Demonstrating the Value of Data Governance

As organizations strive to become more data-driven, they increasingly recognize the importance of Data Governance (DG), a business program supporting harmonized data activities. However, business leaders, colleagues, and workers often express confusion about DG policies and need clarity around its value.

This article tackles this issue by exploring the top 10 ways for effectively articulating the value of DG, as demonstrated by Deron Hook, Director of Data Governance and Management at American Express. His insights at a recent Enterprise Data World (EDW) conference offer an understanding of when and how to employ these techniques through a framework based on value dimensions and other considerations.

Value Dimensions and Other Considerations

Hook introduced a framework consisting of value dimensions known as “business drivers,” which show the worth of DG with different colors. See the image below:

These value dimensions include:

• Increased revenue: Effective governance of critical data leads to higher Data Quality, reduced checking, and enhanced trust, resulting in valuable insights that generate profit.
• Decreased costs: Organizations can increase operational efficiency and be more cost-effective by allocating resources to more impactful work, such as reducing data lineage research.
• Mitigated risks: Compliance with regulatory bodies and audits requires locating and classifying sensitive data, which mitigates potential risks.
• A sustainable competitive advantage: When a culture is data-centric, the organization enhances scalability and reputation, gaining an edge over competitors.

Hook also emphasized the importance of considering other factors that impact the situation when presenting the value dimensions. He listed them as:

• Audience level: An executive will resonate with a different set of information at a higher level than a peer doing data operations.
• Maturity required: Hook pointed out that the benefit you can present differs depending on where the program is. He said, “A certain maturity level is required to provide certain statistics or metrics in a response.” (DATAVERSITY® has numerous resources, like this one, to learn about maturity models.)
• Prevalence: Prevalence expresses the difficulty in obtaining evidence to back up the business driver.
• Effectiveness: Hook assesses each technique’s messaging, assuming that DG benefits are presented appropriately.

Tailoring the messaging around DG’s value to these factors ensures maximum influence and understanding among stakeholders.

Conveying the Importance of Data Governance in the Early Stages

Gathering meaningful statistics and testimonies demonstrating the value of the services can be challenging when describing a newly established or recently restarted Data Governance program. It takes time to build a foundation and establish a history of success.

However, there are helpful techniques to generate the momentum needed to reach a higher maturity with more demonstrable program data. Hook suggested the following:

Industry Statistics: Hook suggested using industry statistics solely to support a startup Governance solution “by grabbing attention.” While this approach is effective in the early stages, it should be replaced with specific data as the DG program matures.

Other companies’ failures: Sometimes, pointing out how other competitor companies failed to mitigate risk and ended up incurring fines can spur more interest than industry statistics. While this strategy is a start, it can only go so far. Hook said, “Driving governance through fear only works a short amount of time … because no one likes fear as a motivator.”

Your past failures: Tactfully presenting your organization’s past failures and using them as learning opportunities can demonstrate the value of Data Governance in improving risk mitigation and cost reduction. Additionally, this approach can show value through maturation (see the last bullet in this section). However, Hook said getting those specific numbers can prove difficult, as teams tend to brush bad mistakes under the rug, and it is important to be diplomatic.

Future potential ROI: Presenting future potential ROI “paints a vision and illustrates potential expected benefits,” said Hook. Capturing accurate data can prove challenging as projections can lead to “unrealistic expectations or failure to capture unexpected benefits.”

However, this technique can powerfully show that “monetary value will result, from either cost savings or generating revenue,” he noted. When communicating ROI, Hook uses data from a third-party calculation to make his point.

Overall DG maturity: When sharing information about overall DG maturity, managers guide a high-level discussion about the organization’s progress – “where it started, what the industry average is, and where it is now.” Hook recommended gathering this information from several free assessments or a third-party consultant and communicating any improvement.

While some people may not see the monetary value of increased maturity, it can connect to success with use cases and gaining a competitive advantage. Additionally, as the program matures, governance managers will have access to evidence that delivers more impact, opening other techniques to show Data Governance’s value.

Communicating the Benefits of Data Governance as the Program Matures

As services are defined across the organization, managers can more easily supply statistics communicating DG’s importance. Hook presented two preferred options for those with the information on hand.

Audits: This technique works well, provided past mistakes are resolved or the company’s future risks are mitigated. However, these inspections from an oversight group, another internal team, or a third party require lots of resources. Team members must leave their DG work to prove to auditors they have done the Data Governance. Additionally, those audited need to defend their Data Governance, which can be more stressful than other ways to share the program’s importance.

Intangible wins: Others step up during a conversation to communicate they see DG’s value, say from the saved time in their work. These cheerleaders provide testimonials or anecdotes a DG manager can leverage. Hook noted that these examples may be less polished, which adds to their credibility and adds confidence and momentum for the program in the future. Be aware that some people want to see the numbers and dollars; however, intangible wins “provide business values and align activities with organizational goals,” he said.

Proving the Impact of Proactive and Optimized Data Governance Efforts

Advanced governance maturity allows organizations to use numbers to communicate their program’s value powerfully. These approaches include:

Cost savings: According to Hook, quantifying cost savings “is the easiest and most effective way to show value.” He advises turning intangible wins into tangible ones.

For example, a data scientist spends less time cleaning data due to better Data Quality serviced by the Data Governance program and adds a testimonial. A DG manager can interview the data scientist to determine the time saved and use Glassdoor PayScale, a popular platform to research salary costs freed up for that person to do more impactful work.

Although this approach does not include revenue generated by Data Governance, “it remains the most popular way to get the hard dollars,” Hook observed.

Tangible wins: The second-most impactful way to show the value of Governance calls attention to tangible wins. Examples include product optimization, speed to market, effective decision-making, or revenue-generating opportunities. 

Hook noted that people generally do not expect to realize profitable value from DG services. However, these results indicate that the DG program has value and can be sustained as a pro. On the con side, sticking with only tangible wins limits evidence to the past or present and does not provide information on future capabilities.

Monetized value: Great Data Governance leads to monetized value, showing responsibility for organizations generating cash through data acquisition, sale, or trade. “This is the dream, right?” said Hook.

This approach demonstrates high value and profitability, especially when tied to internal metrics like financial impact analysis. It is important to note that achieving these results requires a high program maturity level, which takes time to develop.

Conclusion

Effectively communicating the value of Data Governance, as suggested by Deron Hook, is vital for gaining stakeholder support and understanding. By tailoring the message to resonate with the listener, considering the program’s maturity, and using available evidence, DG directors can effectively convey the importance of DG.

Quantifying impact through specific metrics and showcasing profitability are impactful approaches. These hard numbers will become more available as organizations achieve a more data-driven state. In the meantime, articulating the value of Data Governance services will remain essential, whether a new or highly mature program.

Want to learn more about DATAVERSITY’s upcoming events, including Enterprise Data World (EDW)? Check out our current lineup of online and face-to-face conferences here.

Here is the video of the Enterprise Data World presentation: