Data is everywhere today, and it’s difficult to think of any industry that has not been affected by data. Unfortunately, despite dedicating heavy, long-term investments to data management, companies are still struggling with data.
While some companies have accumulated so much data that they have reached a point where they don’t know what to do, others don’t see the need for a data strategy because they believe they are too small.
The truth is, no matter the size of the business or the current state of your data, your business can benefit immensely from implementing a data strategy.
This article breaks down what a data strategy is, its value for businesses, and the key components that make up a great data strategy.
What Is a Data Strategy
A data strategy involves the tools and processes that define how a company can collect, manage, and analyze data to find high-value insights and information to make the work of key decision-makers a lot easier.
In simpler terms, a data strategy is a company’s roadmap for using data to realize its objectives. This roadmap outlines all the activities involving organization data – from collection to analysis.
To understand what problems data solves and what value it provides for businesses, you first need to consider how companies interacted with data in the past, long before the digital world we are so familiar with today.
Data in the Past
In 2004, Blockbuster made about $6 billion in revenue while having about 85,000 employees. Fast forward to 2020, Netflix, which made Blockbuster redundant, made over $25 billion in revenue with approximately 9,000 employees.
The comparison may not make any sense, but it just goes to show how the world has changed in regards to how people and businesses interact with big data.
For many companies, data used to be a byproduct of a business process or activity that had very little importance once the process/activity was complete. Yes, there might have been a couple of applications that required the data, such as special reports or departmental audits, but they were often one-off activities.
Business today is an entirely different setting where data is appreciated so much that it can be shared with as many as eight other systems within the organization. Nevertheless, companies are still struggling with creating data strategies relevant to today’s realities.
Let’s take a look at how a cohesive data strategy can provide value to your business.
1. Boost Innovation
A company that adopts a data strategy can realize significant innovations in its products or services. For instance, by analyzing customer data to determine where their guests are spending their money, a hotel chain can fine-tune its customer experience to generate more revenue.
2. Reduce Operational Costs
One of the critical goals of any data strategy is to achieve the set organization goals while reducing overhead costs.
3. Comply With Regulations
As highlighted earlier, the world has come alive to the potential of data. As such, governments have had to develop legal frameworks to govern how companies interact with user data.
A company with a comprehensive data strategy can avoid penalties while collecting sensitive customer data such as financial information.
Components of Great Data Strategies
In the past, companies approached data with a primary focus on storage. While data storage is undoubtedly crucial, a comprehensive data strategy needs to consider how the data will be acquired, collected, stored, managed, accessed, and analyzed.
The five key components of a data strategy include:
- Objectives – A company needs to have goals in mind and a clear idea of how the data strategy can help it realize its goals.
- Identification – Leveraging data is impossible unless the data value has a name.
- Storage – With companies generating data every day, they need to have a storage system where data can be accessed when needed.
- Technology – Companies must use various tools and software to manage and leverage data with ease.
- Skills – You need to have the right talent to perform tasks that involve data management.
The Bottom Line
The need to manage and leverage torrents of data is critical to a company’s growth more than ever before. But despite companies being familiar with the concepts of collaboration, system architecture, testing, and analysis, applying these concepts to support a cohesive data framework is still a somewhat foreign notion.
To leverage data for their benefit, companies need to adopt a strategic and proactive approach.
