3 challenges preventing businesses becoming data-driven
Over the last decade, it’s clear that data has increasingly become a critical asset in helping businesses thrive, and therefore, there’s a strong desire to take advantage of the opportunities data enables in pursuing better customer and financial outcomes.
However, Experian’s latest Global Data Management research paper has revealed that while most companies have access to vast amounts of data, a lack of understanding is hampering success.
The analysis found that eight in 10 businesses believe data is one of their most valuable assets, but while they are investing in data and analytics, many are still struggling to incorporate meaningful data insights into day-to-day business processes.
The paper discovered three key reasons preventing businesses becoming data-driven –trust in data, data debt, and the skills gap.
Tackling distrust in data
Firstly, there is a large degree of distrust in information. The average professional looking at data does not understand how that data got there, when it is useful, and what state it is in. This comes into play especially when data insight contradicts a long-standing norm. While the business wants to be agile and informed by data, this level of distrusted data often influences business leaders to fall back on making decisions by gut instinct rather than by informed data insight.
In fact, the research found that two in five organisations say people within their business do not trust data insights preventing them from harnessing the power of their data. This doesn’t come as much of a surprise though, as we have consistently seen over the past several years that people believe almost a third of their data is inaccurate.
While some may think this is relegated to unused information, we see that half of companies this year do not trust the data in their CRM or ERP system, which is certainly cause for concern. Contrast this with 98% of organisations that say having high-quality data is either extremely important or important in achieving their business objectives. These statistics highlight organisations are entering a standoff on the quality of their data versus the benefits of how they want to leverage it.
If ever there was a time to break down this impasse and gain the buy-in and trust of the organisation to achieve business goals, it’s now.
The cost of poor data governance
Secondly, this high degree of inaccuracy is leading to a large issue with data debt – the cost attached to poor governance of data in a business – with the research finding that it is a challenge for 78% of organisations, with 28% overall saying it is a significant problem.
Data debt is a lot like technical debt. You have a set of data assets that isn’t necessarily fit for purpose, or it has a high degree of inaccuracy. Unless you take the time to fix that information and govern it properly, you are always going to have a suboptimal data operation.
While organisations struggle to decide how to tackle the challenge of data debt, more and more are starting to see poor data negatively impacting a wide range of initiatives. Thirty-five percent of respondents say they are not able to see ROI from data management initiatives like machine learning, artificial intelligence, and preparing data for analytics. Additionally, 33% are unable to get value from technology investments.
Business leaders often underestimate the level of data debt within their company and do not realise it drags down the benefits of not only data-type initiatives but also daily business operations or broader critical investments. Data is being used to tackle nearly every challenge within a business. That means that when organisations are operating with a high degree of inaccurate information, they are not only dragging down initiatives like analytics or data governance, but they are also hurting customer experience, new platform investments, operational efficiency, and more.
The data literacy engine
Finally, the research shows that a data skills gap has emerged, as many organisations lack the necessary skills and resources to make the most of data they hold. This doesn’t just mean data professionals, like data analysts, chief data officers (CDOs), and data scientists, there is also a general lack of understanding around data within the broader business.
That’s why data literacy, the ability to read, work with, analyse, and form arguments with data, is seen by 84% of organisations as a core skill that all employees must have in the next five years. Those that are not over-reliant on a handful of hard-pressed data scientists are far more likely to be successful.
Why? Because now more than ever, it’s widely accepted that data literacy is as critical to commercial success as data hygiene. In fact, 70% of decision-makers say a lack of literacy skills has a direct impact on the return on investment in data and technology.
The vast majority (85%) of businesses said data was one of their most valuable assets, and 36% said data literacy was crucial in order to future-proof the business. To address this issue, 30% have a formal data literacy programme in place and 36% say they are planning to establish one in the next year.
This year’s research highlights more businesses recognising these challenges and initiating the changes necessary to gain insights from their data. For some, this starts with equipping their workforce with the essential skillset to be able to manage data.
Importantly, by creating a culture where sharing data knowledge and tools is the norm, these responsibilities can be distributed across a data-literate workforce, freeing up valuable time for your data specialists to be truly innovative and drive success.