The importance of Data Governance in the Era of Digital transformation

As digital transformation evolves, we need to gain maximum insights to develop new product ideas and find the best ways to interact with consumers. This leads us to collect more data to obtain these insights and consequently achieve continuous improvement in business data governance.

However, this increase in data collection also presents challenges, as highlighted by Stephen Hendrie, senior director and chief information security officer at Hershey’s: “We have to be very proactive in data protection and maintaining the trust consumers have in our company.” And he is not alone; many other executives recognize the direct link between effective data use and improved business outcomes, as well as the challenge of data governance.

In this article, we will address data governance and its principles, how to implement it, the main challenges faced by executives, trends, and present Netflix as a successful case of data governance.

What is Data Governance?

Data Governance is a set of processes, policies, standards, and procedures that ensure the effective management, quality, security, and proper use of data within a company. It involves defining roles and responsibilities, access and security policies, data standardization, among other aspects related to data management and control.

The importance of Data Governance

A recent survey conducted by the Havard Business Review Analytic Services revealed that over 77% of the 460 global executives interviewed consider data strategy crucial for the success of a thriving business. This perception has led many to compare data to the new oil, due to its transformative potential. In fact, data monetization models are driving up the market value of the world’s six most valuable companies.

However, developing effective data strategies is not a simple task. The survey found that many companies are struggling to implement modern data governance policies essential for protecting and managing confidential information. Of the respondents, 82% stated that data protection and control are becoming more challenging due to new risks and complexities arising from digital business transformation.

Furthermore, almost 6 in 10 companies reported that their data governance approach does not cover the entire organization, leaving confidential information vulnerable in some departments and divisions, subject to data breaches, loss of business, and regulatory fines affecting reputation and financial results.

This level of susceptibility can leave companies vulnerable to data leakage scandals, resulting in reputation damage, loss of customer trust, and even legal implications. An example is the case of the political consulting firm Cambridge Analytica.

Example

In 2018, the company was accused of illegally obtaining personal data from millions of Facebook users without their consent and using it to influence elections in the United States. This scandal resulted in a huge negative impact for Facebook, leading to government investigations, substantial fines, and a sharp drop in the company’s market value.

The lack of data governance left both Facebook and Cambridge Analytica exposed to serious consequences. This case highlights the importance of data governance in protecting user data privacy and security.

Despite the challenges and scandals that some companies face, there are others that stand out positively. The Havard Business Review survey identified a small group of companies with comprehensive data policies that are outperforming their competitors and gaining competitive advantages in their respective markets.

The message to other organizations is clear: data governance should not be seen as a concern exclusive to IT specialists. Now, it should be at the top of the priority list for the C-suite, business line managers, and everyone involved in the company’s success.

What are the principles of data governance?

Data governance principles represent essential pillars for efficient corporate data management. When structuring a policy, it is necessary to customize it according to the objectives and needs of your company.

Microsoft, a reference in data governance, identifies five fundamental principles that can drive successful data governance implementation. Paying attention to these five principles can be a good way to ensure an effective approach, see what they are:

Responsibility

Clearly define the roles and responsibilities of each person involved in data management, ensuring that everyone knows who is responsible for what.

Transparency

Policies, processes, and practices related to data governance should be transparent and understandable to all involved, promoting trust and collaboration.

Quality

Ensure data quality by defining standards and procedures to ensure the accuracy, relevance, and timeliness of information.

Standards and Guidelines

It is essential to establish consistent standards and guidelines to guide all stakeholders, developed by the data governance team, aiming to implement and define criteria for data use throughout the organization.

Data Management

The appointment of a dedicated data manager, also known as a data steward, ensures effective application and proper protection in data governance. The data manager is responsible for reporting to the data governance team and enforcing established standards and guidelines, ensuring their ongoing compliance.

How to implement good Data Governance?

Implementing data governance involves several important steps. A tip is to think comprehensively but start with concrete actions. Therefore, it is essential to document your high-level goals, always keeping in mind the specific objectives and project milestones. Here are the steps for this implementation:

Establish a Data Governance Framework

Define a data governance framework that includes a framework, policies, processes, standards, and procedures to manage data effectively and securely.

Create Roles and Responsibilities

Identify and assign roles and responsibilities to stakeholders involved in data governance, such as the data governance committee, data owner, data administrator, among others.

Assess the Current State of Data

Conduct a comprehensive assessment of the current state of data in the organization, including data quality, integrity, security, and compliance.

Develop Policies and Procedures

Use these resources to manage different aspects of data, such as data quality, information security, data privacy, among others.

Implement Supporting Technology

A good ally is to rely on tools and technologies that support data governance, such as master data management (MDM) systems, data quality tools, information security solutions, among others.

Provide Training and Awareness

Provide training and awareness to employees about data governance policies, processes, and practices, ensuring that everyone understands their importance and how to contribute to their implementation.

Monitor and Evaluate

Establish processes for continuous monitoring and evaluation of data governance to ensure that policies and procedures are being followed and to identify areas for improvement. The implementation process can be complex and time-consuming, but the benefits of effective data governance are significant and contribute to the overall success of the organization.

Benefits of Data Governance

The success of a company depends, in part, on good data governance. See what the executives responded to Havard Business Review about the greatest benefits of data governance:

Challenges in Implementing Data Governance

According to the Havard survey, the significant increase in data volume is cited as one of the biggest challenges in data governance, as reported by 53% of executives. However, this is not the only one; it is possible to find a series of obstacles, get to know them and learn how to anticipate and deal with each one to succeed in your implementation:

Lack of Awareness and Support from Top Management

Without active support from top management, it can be difficult to obtain the necessary resources and commitment to effectively implement and sustain data governance.

Organizational Complexity

Large and complex organizations may face additional challenges due to the diversity of data, systems, and processes, as well as resistance to change in different parts of the organization.

Lack of Resources and Expertise

Successful data governance implementation requires adequate financial, human, and technological resources, as well as expertise in areas such as data management, information security, and regulatory compliance.

Technical Complexity

The technical complexity of data systems, including integration, interoperability, and data quality, can pose significant challenges to data governance implementation.

Resistance to Change

Employees may resist change regarding new processes, policies, and procedures related to data governance, especially if it disrupts their work routines or challenges their perceptions of data ownership and control.

Compliance Challenges

Complying with data privacy regulations, such as GDPR, LGPD, and others, can be challenging, especially for organizations operating in multiple countries or jurisdictions with different regulatory requirements.

Costs and Return on Investment

Implementing data governance may require significant investments in terms of time, money, and effort, and it may take time to demonstrate tangible return on investment.

Overcoming these challenges requires a firm commitment from top management, a multifaceted approach that addresses technical, cultural, and organizational issues, as well as a long-term vision and a mindset of continuous improvement.

Trends in Data Governance

In the field of data governance, several trends are emerging to address current challenges and prepare organizations for the future. Here are some of the main trends:

Automation and Artificial Intelligence

The use of automation and artificial intelligence is becoming increasingly common in data governance, helping organizations automate repetitive tasks, identify data quality issues, and make faster and more accurate decisions.

Cloud Data Governance

With data migration to the cloud, data governance is becoming an even greater priority as organizations seek to ensure data security, privacy, and control in cloud environments.

Unstructured Data Management

With the exponential growth of unstructured data, such as documents, emails, social media, and other digital content, organizations are looking for ways to manage and govern these data effectively.

Blockchain and Distributed Technologies

Blockchain and other distributed technologies are being explored as means to ensure data integrity, security, and transparency, especially in sectors such as finance, healthcare, and supply chain.

Advanced Metadata Management

Metadata management is becoming increasingly sophisticated, allowing organizations to capture, manage, and utilize metadata more effectively to understand and govern their data assets.

Real-Time Data Management

With the need to make real-time decisions based on constantly changing data, real-time data management is becoming a priority for many organizations, requiring agile and scalable approaches.

Transparency and Accountability

There is a growing emphasis on transparency and accountability in data governance, with organizations seeking to increase visibility and accountability regarding data use and management.

These trends are shaping the future of data governance, driving innovation and new approaches to address challenges and opportunities in organizational data management.

Data Governance and Digital Transformation

Since at least the 1980s, companies have been engaged in digital transformations, coordinating, automating, and outsourcing their productive activities. During the Covid-19 pandemic, virtual interactions replaced physical ones out of necessity. Some of these changes were simple, such as converting analog processes to digital ones. In other cases, companies changed their ways of working or their products and services.

However, amidst all this transformation, something new and fundamental emerged: companies can reap great benefits by digitizing their operations using technology and data governance to enhance processes.

In an interview for a Data Governance research, Jay Cavalcanto, vice president of technology, design, and engineering at Exelon, stated that digital transformation is fundamentally changing the nature of work, because, according to him: “For a long time, business content was created within an organizational network using fully controlled devices. Today, business documents and data are being created with cloud applications on a variety of laptops, smartphones, and tablets”.

As data sources and the amount of information increase, it becomes increasingly important for business systems used to create this information to have integrated capabilities to ensure data security, compliance, and record retention. Thus, data governance provides the necessary foundations to drive and sustain the digital transformation of organizations, it is inseparable to think about digital transformation securely without thinking about data governance.

Netflix and Data Governance

A success story of a company that uses data governance is Netflix. The video streaming company not only revolutionized the way we consume content but is also recognized for its effective data governance.

Netflix collects a large amount of data from its users, from viewing history to genre and language preferences. This data is used to personalize the user experience, recommend relevant content, and inform business decisions.

Data governance at Netflix is crucial to ensure that this data is managed efficiently, securely, and ethically. The company implements strict privacy and security policies, ensuring the protection of user data. Additionally, Netflix invests in advanced data analytics and artificial intelligence technologies to extract valuable insights from its data and continuously improve its content offering.

Thanks to its data governance, Netflix is able to offer a highly personalized experience to its users, increasing engagement, loyalty, and customer satisfaction. Moreover, the company uses data to make strategic decisions, such as producing original content and expanding into new markets.

In light of the above article, it is clear that digital transformation can only be effective and sustainable if accompanied by robust data governance. Data governance not only protects company data but also ensures its quality, integrity, and compliance, providing a solid foundation for informed decision-making and continuous innovation.

We invite you to take the next step towards a successful digital transformation. Contact our experts to learn more about how we can help your company shape the digital future of your business and ensure its long-term success.