A company can truly call itself data-driven when data, or more precisely, the insights derived from its analysis, are at the core of its decision-making processes and its ability to innovate. However, today, the vast majority of daily decisions are still data-deprived, meaning they are based solely on experience, intuition, and expertise. Often, this happens because data is not accessible to everyone, highlighting the need for a path towards data democratization.
What is Data Democratization?
According to a reputable study from a few years ago, only 3% of everyday operational (real-time) decisions are data-supported, and this is true even for companies that consider themselves data-driven. Many organizations believe that basing only strategic and business-critical decisions on data is enough to be a modern company, when in fact, they should also include all the operational decisions that are part of the daily life of every professional and every business division.
Data democratization is the process, or rather the journey, that a company undertakes to ensure that data (and the related insights) are accessible to everyone, not just a select circle of managers. In fact, companies have been basing their most important decisions on numerical evidence for decades, but each analysis was handled separately, requiring the direct involvement of IT professionals to identify the correct datasets, gather information, make appropriate modifications, perform correlations, analyze, and create dedicated reports.
While the traditional approach may still be viable for a company’s most important decisions (e.g., a merger), it is certainly not suitable for everyday decisions, which are the ones that impact productivity, internal and external relationships, sales, profitability, and business competitiveness. To ensure that these decisions are also data-supported, three key elements are necessary:
- Make information accessible to all professionals within the company, tailored to their needs, roles, and requirements;
- Enable real-time analysis;
- Implement a self-service mode of access and analysis that does not require IT involvement.
Data democratization is therefore a process aimed at ensuring that every employee can instantly access the data necessary to make informed decisions, ranging from setting a product’s sale price to deciding on the quantity of raw materials to purchase. This empowers individual capabilities, derived from experience and expertise, with solid and valuable information.
Data Democratization: A Full-Fledged Challenge
If democratizing data were easy, related decisions wouldn’t be at just 3%. Spreading data usage within large organizations is possible only by tackling and overcoming several challenges, which depend on how the company has always considered, managed, and analyzed data. Specifically, there are four areas to focus on.
Data Accessibility
Companies have always managed their data in silos, and many still do. Each division has its own information and applications, which do not necessarily communicate with those of other functional units, making every data project complex and laborious due to the need for manual information integration, reconciliation, and handling of heterogeneous formats and structures. This isolation prevents a unified and coherent view, hindering the company’s ability to make quick and informed decisions.
Data Governance
Data governance is closely related to the previous point. To create an enterprise data platform that overcomes the limitations of siloed management, clear policies and guidelines are necessary to govern the use, access, analysis, security, and sharing of data.
Data quality
Unreliable information leads to incorrect decisions. Companies pursuing democratization must ensure that data is always accurate, reliable, and up-to-date. Given the proliferation of unstructured information and the exponential increase in data volume and heterogeneity, data quality is a significant challenge.
Data culture
Despite the numerous technical challenges, what truly risks hindering companies' progress towards democratization is the lack of an adequate culture (and data literacy, which will be discussed later). Many organizations struggle to integrate data into everyday decision-making processes and to promote a modern and digital mindset among employees, despite considerable investments in technology. To succeed, careful change management is required.
Data Literacy: A Cornerstone of Democratization
As we’ve already emphasized, a data-oriented culture is essential for democratization and, more broadly, for digital transformation. But what about the skills of those who will use this information?
Data literacy refers to the ability to understand, read, analyze, and communicate data effectively. It is an essential skill in the 2.0 enterprise model and a key component of data culture. Obviously, not everyone is expected to become a data analyst, but everyone must be able to access information, perform even relatively complex analyses, and correctly interpret the results, making the most of the analytical tools provided by the company.
Given its evident connection with company culture, data literacy is not easy to implement and promote. It requires training and development, customization of paths based on the needs of individual professionals and/or teams, generalized access to data catalogs and analytical tools, and, of course, the promotion of a modern mindset.
Data Democratization Strategy: How to Spread Data Use in the Company
Every company is unique, and so is its digital transformation journey. Data democratization can undoubtedly create a certain level of discontinuity with past practices, tools, and mindsets, so it’s always advisable to be guided by a partner with specific expertise and experience.
The starting point of a possible strategy is always defining the as-is: what level of maturity does the company show regarding the use of data as decision-making support and an innovation driver? What is hindering its progress? Would professionals be able to analyze, interpret, collaborate, and share data-based information if they had access to analytical tools? And from a technical perspective, where is the data, what is it, and how is it managed?
At this point, a data democratization strategy might include activities aimed at:
- Building data culture within the company;
- Managing change effectively;
- Developing data governance;
- Implementing all the necessary technical activities to build a platform, or rather a modern data architecture that allows generalized use while ensuring security and quality. This means acting at the process and tool level, with overarching governance ensuring compliance with company policies and existing regulations.
Depending on the starting point and objectives, the path to data democratization can be quite complex. However, it remains a fundamental step for all companies that truly want to evolve in an increasingly digitized world.
The (business) benefits of democratizing data
Pursuing data democratization is highly advisable as it enables the company to compete with modern, innovative, agile, and natively 2.0 enterprises. The fintech phenomenon, for example, has shown that even small but modern and fierce structures can enter markets dominated by large incumbents and carve out significant space thanks to new business models based on data usage. This means that no organization, no matter how established, can afford to ignore the importance of digital transformation, which inherently requires the horizontal dissemination of data within the organization.
- Better decisions;
- Faster decisions;
- Increased productivity;
- Development of a data-oriented culture;
- Risk reduction;
- Simplification of processes;
- Greater innovation capacity.
In the medium to long term, the most significant benefit remains the overall transformation of the organization, making it more agile, responsive, and future-oriented.
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