The word “data” comes from the Latin datum: (thing) given. What exactly can data give us - and how do we make the most of this gift? With questions swirling about privacy, AI ethics, and the future of the world of work as we know it, how do we work with data while keeping our values in mind? Companies need to use data effectively to maintain a competitive edge, and in a recent report, Isabelle Comyn-Wattiau, Professor of Information Systems, Decision Sciences and Statistics and the ESSEC Chaire Stratégie et Gouvenance de l’Information, alongside corporate partners Covea and Devoteam, outline a barometer to assess companies’ data strategies.
They created a questionnaire to explore how companies use data, getting results from 116 companies. They derived several key findings about how companies value data, how they manage it, and their next steps.
To explore companies’ data strategies, the researchers sent out questionnaires to French companies at the beginning of 2023. Among the 116 participants were business leaders, IT managers, data managers, and other leaders, representing a variety of sectors and company sizes.
Data as a source of value
Companies are investing both human and technical resources into managing data - so it needs to provide a return on investment. Dr. Comyn-Wattiau suggests a three-pronged approach for evaluating data value:
Its value: what does it bring to the organization?
Its cost: what are the costs over its lifecycle, from acquiring it, preparing it, stocking it, using it, sharing it, and disposing of it?
Its risk: what are the operational, strategic, and legal risks of using it?
Their results found that today’s companies are considering these factors, and that their main concerns are:
Getting the most they can out of data
Making sure they conform to laws and regulations, like Europe’s GDPR law
Minimizing the risk involved
Minimizing the costs involved
In particular, companies noted that they are able to improve processes, optimize tasks, and reduce costs thanks to the use of data. Indeed, thanks to their use of data, a third of the organizations surveyed (34.2%) found that they could expand their product/service range, and 26.3% were able to boost their sales figures. The bigger the company (in terms of revenue or budget), the more emphasis they place on the value of the data, with less concern for minimizing costs: ⅔ of companies surveyed are aiming to further optimize their use of data . Companies of all sizes place equal importance on conforming to legal requirements.
Data governance in French companies
But it’s not enough to use data - it also needs to be properly handled, which is where data governance comes into play. While there’s no exact consensus on what “data governance” entails, it’s generally accepted that its main objective is to maximize value while minimizing costs and associated risks. Data and information governance can be implemented at different levels: strategic, intermediate, and operational. It relies on three pillars: people, processes, and technologies. Perceptions vary, with 36% considering it a strategic approach to maximize data value, 24.6% defining it as a framework describing principles and rules, 18% emphasizing operational data management rules, and 14% viewing it as a subset of corporate governance. Given this, it’s not surprising that a large chunk of respondents identified it as something their organization needed to improve on (40%) and that it was a key strategic subject (35%).
The researchers also explored the level of companies’ data governance, separating it into four sections:
Initial (40.4% of companies): minimal level of documentation and regulatory control
Managed (31.6% of companies): data governance is enacted in certain strategic areas
Defined (19.3% of companies): data governance is present for all areas of the company
Optimized (8.8% of companies): best practices for data governance are used across the company’s activities (such as maintaining a data catalog, monitoring data quality, and managing data security)
Since data can play a crucial role in making a strategy successful, data governance plans are critical, and the companies surveyed tended to agree, with almost half (44.7%) noting that they’re a key part of the strategy and over half (56.1%) adding that data governance is seen as a strategic tool by leaders. The implementation of Europe’s GDPR or the arrival of a data expert as an executive tended to be the kick-off to data governance being given heightened strategic importance.
With so many companies demonstrating immature data governance plans yet recognizing the important role of such plans, it’s a clear area for improvement.
A company’s data dream rests upon four pillars:
Organizational: This is the most critical part of building a data strategy, as it includes defining the key jobs that will handle data such as data owners, data managers, and Chief Data Officers. It also includes structuring the data strategy and establishing project reporting and budget management. Most companies surveyed place this under the purview of their IT department (55.3%), but other departments tend to be involved as well: for example, the risk and compliance department manages data-related risk in about 30% of companies.
Human capital: In addition to the roles outlined, employees add to the strategy through dialogue between key stakeholders. While half of employees surveyed noted that there was excellent communication between major players, over 60% also identified the diffusion of a strong data governance culture as an axis for improvement at their company, and half also noted that increased training around these topics and involving employees in decision-making would be useful.
Technology: the infrastructure and tools put into place and used at the company to deal with data throughout its lifecycle.
Financial: all that concerns money, from the company’s budget and how it’s structured to the profitability of the data strategy. While many respondents didn’t necessarily all have the information required to answer, only 9% of those that did responded that more than 10% of their company’s IT budget was devoted to data - suggesting that many companies dedicate rather modest sums to their data ambitions. However, around a third responded that while there were currently insufficient sums, the budget was growing.
Artificial intelligence (AI) and social impact
It’s impossible to have a conversation about data without acknowledging the role of AI. While this study was conducted in early 2023 and it’s a quickly evolving landscape, most companies seemed to be using AI in some capacity already, with only just under a quarter (22.8%) saying that they didn’t use AI at all. However, most companies were still at the beginning of their AI journey, with undercooked AI strategies, and it was primarily the large companies that had more developed AI uses.
Data can also be used for good - and indeed, a third of companies surveyed already use data to achieve their environmental, social and governance goals. However, around half of the companies noted that for the time being, there wasn’t much discussion or action on the topic.
For both AI use and social impact, there’s room for growth when it comes to making the most of current technologies.
What’s next for data strategies in French companies?
Data strategies seem to be in a nascent stage in French companies. When asked what they consider next steps, participants identified primarily organizational factors: clarifying roles and responsibilities, the commitment of the C-suite, training employees, reinforcing governance structures, increasing transparency, and boosting communication, alongside increased financial resources. On the flipside, a lack of dedicated employees, resistance to change, an ill-suited corporate culture, insufficient finances, and a lack of communication and commitment were identified as the main barriers to expanding the data strategy. These findings suggest that human and organizational factors are key for taking a company’s data dreams to the next level.
Taken together, French companies appear to be taking their first steps towards building a data strategy, with room for growth. Companies seeking to make better use of their data need to identify their key institutional players and their specific roles and responsibilities, and ensure that these players are properly trained and encouraged to communicate with one another to prevent information silos. Leaders should build a corporate culture receptive to data and change, and ensure that this commitment comes from the top. With data a key part of maintaining a competitive advantage today, French companies need to work on their strategy - and this barometer is one useful way of measuring progress.