Last time, we had spoken about the end to end journey of data in an organization and setting up your data to succeed. In case you missed it, you can read it here . This time, I’d like to provoke your thoughts on the concept of Data Driven Organizations. We are seeing an increasing number of organizations that are becoming ‘data savvy’ and are depending on their data to help drive decisions for them. Let us explore where these organizations are heading and how they are becoming a ‘data-driven’ organization.
What is a Data-driven Organization?
In simple terms, Data driven organizations are organizations that give careful thought to data around usage patterns, user behavior, system performances, etc. before identifying their future roadmaps, performance metrics, and other mission-critical decisions.
In these Organizations, decisions and actions are not taken basis latest trends or gut feelings or simply to make a statement. Instead, they are taken based on careful analysis of the data collected, regression of the data against the past data and after carefully looking at down side and upside by simulation. For example, when hurricane Sandy was about to hit coastal Florida, Wal-Mart executives used big data predictive analytics to predict a seven-fold surge in the demand for strawberry Pop-Tarts in the area.
Another example could be that of using real-time executive dashboards to drive performance. For instance, in a data-driven services organization senior management need not wait till the end of the quarter to get reports around utilization, performance, etc. Instead, they can get this information real-time from the data in their system allowing them to quickly adjust their plans and measure their effectiveness while saving precious resources. This makes the organization more agile.
Why Organizations are adopting a data-driven culture?
With the enormous amount of data being generated today, it is impossible for organizations to ignore the ‘information’ stored in this data. Data is becoming one of the most valuable assets that any organization holds. Organizations are increasingly harnessing this asset and moving towards a data-driven decision making model, reaping rich benefits of this approach as indicated by an Economist Intelligence Unit Survey. This survey found that most companies that have adopted a data-driven culture and use data to guide decision-making are three times more likely to rate themselves as substantially ahead of their peers in financial performance. Strengthening this argument further, revenues of data-driven organizations was on an average 8 CAGR percentage points higher than the competition in the markets examined as outlined in another report by McKinsey & Co.
As more and more companies move towards being data-driven, the link between better performance and data based decision making is becoming increasingly clear. While a superior financial performance is incentive enough, pivoting your organization to a more data-driven way of functioning has far-reaching benefits that ensure long-term success of the organization.
Being data-driven brings in a higher degree of transparency, agility and clarity to the entire corporate decision-making process. So how do organizations get to this point? How do they change their current processes and systems to make data as their main asset?
How can Organizations become Data Driven?
While incorporating data-driven insights into strategic decision-making has obvious benefits like better performance and market leadership, making this shift is easier said than done for most organizations. This is because large organizations tend to grow into complex entities where every decision is influenced by multiple factors and often data is not the strongest force influencing a decision. Political pressures, long-term strategies, or just a latest market fad - they all are examples of scenarios where business decisions do not solely rely on available data. Also, organizations might not be having the necessary know-how, best practices, infrastructure and systems to enable effective analysis of their data even if they would want to.
However, delivering information and value from Data is becoming easy as Technology is making it easy to store, analyze and present data. A lot of decisions that earlier needed human intervention can now be data-driven and automated. With the latest technical innovations in the Data space, it is possible to harness large data and derive value out of it in a way that is feasible for businesses. As technology advances, businesses can focus their most precious assets and core strengths on only the most crucial of strategic decisions while letting data-driven systems take care of most of the mundane decisions. Needless to say, this means better resource utilizations, improved bottom lines and overall more efficient organizations.
But as organizations rapidly realize the value of, and move towards data-driven decision making, they need to develop a better appreciation of the importance of data and more importantly, the importance of data management. This much-needed shift in attitude towards Data Management is imperative because as organizations rely on data to guide them, even a minor compromise on data parameters like data quality can result in significantly adverse business impact.
Given the points above, it is clear that becoming Data driven is the way forward for organizations. It is also clear that the three primary challenges for organizations as they try to become data driven are:
- How to fully understand the meaning, significance and advantages of becoming a data-driven organization
- How to design and implement business processes that transform organizations into data-driven organizations in a way that is measurable, sustainable, scalable and cost-effective in the longer run
- How to translate these processes and objectives into best-fit technology and service delivery goals that not only transform them but also future-proof them
While the first two challenges are something that every organization must think and figure out on their own with little aid from outside, the last is something that technology and service leaders such as us can help them with. At Tech Mahindra, with our experience of offering end-to-end Data Management services in the last decade, we have gained unique insights into data-driven organizations and look forward to helping our customers move towards adopting a data driven culture.
So, is your organization a Data-driven Organization? What Challenges does your organization face in effectively leveraging their data? How do you handle those challenges?