The impact of poor data governance can be wider-reaching than you imagine. It doesn’t matter how much data you’re able to gather and organize if the quality of your data insights is low.
Today, we’re talking about how to optimize your approach to data management and make sure you’re getting the information your organization needs from your new enterprise software.
What is Data Governance?
Each organization might have its own unique definition of data governance, but the goal is always the same: to make sure that data across an organization is of the highest quality possible and that information is processed according to pre-defined standards.
Without data governance policies in place, companies can encounter multiple risks, such as:
• Lost business opportunities
• Performance issues
• Excessive operating costs
• Less accurate decision-making
• Cybersecurity risks and data breaches
On the other hand, when data governance is a priority, organizations can experience many benefits, including:
• More confident decision-making
• Improved overall data quality
• Increased capability to meet regulatory requirements
• Increased profitability
• Higher staff productivity
Getting there isn’t always easy, though. In your quest to optimize your data governance policies, it’s easy to get off track. Let’s take a look at what could happen if your team fails to manage its data correctly.
We have multiple software expert witnesses available for provision of reports, depositions, and testimonies.
5 Risks Organizations May Experience Without Data Governance
1. Lost Business Opportunities
Does your business currently have the capacity to spot industry trends? Can you predict when and if a certain digital technology is going to become popular, and can you act on that knowledge accordingly?
When you have a robust data governance framework in place, it’s easier to use your enterprise software to monitor what’s going on in the niche around you. You’re more connected and competitive. You’re less likely to miss a new product launch, an untapped opportunity, or a feature that your customers are asking for.
2. Performance Issues
Just as it informs every aspect of your business, data also contains details about how your employees are working.
When you have visibility into every facet of your operations, you can easily spot challenges of organizational communication. Then, you can take action to reduce the fallout as much as possible.
Without a strict data governance strategy in place, you could lose track of performance and productivity records. How will you know which equipment is working and which ones need maintenance? What about operational siloes, bottlenecks, and conflicts that are keeping your teams from doing their best work?
3. Excessive Operating Costs
When maintenance and performance issues are allowed to go unchecked, your company could be losing money without even realizing it.
Once you create a plan to collect, store, and clean data in an integrated ERP, CRM or SCM system, it becomes easier to see where your unnecessary costs are occurring.
This step is even more important for companies that practice lean manufacturing. These companies are trying to conserve as many project-based costs as possible, including overhead. To do so, they focus on reducing waste, generating customer value, and continuously improving their processes.
With access to clean and reliable data, you can identify areas of excess and make changes to reduce and limit them.
4. Less Accurate Decision-Making
As a business, nearly every decision you make should be rooted in evidence.
In the era of Big Data and the Internet of Things (IoT), it’s easier than ever to access information about your business, partners, employees, and customers. It’s what you do with that data that counts. If you aren’t storing and managing it correctly, the information could become inaccurate.
For instance, say you’re creating a sales forecast based on figures from the past six months. You plan to look at which products or services have sold the best and ramp up production in those categories. What would happen if you discovered that the information you’re working with is incorrect?
It’s never smart to make a budgeting decision based on inaccurate information. Doing so could mean over-investing in inventory that’s underperforming, or you might not put enough money into a sector of your business that has potential.
You need those numbers to be as correct and precise as possible, especially when so much is at stake.
5. Cybersecurity Risks
According to one report, more than 4,100 publicly-disclosed data breaches occurred in 2022. As a result, around 22 billion records were exposed. This isn’t even counting all the private branches that weren’t reported.
(f you find yourself in a situation that requires guidance in this area, software expert witnesses at Panorama Consulting, can provide invaluable expertise.)
When your business doesn’t have a firm grip on its data, sensitive or confidential files could become vulnerable. Weak data policies open your company up to a host of cybersecurity issues, allowing prospective hackers to access some of your most classified information.
Not only should the data itself be secure, but so should access protocols. Together with your team, set protocols around authorizations and permissions to make sure that only certain, pre-vetted users have access to your ERP system.
We recommend having a recovery plan in place that you can implement if a breach still occurs.
Limit the Impact of Poor Data Governance
It’s hard to grasp the value of accurate data until you realize you don’t have it. At first, you might not be able to put your finger on why your organization is losing money, time, productivity, and reputation. Yet, it will eventually become evident if data is to blame.
The impact of poor data governance extends into nearly every facet of your organization. If you don’t have a strategy in place to ensure that all your insights are relevant, timely, and exact, we can help. Contact one of our ERP implementation consultants to learn why data matters, and how to create a plan that works.