How can organizations leverage data as a strategic asset? Data comes at a high price. Businesses must pay for data collection and cleansing, hosting and maintenance, salaries of data engineers, data scientists and analysts, risk of breach and so on.
The line items add up. However, if done well, a thriving data-driven organization can reap huge rewards. Controlling for other factors, Erik Brynjolfsson et al. from MIT’s Sloan School of Management found that data-driven organizations have a 5-6 percent higher output and productivity than their less data-driven counterparts. They also had higher asset utilization, return on equity and market value. Other research shows that analytics pays back $13.01 for every dollar spent. Being data-driven pays!
To be data-driven requires an overarching data culture that couples a number of elements, including high-quality data, broad access and data literacy and appropriate data-driven decision-making processes. In this article, we discuss some of the key building blocks.
Single source of truth
A single source of truth is a central, controlled and “blessed” source of data from which the whole company can draw. It is the master data. When you don’t have such data and staff can pull down seemingly the same metrics from different systems, inevitably those systems will produce different numbers. Then the arguments ensue. You get into a he-said-she-said scenario, each player drawing and defending their position with their version of the “truth.” Or (and more pernicious), some teams may unknowingly use stale, low-quality or otherwise incorrect data or metrics and make bad decisions, when they could have used a better source.
When you have a single source of truth, you provide superior value to the end user: the analysts and other decision makers. They’ll spend less time hunting for data across the organization and more time using it. Additionally, the data sources are more likely to be organized, documented and joined. Thus, by providing a richer context about the entities of interest, the users are better positioned to leverage the data and find actionable insights.