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What is Data Governance and Why is It Important?

Data governance is an important element in the organization’s digital transformation, but it is also one that is often subject to misinterpretation. Oftentimes, it is because of the word “data”, which has led many to assume that it has something to do with technology or that technology plays a significant role.

Truth is, that is not the case with data governance. In fact, technology does not play a part in it at all.

This is an opportunity to understand what data governance is about and its importance in the organization’s overall data strategy despite not being related to technology.

What is Data Governance?

While there are different definitions that have been given, at its core, data governance refers to how an organization acts upon and makes decisions on data based on established guidelines and policies defined by the organization beforehand.

Data governance, in turn, is governed by three key elements:

Documentation - Every policy related to the treatment and utilization of data is documented as thoroughly as possible, with little to no room for misinterpretation

Groups – Groups here refer to the senior leadership and other groups that support data governance such as the policy council, data stewards council, and the information security council to name a few. They are the ones who define the guidelines and policies as to how data is to be treated and utilized in specific instances, making sure that everything related to this aspect is covered regardless of the scope of the organization’s structure and processes.

Individuals – The individual players are perhaps the most crucial element in the data governance structure. Whether as data stewards or end-users, they are the ones who will ensure the compliance and viability of the organization’s data governance structure.

Why the Need for Data Governance?

Data governance acts as the foundation that establishes the organization’s approach to data and guides all decisions and actions related to data. But it also offers other key benefits that are often overlooked.

Increased revenue and valuation – Having a data governance structure in place enables organizations to market their information assets to interested parties, which in turn can be a significant source of revenue. In fact, Gartner predicts that 10% of organizations will have a highly profitable business unit specifically for productizing and commercializing their information assets.

Cost savings – An IBM study found that poor data quality is costing the US economy $3.1 trillion every year, a result of having poor, if not non-existent, data governance structure in a number of businesses. In addition, poor data quality is costing businesses an average of $9.7 million per year.

Having a well-established data governance structure will allow the business to be more cost-efficient in its operations by being able to identify inefficiencies and implement cost-efficient processes.

Improved compliance – Data governance ensures that everyone within the organization complies with the various existing standards, practices, and regulations that pertain to data. This ensures that the business is compliant with the best practices in handling and utilizing data and ensures improved operational efficiency and reliability.

Competitive advantage – Organizations with a data governance system in place are well-poised to face the challenges ahead relating to data. Even if a challenge is considered unprecedented for the business, the fact that the data governance foundation ensures a faster rate of recovery.

In addition, there is a growing trend in which companies will be valued based on their information portfolios. Data governance plays a significant role as it ensures such are data secured and organized to help build the organization’s overall value.

Data Governance and the Bigger Data Picture

Throughout this article, we have seen how data governance is a crucial part of the organization’s overall data strategy. However, it is also important to remember that data governance is just a part of the larger vision of how the organization is envisioned to work with data, from acquisition to analytics to usage. So while it is important to have the data governance structure in place, it is also important to establish the other elements for the organization to be able to fully maximize their data.


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