The Importance of Data Governance in Digital Transformation

Collecting, storing, and analyzing data has turned information into a valuable asset that enables organizations to be more agile and competitive in a global business environment. However, you can only use this information for digital transformation if you can manage it effectively.

While data management is critical to an organization's success, more is needed. A management system should be in place to set the rules for every activity and break down data silos across different departments. It must provide answers about data ownership and solutions to the growing need for big data and its various benefits.

Now is the time to create a data governance framework if you have decided to do so. Such a structure should oversee data standards and delegate necessary roles and responsibilities within your organization to the business ecosystem in which it operates. But you must choose one that suits your organization and its future business goals, models, and strategies. In this, we’ll illustrate the data governance concept and its role in digital transformation.

Data Governance in Digital Transformation

Data Governance plays a crucial role in digital transformation by ensuring that an organization's data is accurate, reliable, and compliant with industry regulations. It helps establish policies, procedures, and guidelines for the management, use, and protection of data assets, while also providing oversight and accountability to ensure compliance. This enables organizations to make data-driven decisions, improve operational efficiency, and gain a competitive advantage in the digital age.?

Furthermore, Data Governance helps organizations to mitigate the risk of data breaches and other security threats, as well as ensure that data is appropriately used and protected by privacy laws and regulations. In short, Data Governance is essential for organizations to unlock the full potential of their data assets and achieve their digital transformation goals.

Data Governance Importance

In support of their transformational initiatives, virtually every organization has implemented elements of a data governance framework. By 2026, the data management market will be worth $136.4 billion, up from $1.81 billion in 2023.

Data is used by 48.5% of Fortune 1000 companies for innovation, according to a McKinsey survey conducted in 2023-24. Additionally, data-driven businesses use structures to manage data to streamline processes and growth plans. In today's business environment, it is crucial for any company looking to gain an edge.

By implementing a data governance framework, you can ensure that your data is clean, compact, and consistent. The result is better analytics, better security, and better compliance.

Without a data governance structure, managers, team leaders, or line employees make crucial decisions based on outdated, inaccurate, or limited data. According to a McKinsey survey, about 30% of an organization's time is spent on non-value-adding tasks due to poor data quality and availability. In addition to losing out on data-driven opportunities, companies waste resources without quality governance.

Management programs generally fail to create value. Top management often needs to be aware of data governance's potential for value creation. As a result, the program becomes a set of policies and guidelines relegated to the support function performed by the IT department and not universally applied, making data-driven initiatives equally ineffective.

Steps to Build a Successful Data Governance

Keep the following data governance principles in mind to ensure a successful implementation.

1. Accountability

Data governance will be pointless, dumb, and useless if no one takes ownership of the problem. Throughout the organization, business leaders must implement accountability. If only one department is responsible for understanding the problem--for example IT--other business leaders may begin to view data governance as something only IT needs to understand.

Tip:

Form a cross-functional data governance committee comprising representatives from each department, including upper management, to guarantee accountability across the organization.

2. Regulatory laws and regulations

To be successful, any data governance program will need to comply with uniform rules and regulations. This protects data and ensures all applicable external laws are followed when processing it.

Tip:

To comply with regulations and avoid penalties, firms should document the origin of data assets and associated access controls. Underinvestment in governance exposes organizations to real regulatory risk--which can be expensive.

3. Data administration

Data governance is essential for the effective management of your company's data. A dedicated data administrator ensures proper accountability for your company's data.

Tip:

By providing data assets that meet desired quality thresholds, you can optimize staff performance.

4. Data quality standards

To make informed business decisions, companies need to use high-quality and reliable data. However, you would be surprised how few companies can fully trust their data.

Tip:

Develop a common set of data quality standards that will be used to ensure that data quality governance is assessed and documented.

The Future Ahead?

Shortly, data governance will become increasingly important in digital transformation as organizations continue to rely on data to drive their operations and make strategic decisions. As the volume and complexity of data continue to grow, the need for effective governance practices will become even more critical.?

By 2025, organizations will likely implement more advanced technologies such as Artificial Intelligence(AI), Machine Learning, and big data analytics, which will require robust governance frameworks to ensure data quality, security, and compliance.?

Additionally, with the increasing focus on data privacy and regulations such as GDPR, organizations will need to have in place strict data governance policies to ensure they are in compliance and can avoid costly penalties. Overall, this will be a crucial enabler for organizations to fully realize the potential of their data assets and achieve success in their digital transformation initiatives.

Opportunities in Digital Transformation

The digital transformation of businesses has created a wealth of opportunities for companies to leverage their data assets to drive growth, improve efficiency and gain a competitive edge. However, to fully capitalize on these opportunities, organizations must have robust data governance practices in place. In 2023, data governance will be a critical component of digital transformation, as it ensures that an organization's data is accurate, reliable, and compliant with industry regulations.?

By implementing effective data governance, companies can ensure that data is properly used, protected, and shared across the organization, enabling them to make data-driven decisions, streamline operations, and gain a competitive advantage.

Conclusion?

Data governance is critical to delivering value through analytics, digitalization, and other transformational opportunities. You will succeed much faster by transforming your thinking about data governance from a compliance requirement to a strategic discipline and incorporating it into your day-to-day operations.

Gyan Consulting helps organizations establish data governance strategies and frameworks. We use a customer-centric approach, ensuring that the strategy is developed based on what people are already doing, rather than dictating how things should be done.