Everyone talks about how data is the new oil, but having all that oil isn’t much use if you’re just storing it in a container in the boot instead of actually putting it in your car engine. Similarly, enterprises are sitting on tons of valuable data that has the potential to improve every aspect of their business – from product development and CRM to P&L and new revenue streams – but that potential is wasted if they don’t know how to utilize that data.
Data commercialization – the art of harvesting and crunching internal and external data to enable better business decisions and develop data-driven products and services that generate an ROI on those data assets – is the name of the game. And one would think the TMT (technology, media and telecom) sector would have their data commercialization strategies more or less sorted – after all, they should understand technology better than anyone, right?
Turns out most TMT businesses are as bamboozled by big data as anyone – or at least are miles away from realizing its full potential.
That’s according to a global survey from law firm Simmons & Simmons, which covers over 350 decision makers in the TMT sector to gauge their progress in data commercialization. The survey, released at the start of November, rates the data commercialization maturity of respondents using a six-pillar model: overarching strategy, talent, regulatory compliance, underpinning data infrastructure, data governance, and collaboration across different departments and business units.
The survey compares data commercialization “leaders” (companies that ranked in the top 20%) against “laggards” (the bottom 20%) to determine what the former group is doing right. While the survey is focused on TMT companies, the results offer valuable lessons on how to formulate a successful data strategy.
According to the report, here’s what data commercialization leaders are getting right:
- They’ve developed overarching data commercialisation strategies with all departments having input in the process
- They’ve optimized their technology and infrastructure to support data commercialization (to the point of investing enough to developing data analytics in-house rather than outsourcing)
- They’ve recruited the skills needed to deliver data imperatives
- They’ve appoint an individual with responsibility for regulatory compliance who sits on (or reports to) the board
- They seek beneficial relationships with partners (for example, payment processors and social media) outside of the TMT industry to augment their data.
- They’ve implemented regulatory compliance policies that include clearer communication with customers on how their data is collected, what it will be used for, and how they can opt out.
“The key takeaways for us is that having an overarching strategy is key, as well as making sure you are transparent with your customers,” says Michelle Ta, foreign legal consultant at Simmons & Simmons. “Transparency and customer trust is going to be increasingly a competitive edge for those who are doing well in this area.”
Data commercialization is everyone’s business
Most TMT companies surveyed have a data commercialization strategy in place, but 58% are still stuck in the compliance/governance phase rather than commercialization itself. Even worse, only 20% coordinate data commercialization activity constantly and consistently across the entire organization.
“Other companies may have data strategies within business units, within silos, but they don’t have an overarching strategy,” says Ta. “That’s the defining distinction between the leaders and those who are not doing as well.”
One symptom of the problem is that data commercialization is still primarily an IT-centric endeavour. Too often, departments such as sales and marketing, operations, product development and procurement are not as engaged in formulating data strategies, while legal, HR and finance are typically at the bottom of the list.
That’s worrying, said Ta, because “without that insight, you’re missing opportunities. It’s quite possible the business may dismiss certain initiatives because they think it’s not possible or unlawful, when that may not be the case.”
One reason it’s important to get all of your business units involved in your data commercialization strategy is data governance. Companies that get the whole enterprise involved rate better at data governance than those that don’t because this approach establishes a common and consistent language for data governance across all business units. Businesses who don’t manage their data well are essentially wasting and devaluating it, as well as running the risk of compliance problems, the report says.
Lack of collaboration also impacts data usability – many respondents said their data governance is “not fit for purpose in enabling data commercialization” because they’re either not collecting enough data types or not collecting it from enough departments. Only 25% of respondents said they have data input/maintenance governance that “covers most types of data and is consistent across all offices and teams across the enterprise”. Over half said that while their input and governance covers most data types, “it varies across offices and teams”, while 23% said they limit their governance to only certain types of data.
It’s also your customers’ business
Much of the efforts towards data commercialization over the last couple of years have been focused chiefly on regulatory compliance as the spectre of GDPR loomed large before the regulation took effect in May 2018. However, according to the survey, 53% of respondents admit they still don’t fully understand what they have to do to ensure compliance as the data commercialization regulatory landscape continues to evolve in the aftermath of GDPR.
That’s not especially surprising, says Ta. “GDPR is an incredibly complex piece of legislation. And that’s at the European level – then you’ve got the local level as well, with every country in Europe having their own localized version of that. So it’s not surprising that executives are still grappling with what it all means.”
What’s far more surprising, she continued, is that over the last two years, only about 30% of TMT companies have changed the way that they’ve talked their customers about how they use their data, and about the benefits of sharing data.
“There was a great opportunity for them to think about how they were communicating with their customers at a broader and more commercial level, and we were surprised that they didn’t take that opportunity and do that,” Ta says.
She notes that this is likely because they’re still sorting out the compliance part of the equation. However, Ta adds, the companies leading in data commercialization are the ones who are already engaging their customers in that conversation. “Companies are going to have to demonstrate the value exchange, because customers are going to become more aware of the fact that their data is valuable, and they’re going to be more wary of sharing that data with companies.”
Ta advises that while data regulations are in flux around the world, companies can’t afford to sit around and wait for the regulatory dust to settle everywhere before moving forward with a data strategy. “Companies are going to need to get comfortable with the fact that regulatory certainty is not going to be there, and things are changing very quickly.”
That’s why it’s important that companies make as much headway along the six pillars in the report’s data commercialization maturity index as possible, because doing so will give companies the flexibility to comply with regulatory updates as they come into force, Ta says.
“You need to have a good master strategy, you need to have good governance, and you need to equip yourself at a practical level to deal with change quickly,” she says. “And that’s what we see the leaders doing.”