Data governance, which has gained substantial visibility in the last several years, continues to become increasingly important.
Author Mike Wheatley described the situation aptly in a Silicon Angle article, emphasizing that data requires the right policies and procedures since it is such a crucial component of our information economy. Forbes contributor Barry Murphy emphasized the key role information plays, noting that businesses can derive value from a wide range of sources, including online transactions, social media posts, patents and the proprietary information that organizations hold.
As the phenomenon of Big Data proliferates, firms have access to ever-increasing amounts of information, the author noted. As the cost of storage plummets, companies can easily become complacent and rack up vast amounts of information.
Impact on buy-side
Businesses – and especially those in highly-regulated industries such as the buy-side – need data governance even more these days, as keeping their client data secure is of paramount importance. There are many other reasons why institutions should establish a proper framework of policies and procedures, including cost reduction, more effective risk management and better-informed decision making.
Individuals who want to champion data governance initiatives at their institutions should formulate a plan that will increase their odds of achieving their goal. Building a bullet-proof case for why a buy-side firm should invest time and energy into setting up an ideal framework of information policies and procedures can mean the difference between success and failure.
Dig deep with an assessment
One good place to start is undergoing a comprehensive assessment of a company’s data governance practices. Doing so can help provide a much more helpful picture of what is going on.
By conducting one of these evaluations, an organization can determine where the biggest problems lie and where to go to generate the largest improvements. What might be even more important to getting others on-board for data governance initiatives is uncovering opportunities to drive results that would be salient to key decision makers.
For example, operational staff at buy-side firms may not be concerned with data governance if they don’t know how it will impact their day-to-day activities. Alternatively, those working in business development may pay little heed to these information policies and procedures if they don’t know how such a framework would impact their sales and marketing.
Once data governance champions have either done an assessment or otherwise surveyed the situation, they might want to promote these frameworks by emphasizing the benefits that are most-easily noticeable: revenue and expenses.
Building a case for data governance: Cutting costs
Well-formulated information policies and procedures can help a company trim costs in many ways. Simply keeping track of which data is current – and decommissioning information that is not – can generate cost savings.
In addition, higher data quality can help place downward pressure on expenses by lowering the time and expense that goes into reporting. If a buy-side firm generates two reports with conflicting information, this situation can cast doubt on the accuracy of the process used to create these documents.
Staff members will need to take the time to double-check the important information if this situation crops up. Data champions can easily point to these scenarios when advocating for the right framework of policies and procedures.
Buy-side firms can potentially improve their top-line by having accurate information. Incomplete and inaccurate data can undermine sales and marketing by creating poorly-informed initiatives. For example, institutions can miss out on opportunities with existing and potential clients as a result of not having the right information.
To fix this problem, data specialists and individuals more used to business objectives – such as marketing staff – should work together to identify and then address the root cause of the inaccurate information.
Bettering risk management
Institutions with more evolved data governance frameworks can have greater faith in the accuracy of their risk management efforts. When buy-side firms are measuring the various types of risk that could impact their investment activities, having reliable underlying data is of the utmost importance. To ensure that the quality of this information is high, companies must establish the proper controls, monitoring and alerts for their data.
In addition to more reliably measuring the various risks that are inherent to investment, buy-side firms can reduce the odds of reporting inaccurate information to regulators by setting up the proper data governance framework.
If data champions want an easy way to convince their coworkers of the importance of data governance, they can point to existing regulations and emphasize how crucial it is to supply correct information to government agencies.