Microsoft’s governance expert Geoff Clarke argues that an organization’s digital transformation starts with a clear data strategy approved by its leadership.
By Geoff Clarke, Regional Standards Manager, Microsoft Asia Pacific
The advancement of digital technologies such as cloud computing, Internet of Things (IoT) and big data analytics has enabled organizations to derive plenty of useful insights from data in an easier manner. These insights – whether they relate to your products, customers, supply chain or even your industry – mean that data is now much more valuable than it has been. Organizations that understand and can capitalize on this value of data are transforming their businesses and disrupting their industries.
However, one of the biggest concerns slowing down digital transformation is the lack of overall governance of the data that the organization uses. Unresolved concerns such as privacy, security and departmental silos are limiting the sharing of data internally and externally, the buying or monetizing of data as well as the broader analysis of data for the whole business and its customers.
Microsoft’s view is that the mindset of governance around data needs to change from being that of “data management” to “data as a strategic advantage”.
Once the organization understands that the use of data can strategically change the way it does business, the requirement of the governing body (typically the board of directors) to become involved is obvious. After all, it is the board that is responsible for the overall strategy of the organization. And if the organization is to transform itself to become more of a “data business” then it is the board that is accountable for the success of that transformation.
The digital transformation journey for Ryman Healthcare, a leading retirement village operator in New Zealand, started two years ago precisely that way.
The management team initially set out to mitigate risks of documentation errors as they felt that it was risky to depend on manual and paper-based documentation, especially when it comes to patient care. Ryman Healthcare also lost its head office in the February 2011 Christchurch earthquake – so the company had good reason to be nervous about how it stored its information.
They then embarked on a journey to digitize its business processes so they could be captured and analyzed more easily, cutting down any possible errors in its interactions with older people under its care. This single digital project provided the fuel for Ryman Healthcare to use data strategically to also transform staff productivity and ultimately, significantly improving how they interacted with their patients.
Governance + Strategy
Data is without a doubt a boardroom responsibility in a digital economy. Organizations have to think of their business from a customer and data perspectives if they want to thrive amidst rapid progress of data-enabled technologies and increasingly competitive environments.
The recent Microsoft Asia Data Culture Study 2016, which polled 940 business leaders from medium to large-sized companies in 13 markets in Asia, found that 87% of respondents felt a data culture should be driven from top down, and that there should be a formalized role in the leadership team to drive successful adoption of their data strategy.
In my conversations with customers, the misconception held by some business and technology leaders is that data is simply an operational issue that is managed by the IT department. In these organizations, it is still the case that data is only generated and used internally as a system of record, for accounting or general trade.
However, in the digital economy, data becomes the lifeblood of the organization and can be embedded in the products, services and supply chain – with design, production, customers and suppliers all demanding more data and more often so they can make better decisions faster.
A data strategy is needed to define what data is to be used by the organization – and how that will add long term value. As part of an overall data governance framework, this requires an understanding of the value, risk and constraints inherent in all data.
It will determine what data is collected, purchased or sold, how it’s used and monetized to deliver better products and services, address customer needs and drive business agility. It also describes the policies and culture of data use by the organization so that privacy rights are protected, decisions are based on reliable data and in compliance with local laws and regulations.
In 2015, Mattel released an internet-connected Barbie doll which unintentionally led to privacy and security risks for its users. A security researcher discovered that hackers could potentially hijack the toy and turn it into an audio surveillance device to spy on children, listening in on their conversations. What originated as a clever product idea led to a company backlash on privacy. This is where the broader view of business, analytics and the policies governing the use of data would have enabled Mattel to think through the end to end journey.
A trend we have noticed is that many members of the board have a “fear” of data due mainly to a mixture of risk management and security concerns. The Microsoft Asia Data Culture Study found that the fear of change is one of the top five barriers for implementing a data culture.
While it is healthy to take a cautious approach to innovation in the use of data, fear must not be allowed to cripple progress – particularly when the biggest threat may come from competitors realizing the potential of a good data strategy.
Beyond data governance, the boardroom has to be responsible in laying the foundation for the organization to understand and prioritize the strategic value of data. Without the boardroom providing clear guidance (usually through the CEO and other executive management) on an overall data strategy, digital transformation projects may not have the ability to bridge organizational barriers or scale beyond their pilot phases.
A Data Governance Framework to Accelerate Transformation
In my role, I work closely with global and local standards bodies such as International Organization for Standardization (ISO) to set and define the next-generation best practices for data governance. An example of such work is a new standard that is currently being developed on the governance of data – ISO/IEC 38505. This standard helps board members understand the accountability issues of data and helps them develop a framework for governing the use of data.
As that data moves to the cloud to leverage its potential value, there are also other standards that help provide the transparency and trust that is needed to ensure such governance. For example, ISO/IEC 27018 provides new and heightened privacy requirements for cloud service providers such as Microsoft.
Data governance standards serve as a great guideline for the boardroom in crafting data strategies and accelerate business transformation. Following such internationally-accepted guidance can help assure the board that a company’s data strategy is carefully considered and that such a strategy aligns with the overall business goals and responsibilities.
While many organizations monetize data through subscriptions, advertising and service improvement, others across Asia are taking differing approaches to using data in adding value for their stakeholders and customers. For example, Australian government agencies are increasingly looking at implementing Open Data protocols (OData) to enhance sharing of data internally amongst agencies and also with external organizations.
In 2015, the New South Wales (NSW) Office of Environment and Heritage in Australia made available its biodiversity data to the public using an OData-based web service. Called BioNet Web Service, the data of over 7 million species sightings in NSW is open for public to harness with the aim of promoting better environmental decision making through public and private partnerships.
So how does an organization get a good handle on the governance of data it uses – and turn that valuable data into positive results? Well, here are five common threads we are seeing with our customers going through their digital transformation journey:
- Take a data perspective. Whether it’s an elevator manufacturer gathering sensor data to predict component wear or the government digitizing its environment so everyone can partake in preserving it, viewing the organization as a ‘data business’ is the starting point for success in today’s digital world.
- Decide how much of a “data business” you want to be. While it’s certainly possible to become a complete “data business” (like the weather bureau, Uber or a digital music store) most organizations add innovative data services to their existing products and services. For example, Domino’s Pizza Enterprises Ltd in Australia and New Zealand introduced a GPS tracking system which increased store sales and customer satisfaction. Such innovations use data to connect products and services to customers and are core to a digital transformation journey of businesses. But they also require governance oversight to ensure strategy alignment, risk management, compliance and of course, visible support and encouragement from the business leaders.
- Build your data strategy. There are already many lessons in what works in the new digital world and how to maximize your investments in data. In addition to getting technical and business help from experts, the new and upcoming international standards such as ISO/IEC 38505 above can help you drive a responsible data governance framework that balances the potential value, risk and constraints that all data carries. That is the framework upon which your data strategy is built.
- From strategy to policy and culture. Strategy describes how data will help add long term value to your organization. But turning that strategy into effective policies and a supportive corporate culture is critical to a successful execution. Bringing your management team in early to help design, manage and support this process will reap rewards.
- Transform your business. Good data strategies align and support the overall strategy of the organization. Great data strategies go further and can transform the business by leveraging the value of data to unlock new opportunities and increasing benefits to the organization and its stakeholders.
At the end of the day, every organization’s digital transformation journey is different. What’s consistently similar is the requirement for an organization-wide governance framework and data strategy to ensure the long term success of that journey.