Every company must be able to measure and analyze its business performance. Larger organizations will face greater challenges in evaluating their performance, as different departments and business units may have different priorities and methodologies. They might also organize and analyze their data in different ways, which emphasizes the importance of having an enterprise-wide data management and governance strategy.
For example, to identify your most profitable customers, you will need to gather data from different parts of the organization on what they buy, how you market to them, and the process of selling to them. Multinational corporations with different business units will have to gather data from different sources to identify and collate the various revenue streams. Your company might have different classifications for customer, product, and sales data, and each one might use its own applications.
Data governance should be part of every company’s data management strategy. It can help an organization to actively manage and control the data across the enterprise, as well as how it is used. It can also contribute to saving – and generating – millions of dollars across the lifetime of the organization.
Increasing Operational Efficiency
You’ve probably heard about the Pareto principle, also known as the 80-20 rule, where 80% of outputs come from 20% of all inputs. You can apply this rule to your business, where 80% of your profits come from 20% of your customers. Having a solid data management strategy will enable you to clearly measure your revenues, identify your top-performing customers, and better target your marketing and sales efforts.
A strong data management strategy will help you to improve your operations, as you will have a greater understanding of your product profitability. It will enable you to identify and eliminate underperforming product lines and invest your resources in product lines that are doing well or showing promise. You will also be better equipped to analyze your business processes to uncover areas for improvement.
More Informed Decision-Making
According to a 2019 study by Experian Data Quality, 95% of organizations stated that poor data quality had a negative impact on the customer experience, business efficiency, and corporate reputation. The organizations also believed that 29% of their customer and prospect data was inaccurate.
Poor data quality can have significant impacts on many parts of the organization. Good data management and governance will help to maintain the quality of the data. Decision makers and analysts will trust the organization’s data, which will make them more confident when identifying trends, uncovering business opportunities, and forming strategies. Having consistent access to solid data means you will be able to develop, track, and respond to marketing campaigns, product strategies, and other elements of the business operations.
Optimization of Business Performance
When decisions and strategies are backed by reliable data, your organization should realize increases in its revenues and profits. According to a 2018 McKinsey report, high-performing companies take data governance more seriously than their competitors. In fact, “breakaway companies” were twice as likely to have a strong data governance strategy. Since improving business performance is integral to any organization’s growth plans, data management should play a key role in achieving this goal.
Compliance with Industry Regulations
Some industries, such as healthcare and finance, will penalize companies that demonstrate poor regulatory compliance. According to analysis published in JAMA, pharmaceutical companies spend $20 billion per year on marketing to doctors in the U.S. These firms are legally required to track this spending. Since 2009, failure to comply with industry regulations have led to multiple billion-dollar settlements with the U.S. Department of Justice.
The General Data Protection Regulation (GDPR) and related regulations also impose compliance requirements on the use of consumers’ personal data. Proper data management, data governance, and data security strategies will protect your organization from fines and lawsuits, which could save you millions of dollars. Adhering to industry regulations on maintaining your customers’ data privacy will also protect your reputation over the long term.
Maintaining effective data management and governance practices can produce substantial savings and general significant profits for your organization. It will enable you to increase your revenues by improving operational efficiency, making more informed business decisions, and optimizing your business performance. You will also keep more money in your company’s pocket by ensuring you comply with industry regulations.