How data management drives innovation and profitability

Data management is an umbrella term that covers everything from where data are stored to how they are being used. Here is why you should take this seriously – and how it can drive both innovation and profitability.

It is important to note that data management is not a document in and of itself, but the overarching understanding of the process of capturing, storing, organizing and maintaining data within an organization. The component of your data management that concerns how this is done, is called your data strategy.

Key reasons for managing data

Prioritizing data management is important for several reasons. First off, it is the refinement of data that turns it into actionable insight – a valuable corporate asset. The most successful organizations know this. This is why the world’s 5 largest companies, which are all data-driven, derive much of their value from their ability to gather, interpret, organize and use data.

Secondly, a significant problem in many organizations is the siloing of data, as well as inconsistent and low quality data. This leads to not being able to output information across applications, or where data is stored in different departments. Proper data management prevents these problems, by allowing you to see how all entities are connected – and thus your organization as one.

Thirdly, as data rules and regulations tighten, organizations have to be increasingly concerned with being compliant. This is only possible if you have full control over your data and where they are stored, which is what data management is all about. 

Lastly, central to data management is governance: Who actually owns the data, who can access it, and how transparent are the use cases for various data? This is essential to sort out if you want to reap the benefits of being fully data-driven.

Data manage your profitability

But how does all this relate to profitability and innovation? Well, being in control of your data is not just a compliance effort, it also means new and correct information reaches the business units that need them. Basically, it helps drive operational decision-making. 

Let us take the supply chain as an example of how you can use data to increase profitability through working smarter. Without data, you have no precise way of measuring overall effectiveness. But once you can closely track goods and raw materials, you can monitor if they are optimally produced, how production stops are handled, and where your products end up. The more data points you have, the more inefficiencies you can identity – and eliminate. 

Furthermore, with data on actual product sales – what generates the most demand? Are there any trends in either time or space? – you get a clearer understanding of your own supply chain. This not only helps you increase profitability by adapting to the market dynamics, but allows you to increase revenue directly through constructing more compelling brand and product line stories.

Up your innovation level

So what about innovation? Being innovative is about daring to rethink everything about your business, its products and services. This is the very essence of being data-driven. It is not that the data itself is going to tell you what to do. But it might just reveal something you had not thought about. 

Because if you make data available to everyone, and create an environment where people in the organization feel safe tinkering with it, new patterns will inevitably emerge. Many businesses have a long way to go in terms of giving more people access to data – especially all the relevant data and how it is all connected. But once this complete picture is available, more people will want to contribute. And with their unique perspective, they probably can.

This is how bottom-up innovation happens. But it will not if all the data is hidden behind closed doors – or spread across hundreds of hard drives.

So what next?

Put shortly, proper data management is essentially the way of unlocking your data’s potential by treating it as the valuable resource it really is. The challenge you might face is to simply get started. How do you even know whether or not your current processes are adequate? 

If you are unsure how you stack up against competitors – or your own potential –  chances are you might benefit from an external assessment. A reality check, if you will. Maybe there are mostly minor tweaks to be made, or maybe you need to rethink your practices entirely. But the earlier the diagnosis, the better. Your «data health» is too important to neglect.