Cloud Data Management: Transformation starts with putting value on your data
Executive support is vital to any digital transformation. My last few posts have noted this as we’ve covered the vision, strategy, and roadmapping for a transformative cloud journey. “Executive support” is a vague phrase, so let’s look at it more closely: The business buys into a plan because the plan is good for business—it has value, in hard dollars.
So the transformative CIO with an ambitious digital agenda has to be able to say just how much the enterprise’s data is worth—and how that value will increase at the end of that IT roadmap.
That’s one of the hardest things to do in the cloud data management realm: quantify the value of what we do. If you can’t put a price to the data, you can’t value efforts around digital transformation. And that’s why transformative projects with six and seven figure price tags get shot down. But what if your data is worth eight, nine or ten figures?
Understanding the real value of having trusted, relevant, timely and accessible data about your business, your customers, etc., would certainly help a business make sense of the investments it makes in that data.
The two sides to the story
When I see my customers write successful proposals for major IT projects, I notice that they manage to hit both of the key arguments for investment: the efficiency gains that a new technology will bring, and the greater value its utilization will provide to the organization. It’s important to hit both notes, because your key stakeholders have different interests. Your CFO, for instance, cares a lot about the savings that a more efficient system will bring. But your CEO and other senior execs are excited about how you’ll help them hit—and exceed—their numbers.
The best pitches must address efficiency gains and new value. Sounds simple, but it’s not. Companies tend to get both points wrong. On the one hand, efficiency gains are easily quantified, but almost always overstated. On the other, value is hard to calculate, and almost always underestimated.
The value of the cloud, and almost any digital solution, relies largely on the underlying data. But despite the recent buzz that “Data is a business asset,” most companies have no idea how to value their data.
The evolving value of data
In terms of understanding the general “data as an asset” concept, a recent article in The Economist really does a great job of making the case. Its premise is that, like oil in the 20th century, data is this century’s key driver of growth and change. But, it notes, “digital information is unlike any previous resource; it is extracted, refined, valued, bought and sold in different ways. It changes the rules for markets and it demands new approaches from regulators.”
Data, after all, is not a fungible commodity. One barrel of oil is the same as another, but any two data streams contain different information, with different levels of timeliness, accuracy, etc. We lack a common way of structuring our thinking around the value of data, although I think such an understanding will, and must, emerge. The article considers the possibilities, and it should be fascinating to those of us in data management, as it helps drive forward the understanding of what data is worth.
Putting a price tag on your data
There’s a lot to glean from big thinking on where data as an industry is headed. But what do you do right now? How do you understand how “data is an asset” applies to running your business? This is hard, and every business has to look closely at its data, and at where its industry is going. And I would argue that until you can define what your data is really worth, your investment in it will likely be at an insufficient level.
Ask yourself—and your business leaders—this: If you were to sell your business tomorrow and had to list data on the balance sheet, what would be its value? How much is your data actually worth? And how much greater would that value be if your data were 100 percent accurate? How much more would your data—and your business—be worth if it benefitted from the successful completion of your proposed data strategy and IT roadmap?
That, of course, is just a first step, and a partially academic one. Generally, your company is not looking to sell itself, lock, stock and databases, tomorrow. Your transformative project is intended to drive profits from operations, not jack up a sale price. But understanding the value of data as a strategic asset, and the value of treating it as such, helps a company appropriately value the investment it makes in that data.
Up next here, we’ll look at how the journey to cloud transforms the actual role IT plays in your business. What happens when you go from being the creator of IT systems to also, perhaps primarily, being an integrator?