Data as an Asset: The Value of Good Data
In 2019, it is fairly uncontroversial to argue that one of a company’s most significant assets is its data. Whether this refers to data collected from market research, through internal reporting, directly from consumers or via any other means, the strength, reliability and security of data is vital to business operations in the contemporary economy.
Below, read about some ways in which good data is essential to a successful business and see how data quality can impact a company’s efficiency, their bottom line and even their compliance with regulatory standards.
Make Decisions With Confidence
The broadest way in which data quality impacts an organization is the extent to which it enables sound, informed decision-making. Reliably sourced data at a statistically significant sample size, sanitized by adept analytical professionals is essential to fostering confidence in organizational strategies that are based on it. This in turn lowers the risk companies take on when they decide on a strategy, and it also allows them to respond with greater agility to changes in the marketplace.1
The inverse is also true: Unreliable data can undermine decisive action by limiting the confidence that key decision-makers have in the story it is telling. Despite the enormous strides being made across the field of analytics, executive confidence in data continues to be a significant issue. In fact, 84 percent of CEOs report that they are concerned about the quality of data on which they base decisions for their organization.1 Analytical leaders who can effectively bring clarity to data and compellingly communicate its insights in a way that makes it easily actionable for executives are thus among the most valuable professionals on the job market today.
Create Value From Data Insights
The goal of data-based decision-making, as with most strategic business goals, is to achieve a competitive advantage and generate value for the organization. If a strong data set is curated and handled well through all levels of an organization’s analytical chain of custody—from its collection and warehousing to its processing, analysis, visualization and communication, and finally, to its comprehension by organizational leaders and eventual impact on actual processes and decisions—the bottom-line impact it enables should be positive and significant.2
McKinsey & Company offers a helpful breakdown of three different levels at which strong data insights can bring value to an organization. They distinguish between customer-facing uses of good data ("top-line use cases") that can impact pricing and marketing decisions, internal process improvements ("bottom-line use cases") such as supply chain management and fraud prevention, and new business model development as ways in which good data can bring value to any business.2
Good Data Informs Product and Service Development
Bringing a new product or service to market can be a painstaking process. For organizations of any size, and particularly those still in or just recently advanced past their start-up stage, new product or service launches can be make-or-break moments. They can impact everything from cash flow to market valuation to a company’s ability to attract and retain investors for further growth.
One way this process can be streamlined is if products themselves are able to generate high-quality user data that can inform future innovation and development. The myriad smart objects that populate the "Internet of Things" actively and passively collect extremely nuanced information about customer behaviors. With a good data strategy in place to process this information and use it to gauge how customers use a product and what improvements they may wish to see, future launches can be set up for success.3
Data Quality Is Crucial for Mergers and Acquisitions
One of the most complicated decisions any business can face is whether to engage in a merger or acquisition. These complicated processes hinge on precise valuation of both organizations, and in contemporary mergers and acquisitions, this often includes the consideration of data as an asset to be valued. The quality of the data assets possessed by these companies can in turn have profound effects on their ultimate valuation.4
Consider the acquisition of a social networking site with vast holdings of user data. This is a prime example of the importance of good data to a corporate merger: If this data is found to be unreliable—if, for instance, it seems that users provide inaccurate contact or profile information—the value of this data as an asset could be greatly diminished, which could in turn jeopardize the entire agreement.
Data Quality Can Ensure Compliance
Consumer privacy compliance is a major trending topic in the business world, the political arena and culture broadly. As retailers, credit card companies and other business organizations report alarming data breaches,5 consumer confidence in the security of personal information threatens to decline precipitously. Regulatory bodies at the state and national level are responding to this climate by tightening restrictions on how data is handled and what disclosures about that data need to be made to consumers.6
Data quality, then, does not just refer to the type of data that is collected by an organization. Good data is data that is handled responsibly, collected in good faith and stored with an eye toward consumer security. Organizations that take the lead in establishing strong data security procedures will be better-positioned to thrive in an increasingly complex regulatory environment.
Build Your Advantage With Data at William & Mary
The Online Master of Science in Business Analytics program at William & Mary’s Raymond A. Mason School of Business is designed to sharpen your competitive edge by teaching the hard quantitative skills and strategic business competencies that define leadership in the world of analytics today. Learn about the foundational pillars of our dynamic curriculum, and explore more trending topics in the world of data analytics.
1. Retrieved on August 22, 2019, from forbes.com/sites/forbesinsights/2017/06/05/the-importance-of-data-quality-good-bad-or-ugly
2. Retrieved on August 22, 2019, from mckinsey.com/business-functions/mckinsey-analytics/our-insights/achieving-business-impact-with-data
3. Retrieved on August 22, 2019, from forbes.com/sites/bernardmarr/2019/03/13/why-every-company-needs-a-data-strategy-for-2019
4. Retrieved on August 22, 2019, from sloanreview.mit.edu/article/your-data-is-worth-more-than-you-think
5. Retrieved on August 22, 2019, from wsj.com/articles/capital-one-reports-data-breach-11564443355
6. Retrieved on August 22, 2019, from tdwi.org/articles/2018/12/21/diq-all-data-quality-predictions-for-2019.aspx