Data Governance: what it is and why you need it
You have chosen, as a modern alchemist, to pursue the Philosopher's stone and turn any metal into gold. This means that you have decided to handle your data in a manner that can benefit your business, offering valuable insights to help you comprehend what you do well and where you can improve, as well as understand your customers' likes and dislikes about your business. Therefore, you seek to ascertain how to expand, increase your revenues, and gain market share. Data serves as your Philosopher's stone, transforming lesser metals (data points) into gold (information and insights).
While your data is valuable, similar to a team of exceptional football players (referring to the real football, not the game played predominantly with hands, despite its name), who possess individual talent but struggle to work as a cohesive unit, you require an exceptional coach to merge them into a formidable team.
This is precisely what data governance entails and ignoring it is the first capital sin of businesses. Regardless of whether it is legally mandated, you should always have someone overseeing the acquisition, utilisation, and deployment of your data. It is essential to establish policies, procedures, and standards to guarantee the accuracy, reliability, security, and appropriate usage of data throughout its lifecycle. Data governance encompasses the comprehensive management and control of an organization's data assets.
In simpler terms, data governance is like a set of rules and practices that a company or organization follows to make sure that its data is well-managed and used effectively. It encompasses aspects such as defining the individuals accountable for the data, determining how it ought to be stored and safeguarded, establishing protocols for access and sharing, as well as establishing guidelines for its application in decision-making processes. Data governance aids organisations in upholding data quality, ensuring compliance with regulations, mitigating risks, and extracting valuable insights from data.
Let me list a series (by no means exhaustive) of issues that a lack or ineffective data governance may create:
Inaccurate or Incomplete Data: Without proper governance, businesses may encounter issues with data quality. This can lead to incorrect insights, flawed decision-making, and ineffective operational processes. Inaccurate or incomplete data can also hamper customer satisfaction and damage the overall reputation of the organisation. Accurate and complete data is essential to be able to trust any insights deriving from the analysis of the data. In addition, creating rules to ensure accurate data when acquired is vastly less expensive than having to correct the data later.
Data Breaches and Security Risks: Insufficient data governance practices can make businesses more vulnerable to data breaches and security risks. When data is not adequately protected, unauthorised individuals can gain access to sensitive information, leading to financial losses, legal liabilities, and damage to customer trust. This is why having rules to define who is responsible for the data and who can or cannot access the data is extremely important. In addition, compliance with data protection regulations, such as the General Data Protection Regulation (GDPR) or the California Consumer Privacy Act (CCPA), becomes difficult without robust data governance.
Non-compliance with Regulations: Data governance plays a crucial role in ensuring compliance with industry-specific regulations and legal requirements. In sectors such as healthcare, finance, and e-commerce, businesses must adhere to various privacy, security, and data handling regulations. Failure to comply with these regulations can result in severe penalties, fines, legal actions, and reputational damage.
Lack of Data Integration and Interoperability: Inconsistent data governance practices can lead to challenges in data integration and interoperability. When data is stored in silos or follows different standards across various systems or departments, it becomes difficult to consolidate and analyse data effectively. This can hinder data-driven decision-making and prevent organisations from unlocking the full potential of their data assets. Regulating data access is crucial, but it is equally important to ensure that once access is granted, retrieving the necessary data becomes effortless.
Increased Costs and Reduced Efficiency: Inadequate data governance can result in inefficient data management processes. When data is not properly organised, documented, or maintained, it becomes challenging to locate, access, and analyse relevant information. This inefficiency can lead to wasted time, increased costs, and missed opportunities for business growth and innovation. It is crucial not only to possess the required data for analysis but also to ensure that its retrieval and accessibility are well-documented and straightforward.
To mitigate these issues, businesses should focus on establishing robust data governance frameworks. This involves creating clear policies, implementing data management practices, appointing responsible roles, ensuring data security measures, and fostering a culture of data accountability throughout the organisation.
Many of the capital sins I listed in my previous post (see post here) may be avoided or at least mitigated with proper data governance.