Based on my experience around data and metadata, I strongly believe that in today’s business environment, understanding the value of data should be a top priority for almost any organization.
Although there are certainly other core elements that help to define organizations, I would say the three most important are people, processes and technology. What each of these elements has in common is its reliance on data -- without which, nearly any organization’s productivity would quickly come to a grinding halt. Of course, most organizational leaders would agree that data is valuable, at least in a general sense. But it takes an additional focus, and deliberate processes, to measure the actual value of data within your organization, and then set up systems that allow you to take advantage of it.
Beware the coming demographic tsunami
Understanding the value of data may seem like an academic question -- but for an increasing number of business leaders, there’s a real sense of urgency to it. This urgency is driven by the fact that workers in the Baby Boom generation are retiring in unprecedented numbers, with major implications for organizations in every sector. This trend has actually led to an entire cottage industry focused on consulting around the complex issue of knowledge transfer from retiring Boomers to their younger colleagues.
This impact of this massive "changing of the guards" is already causing dramatic changes in organizational operations and cultures. But one of the areas of impact that is often ignored until too late is the substantial amount of "tribal knowledge" (that is, metadata) regarding organizational data that retiring employees will take with them, through no fault of their own. Fortunately, forward-looking organizations are taking steps to gather this metadata that not only help to shed light on the value of data, but that can also provide a range of insights into an organization’s people, processes and technology.
Succeeding at this vital effort requires a specialized communication process, that focuses on sustained, face-to-face collaboration among the members of one’s data community -- of all ages. Such a process allows the different groups of stakeholders to collaborate around the data, including those individuals who create, use and modify it. The ultimate goal of this collaboration is to produce the metadata needed to provide context and insights around the organization’s data and its data community -- information that may otherwise be gone forever in a matter of only years.
Other surprising benefits of data valuation
Getting a clear sense of the value of data in an organization can also play a critical role in Mergers & Acquisitions (M&A) activities. Through the application of data valuation and infonomics strategies, an organization can develop a far more accurate assessment of the value of a company it is considering acquiring. This is why any review of a target organization should include a rigorous data certification process that reveals how well the two organizations’ data will mesh.
This is an aspect of mergers that, if ignored or not well understood, can end up having major negative impacts on operational efficiency and ROI. What’s more, as important as it is today, it will very likely become even more important in the near future. Many economists have projected that we are cycling into another broad economic downturn, so effective data valuation can provide organizations with much better insights into which M&A opportunities and other initiatives will best help them manage risk in a turbulent market.
As significant as those types of insights are, an even more essential benefit of understanding the value of data is in helping an organization monetize its data. By finding new ways to safely derive new insights from its operational data, a business can develop entirely new revenue streams, and at the same time, outmaneuver its competition.
My view is that one of the keys to success in any approach to data valuation is to focus on excelling at the functions that only you can do, and at least consider outsourcing the rest. No other organization is more experienced at acquiring and caring for your data than you and your people. But to reach the next level of opportunity -- safely monetizing your data -- you need to develop advanced metadata and algorithms to generate data and insights that are uniquely yours. Depending on your workforce’s current data analytics skill sets, it could be a shrewd investment to outsource that development.
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Reuben Vandeventer is President and Chief Data Strategist at Data Clairvoyance. He has been driving progress and helping to shape the data space for more than a decade, across many industries including Medical Device, Pharmaceutical, Insurance and Asset Management. As the data space has rapidly evolved over the last few years, his background in science, statistics and finance has created a robust foundation to create real economic value for organizations in new and innovative ways.