Building a Data Strategy: Aligning Data With Business Goals for Maximum Impact

Organizations create and manage huge amounts of data; data with real value to improve their day-to-day and long-term operations. The extent to which this value is realized depends greatly on the organization having a clear plan on how it is going to manage, analyze, and use it effectively. This is where a data strategy becomes an essential part of an organization’s data management practices.

A considered data strategy aligns with the organization's business (or social) objectives, and as such, is calibrated to ensure that the way data is used supports the success of the enterprise. Where this is not the case, data operations can be pulled in a different direction from the stated objectives of the organization at large, creating problematic behavior and conflicts.

In this article, we will explore what defines a data strategy, why it matters and the process to follow in creating an effective strategy for your organization.

What Is A Data Strategy?

A data strategy is a comprehensive plan that outlines how the organization plans to collect, manage, analyze, and use data to achieve its business objectives. It should, as a minimum, state how data-related activities are linked to the achievement of the wider organizational objectives – if this is not included, then the data strategy has been developed in isolation and may not be helpful.

Key components of the Data Strategy include:

• Business Alignment: a record of how data initiatives relate to achieving wider organizational goals/

• Data Governance: a set of policies covering data quality, security, and compliance with legislation.

• Technology and Tools: identification of any platforms or software that will be employed to analyze and manage data.

• People and Processes: definition of the roles and responsibilities of people involved and processes required to bring the strategy to action.

Why Is A Data Strategy Important?

Without a data strategy, organizations risk underutilizing one of their most valuable assets, also falling foul of legal requirements (such as GDPR, HIPAA, and CCPA), and incurring fines or reputational loss.

Some of the key risks are as follows:

• Inefficiency: poorly managed data usually leads to siloed approaches to data collection, storage, and analysis creating the ‘multiple versions of the truth problem’ and associated rework and cross-checking. Similarly, any data-related tools procured in a piecemeal fashion may go under-used, creating a reduced return on investment. A data strategy identifies an organizational-level approach to data management and tooling, mitigating this risk

• Compliance Risks: rules and regulations that cover the storage, transfer, and use of data are growing ever more numerous and their interaction across states and countries creates a complex picture that can be hard to navigate. Furthermore, bad actors are constantly innovating in their approaches to breaching data and a lack of coordination in tackling these risks creates weak points in the organization’s security posture. A data strategy should consider how rules and regulations in the scope of the organization are identified and monitored and should declare the people and processes responsible for this activity at an organizational level. From here, clear policies for data usage can be defined. Similarly, there should be a business owner responsible for data security who develops policies and processes for mitigating risks of unauthorized access to data.

• Missed Opportunities: imperfect information made available to business leaders can lead to impaired decision-making as these are based on incomplete or unreliable data. This manifests as both reduced internal effectiveness (opportunities to grow, be more efficient, or improve customer experience are missed) and lost competitive advantage (competitors using data more effectively can respond better to consumer trends and global events). A data strategy identifies how its data assets will be maintained to maximize accuracy, validity, scope, and availability so as to support business objectives. It will identify the people and processes responsible for this maintenance on an ongoing basis.

Steps To Build A Data Strategy

There are several steps involved in creating a data strategy, each designed to align data management and practices with the achievement of organizational goals.

1. Define Business Goals:

   What are the key outcomes the organization seeks to achieve and how can data support these outcomes?

   
   

   Example: A healthcare provider seeking to reduce readmission rates needs to be able to measure this headline rate, as well as quantify the actions taken that impact readmission and capture quantitative patient experience data for text mining. In this way, the organization can identify trends, optimize treatment and care plans, and learn from patient feedback.

   
   

2. Assess the Current Data Landscape:

   Data Assets: What is currently available? Is it accessible, accurate, valid, and complete? Technologies: are existing tools capable of effectively managing and analyzing data? Processes: are existing processes effectively managing data and are these scalable if required?

   
   

   Skills: do employees have the required skills and expertise to implement the strategy?

   
   

   Example: A retail company evaluates its data landscape and discovers its customer data is scattered across several CRM systems, making consistent customer engagement challenging. Additionally, as each system captures different customer attributes, it is very difficult to analyze and segment the customer data for marketing purposes.

   
   

3. Prioritize Use Cases:

   Not all data initiatives will have an equal impact on the business, so prioritizing those with the maximum potential business impact is essential, and so, the data strategy may contain a high-level roadmap identifying how the strategy will be implemented over time b.

   
   

   Example: A financial services company determines that reducing risk in relation to fraud is its highest priority as penalties are high in the industry. Once on a sure footing, it is better placed to confidently seek new business and onboard new customers.

   
   

4. Establish Data Governance:

   Data governance is the framework for ensuring data quality, security, and compliance with legislation. It includes the policies which define how data will be collected, stored, and used. It identifies the roles and responsibilities in relation to data stewardship and identifies those members of the organization with accountability. Data standards, as are mandated by both regulations and best practices, are declared (or referenced elsewhere) and assigned to data stewards.

   
   

   Example: An organization implements a framework for data governance to ensure it is complying with GDPR. As such, the document references policies for anonymizing personal data, and procedures by which customers can request access to their personal data, and identifies senior members of the organization to form an oversight group to meet regularly to review risks and ensure policies and procedures are being followed.

   
   

5. Invest in Technology:

   The data strategy can be more effectively implemented when complemented with the right selection of tools and technologies. Those required are determined with reference to the business objectives. This can include data warehouses and data lakes, analytics tools, data integration tools and platforms, data quality, and master data management (MDM) tools.

   
   

   Example: An e-commerce company that wants to provide a highly tailored customer experience with real-time product recommendations determines it must invest in a cloud-based data lake in order to store large volumes of customer behavior data, such as browsing history. This is integrated with a real-time analytics platform to deliver personalized product recommendations back to the customer as they browse, increasing sales.

   
   

6. Build a Data-Driven Culture:

   A successful data strategy implementation requires sufficiently skilled people who understand the importance of data and advocate for it. The culture starts at the top of the organization and can be undermined when senior leaders merely speak to the importance of data but do not use it themselves. Thus training, encouraging collaboration, celebrating wins associated with effective data use, and strong leadership are essential elements of developing this culture.

   
   

   Example: a manufacturing firm introduces a “Data Champion” program where employees interested in data are given advanced training in analysis tools to help them develop the use of data insights within their functions. The champions then lead efforts within their teams, helping develop this culture at a local level.

   
   

7. Measure and Iterate:

   A data strategy is not a one-off exercise designed to produce a document that then sits on a shelf (as is so often the case). Its effectiveness must be constantly measured and so the strategy itself must declare the measures by which it will be evaluated. Data Quality measures are common, but culture can also be assessed by measuring the take-up and use of analytics tools.

   
   

   The organization can also periodically reflect on the contribution of its data strategy to the achievement of its strategic objectives: how has data supported our objective of growing revenue by 10% this year?

   
   

   Example: A nonprofit organization tracks the impact of its data strategy on its fundraising objectives. By measuring the accuracy of donor information against which marketing efforts are targeted, the organization can assess the impact of updating contact information on marketing effectively to different donor segments.

Common Pitfalls:

Data strategies are often ineffective and exist solely as documents created to check a box – “we have one.” Here is a selection of common issues to avoid:

• No Change Management Process: to successfully implement a data strategy requires behavioral changes across the organization, which itself requires buy-in and leadership. There must be a willingness to change and recognition that the status quo is ineffective, from the top of the organization down, to drive the adoption of new practices.

• No Governance: without the mechanisms to adopt or enforce new practices, any new initiatives can remain stuck as merely good ideas that never got implemented. Governance requires ownership and accountability for areas such as data quality and compliance. Without accountability, it is very easy for stakeholders to merely agree that something is a good idea, knowing it won’t fall to them to implement it.

• Overcomplication: for organizations who have a lot of distance to travel before performing well on data strategy, there can be an overwhelming range of tasks and priorities to manage. For this reason, it can be worthwhile scheduling data initiatives on the basis of prioritization or availability of relevant staff. Given the stress that can be associated with change, it is best not to overwhelm those delivering, or subject to, data initiatives.

Conclusion

Building a data strategy is a critical step for any organization seeking to harness the full power of its data. A successful strategy aligns data efforts with business goals, establishes robust governance frameworks, and fosters a culture where data drives decision-making at every level.

By taking these steps, organizations can overcome challenges such as siloed data, inefficiencies, and compliance risks, unlocking new opportunities and driving meaningful outcomes.

Volume I of Data: Principles to Practice (“Foundations”)provides a comprehensive guide to building this foundation. It introduces readers to the essential principles of data management and strategy through practical chapters such as:

• Chapter 6: Data Management: Explore the key processes for managing and governing data effectively, including data quality, metadata management, and cataloging.

• Chapter 4: Data Storage: Understand the role of different storage solutions, from relational databases to cloud storage, in managing growing data volumes.

• Chapter 8: Data Integration: Learn how to connect disparate data sources, breaking down silos to create a unified and actionable data estate.

These foundational chapters offer a structured approach to organizing and leveraging data, making them ideal for beginners or organizations looking to establish a robust data strategy.

Volume II of Data: Principles to Practice (“Analysis, Insight & Ethics”), launching on 16th December 2024, builds on these principles by delving deeper into advanced topics, including:

• Big Data: Discover how to navigate the complexities of big data environments, from processing large datasets to leveraging distributed systems like Hadoop and Spark.

• Data Ethics: Explore the ethical considerations of working with data, including privacy, bias, and transparency in decision-making.

• Data Visualization: Learn how to translate raw data into compelling visuals that drive understanding and action.

• Machine Learning: Understand the intersection of data science and machine learning, focusing on practical applications for predictive and prescriptive analytics.

Together, these volumes provide a holistic guide to mastering data—from foundational practices to advanced applications. Whether you’re just starting your journey or looking to enhance your expertise, these books offer the tools, insights, and frameworks needed to succeed in the data-driven world.

Get started today with Volume I of Data: Principles to Practice, and stay tuned for Volume II, which will take your data knowledge to the next level! Follow the author on Amazon to get a notification when Volume II is launched!