What is a Data Strategy and Why Should You Have One?

We live in a world of rapid digitalisation where information is power.

Sep. 12, 2023

As businesses race against time and one another to tap into the gazillions of bytes of data available, the endgame is no longer about who can access data, but rather who can successfully harness the potential that data holds to generate insights, drive informed decision-making, and maximise competitive advantage to become market leaders. With the global race heating up and the stakes higher than ever before, the quest to unleash the power of data is well and truly in full swing.

Data is Great, but Nothing Without Strategy

It would be an anomaly to find an organisation today that does not have lofty ambitions and long-term roadmaps to launch cutting-edge products and innovative solutions to win over customers and stand out from the competition. Most employees today would’ve heard from their C-level leaders on how their company is taking strides to be “customer-centric” by being “data-driven”. However, very few of them walk the talk. According to a KPMG report, 57% of organisations do not have a defined enterprise-level data strategy.¹

Often, the buzz created by developments in artificial intelligence, machine learning, big data analytics, and cloud computing, makes “data” a routine topic of discussion in boardrooms. While there is an obsession to access abundant volumes of data, most organisations lack cohesive strategies, adequate know-how, and the right infrastructure to create value and tangible business outcomes from the data at their disposal. Without a clear data strategy in place, having large volumes and access to data is of little to no meaning, as you lack the essential resources to analyse, model, and draw actionable insights from it that can supplement your business strategies.

Every business, regardless of size and scale, needs to evolve into a data business to survive and thrive today. The most critical pre-requisite, to become a data business, is to have a robust data strategy in place.

In Simple Terms, What is a Data Strategy?

A data strategy is set of principles, rules, and concepts that enables an organisation to collect, transform, store, manage, share, and govern data to unlock value and achieve positive business outcomes.² Essentially, it defines how an organisation can manage data as an asset and leverage it to achieve its overall strategic goals.

A good data strategy ensures that the data resources of a business are moved, shared, and utilised in an optimised manner. Having a well-rounded data strategy that is successfully downscaled to all levels of organisations results in smarter, faster, and better-informed decisions – creating shared value for all the stakeholders that your organisation serves.³

There are a few key considerations while designing a data strategy for your organisation:

• Mapping your business objectives
• Identifying your key data sources
• Setting up the data architecture and governance frameworks
• Choosing the business intelligence tools
• Transforming insights into action plans
• Setting up the roles and responsibilities of different teams and personnel⁴

Five Reasons Why Formulating a Data Strategy Should be at the Forefront of Your Agenda

The advantages of deploying a robust data strategy for your organisation are multifold. Five of them have been listed as follows:

• Enhanced customer satisfaction: By collecting, analysing, and drawing insights from customer data, you can understand their needs, pain points, and expectations better. This enables you to design and tweak your products and services to align with the expectations of your customers. Using AI, predictive modelling, and advanced analytics, you can adopt a proactive, customer-centric approach and ensure good customer loyalty, as well as grow your pipeline of new customers.5
• Effective data management: Having a robust data strategy in place helps to make data more accessible and create more visibility internally on how the data is to be stored, transferred, and used. This enables data to be shared in a safe manner and the correct access rights given to the right parties. It avoids data duplication between business units and makes sure that the data quality is maintained, so that you can prevent the creation of data silos.
• Informed decision-making: With the right data infrastructure in place and the attainment of analytical maturity, decision-making in your organisation can be made much faster and well-informed. Critical insights and predictive patterns can emerge from properly analysing data, and this helps to drive the business strategy by making the right choices and avoiding the wrong ones that might act as blockers for growth. With decisions being made at all organisational levels leveraging accurate information, it shapes a strong data-driven culture.
• Increased profitability: By leveraging the power of data and subsequently adopting a customer-centric approach and making the right calls, your organisation can capture new market share and gain a stronger competitive advantage. This ultimately leads to enhanced revenue streams and increased profitability - reflected in McKinsey’s assertion, that data driven organisations are 23 times more likely to acquire customers, six times as likely to retain customers, and 19 times as likely to be profitable as a result.6
• Regulatory compliance and risk mitigation: A key element of a data strategy is the data governance and regulations on how data within your organisation is to be used. This tackles problems like data leakage, privacy-related matters, and mitigates other external risks. A robust data strategy helps to improve data security and limit any unauthorised data access, which leads to better risk mitigation, thereby maintaining strong data integrity.

The Best Time to Start is Now

Crafting and implementing a well-rounded data strategy can be complicated, given the ever-changing data landscape and the capabilities required to stay up to speed. While there might be delayed gratification at first, if the right tools and action plans are put in place, it is only a matter of time before your organisation can reap rich dividends and see the positive correlation of your data strategy in helping accelerate the fulfilment of your business goals and objectives and key results. Sufficient investment and strong conviction from senior management are key to bolstering organisational readiness and driving buy-in at all levels when it comes to implementing the data strategy.

In a world where change is the only constant, building a robust data strategy is pivotal to ensuring your organisation stays relevant, competitive, and ahead of the curve. Ten years ago, there was little focus on data, let alone the pressing need to have a strategy dedicated to it. Today, data is no longer a buy-product of your business, but a key driver in growing your business at scale and pace. Fast forward to ten years from now, the robustness of an organisation’s data strategy is what will distinguish great organisations from the average ones, those who stayed ahead of the curve from those who lagged, and the pioneers from the also-rans.

Sources

1. The Data Imperative, KPMG
2. What is Data Strategy, Amazon Web Services
3. What is a Data Strategy & How to Build One + Examples, Zeotap
4. Why do We Need a Data Strategy, Qentelli
5. Why do You Need a Data Strategy Now More than Ever, Data Ideology
6. The Insights Beat: The Best of Times as a Data and Analytics Leader, Forrester