Let’s all agree on one thing: The subject of DATA can be perplexing at the best of times. The sheer breadth of the issue in any organisation, coupled with the number of disciplines, the confusing jargon and the varying opinions of data professionals leaves us no better off in our efforts to demystify the subject.
The current regulatory environment does not leave us feeling any better. A sheer barrage of regulatory and compliance requirements now faces just about every industry and if you have not been directly impacted yet, you certainly will be in the very near future.
How then do we go about setting a strategy for data for our organisation? How do we ensure that our strategy considers our regulatory and compliance needs, but also keeps us ahead of our competition in terms of innovation and growth?
The insurance industry currently faces the significant and foundation-altering challenges imposed by IFRS 17. Financial reporting requirements were previously handled through assumption-based analysis and high-level categorisation of insurance contracts. The new standard requires insurers to perform highly detailed analysis based on hard facts (data) stored in complex insurance policies, while becoming significantly more granular than the previously-defined high-level categories of insurance contracts.
This is a significant deviation from the status quo and requires insurers to rebuild the foundations of their already-established organisation while continuing operations.
But, as with any construction project, the obligation to install new foundations also creates an opportunity for other changes that were previously unjustified. Why not change the position of the toilet in the bathroom while we’re laying new foundations? We’ve been wanting to do that for a while, but haven’t been able to justify the cost until this foundation-altering project was forced upon us…
Many of the data services (i.e. people, processes and technology) that organisations have needed to achieve progressive and innovative analytics-driven business models or changes in core processes have been impossible to justify until now.
Think about the subject of cross-sell. How many large groups effectively use their cross-divisional data to establish a consolidated view of any specific customer across the group? And how many are then able to use that data to determine the highest propensity to buy, and then go on to use that to drive a data-driven cross-sell model that can highly optimise sales efforts, resulting in a significant increase in the effectiveness of sales teams and potential double-digit revenue growth?
Most organisations find it immensely challenging to justify a massive investment in a groupwide master data management service, without which such a cross-sell initiative would be impossible to achieve.
On the other hand, the bitter pill that is compliance and regulation lies like Mount Everest before most boards and executive teams. The most common response is, “We’ll employ a professional to take care of the compliance headaches for us.”
But with this approach, WE’RE MISSING THE POINT!
This is our opportunity to CHANGE, and we best not overlook this as something trivial that can be outsourced to a “professional”. This “perfect storm” has game-changing potential if we can look at it the right way.
Here’s the crux: Investments in the data services required to achieve innovative and game-changing analytics solutions have previously been untenable. However, these same data services are now needed to address compliance and regulatory requirements that have been forced down on most of us.
The opportunity we have right now is to use the returns we expect from building innovative data solutions to fund the cost of compliance and regulation. This is our opportunity to reevaluate our approach to data. To take stock of our current capabilities. To ready our organisations for what is, unfortunately (or fortunately), inevitable.
So how do we navigate this broad and uncharted data value journey? Here are 6 proven steps you can follow.
1. Set a Data Strategy
Start the journey by establishing your high-level business imperatives. These business imperatives should reflect the vision of the leadership for the growth and direction of the organisation. They should also include all relevant compliance and regulatory imperatives.
2. Build a Roadmap
Develop a high-level 3-5 year roadmap that maps out the data services required to achieve those business imperatives. Align this picture to produce a medium to long-term picture of investment and return that would garner support from any investment committee.
3. Assess and Refine
What do we have that we can reuse? What needs to be re-established from the ground up? What don’t we have yet at all?
Incorporate the outputs of these assessments in the roadmap of projects and refine the plan.
4. Build the Investment Plan
In conjunction with the CFO, develop the investment plan or roadmap to determine the timing and quantum of expected returns and their alignment with key milestones or business imperatives.
5. Present the Plan in the Language of the Boardroom
The Boardroom knows one language well, and that’s the language of value and returns. Present the data strategy, roadmap and investment plan to the investment committee for consideration and approval.
6. Execute and Adjust
The plan is not set in stone. Periodically revisit the strategy, roadmap and investment plan to adjust the approach based on the changing priorities of the organisation, the ever-changing regulatory and compliance environment, the availability of key people and improvements in available technologies.
The world of DATA can be daunting. But with an approach that aligns the data services required to be compliant with the exciting and innovative opportunities available, many of the organisation’s previously unattainable objectives can now be addressed by using the perceived “negative” compliance requirements as a lever. A consolidated roadmap will clearly
define the expected returns, justifying investments in innovative projects, while funding the data services needed to remain compliant.
This will expose the organisation to a whole new world of opportunity.
Written by Karl Dinkelmann, CEO, Nexus Data