn't just be about training people how to do
something better," Giresi says.

"It's really about connecting them to why they should want to do it differently
and then incentivizing them with a culture that reinforces that. It has nothing
to do with the tech. It has everything to do with understanding the value
proposition that the company is performing against."

And this change effort must come from the very top, Giresi says, requiring a lot
of CEO engagement.

"It's great for the grassroots to be connected to it and support it, but
ultimately you're going to have to change the mental model of business unit
leadership in terms of what they value and how they're supporting and
incentivizing change," he says.

And that makes educating the C-suite on the importance of data transformation a
key CIO remit today.

This article was from CIO and was legally licensed through the Industry Dive
Content Marketplace. Please direct all licensing questions to
legal@industrydive.com.


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