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The Dilemma of Data

The Dilemma of Data

Data is everywhere. It is in the click of a link on your corporate website, and the flash of your phone camera. The real-time feed from an Internet of Things (IoT) sensor is an endless torrent of data. Data is produced by everything we do in the digital world.

We create so much data that simply storing it is becoming a challenge. At the moment, data storage centers are responsible for 2% of all global carbon emissions.

But while the production of data in such quantities has its downsides, it also presents a huge opportunity for organizations of all sizes and from nearly all sectors. In fact, so valuable are those mountains of data that in 2017 the Economist published an article that ranked data ahead of oil as the most valuable resource we possess.

Is data the new oil?

The idea that data is the new oil is not new, and not as outlandish as it might first appear.

Strange though it may sound, oil and data share a number of characteristics. Both require processing to create value. Both require significant investment to source and extract. And both have the potential to transform entire industries. But, as Norman Comstock, managing director of UHY Consulting, explains, there are important differences too. “Unlike oil, data can be used by multiple parties at the same time without being depleted,” he says. “Additionally, data is not a physical commodity and can be easily copied and distributed, which creates challenges around ownership, control, security, and privacy.”

The data dividend

Certainly, data presents problems as well as opportunities. Data can be difficult to source, store and use. Not so long ago, companies would gather data but rarely do much with it, because the technology required to put it to use was either absent or prohibitively expensive. But advances in artificial intelligence (AI) and analytics mean companies of all sizes can now glean business-enhancing insight from the data they collect.

Perhaps most fundamentally, decisions that are backed by data are more likely to be the right ones. Data analytics software can identify the trends and patterns in huge volumes of data that might suggest changing customer preferences, a potential supply chain problem or areas of inefficiency and waste, for example.

The result, for those who use data well, is competitive advantage. “Companies that can effectively collect, process, and analyze data can gain insights that their competitors may not have access to,” says Norman. Increasingly, companies know this. According to one survey, around two-thirds of digital leaders think big data and analytics will be the top two technologies to deliver competitive advantage this year.

Using data well

At the same time, it is perfectly possible to collect huge quantities of data and derive no value from it whatsoever. Digital data is diverse, fragmented and often unstructured. Using it to your advantage takes commitment, investment and a company-wide data strategy.

“The management problem when it comes to using data is multifaceted,” says Norman. “It involves addressing challenges related to data quality, integration, privacy, security, governance, analysis, storage, and culture. Companies must have effective strategies in place to address these challenges and make the most of their data.”

With data, as with so much else, the old saying rings true: you put trash in, you get trash out. Data needs to be accurate, complete and up to date. Whatever form it takes, it needs to be available to various systems and processes. Organizations need the appropriate data analysis tools for their specific requirements.

For example, more than 90% of respondents to a survey by data management company Matillion said that it was challenging to some degree to make data available in a format that analytics platforms can use.

Companies that collect and use data also need storage capacity, which is likely to require investment. Depending on your need, data can be stored on-premise, in the cloud or (perhaps for security) in both locations at the same time.

Cybersecurity Strategy and Privacy

On top of it all, there are challenges around privacy and security.

The unavoidable fact is, as organizations gather and store more valuable data, that information becomes increasingly attractive to hackers and cybercriminals. Customer payments information is just one example of many.

Personal data needs to be stored and used in ways that comply with data protection laws around the world, such as GDPR (General Data Protection Regulation) in Europe and CCPA (California Consumer Privacy Act of 2018) in the U.S. and LGPD (General Data Protection Law of 2018) in Brazil. It also needs to be locked down tightly and saved in different locations, so that a successful ransomware attack is an inconvenience rather than an existential threat to the future of the organization.

“Companies must take appropriate measures to protect the privacy and security of their data,” says Norman. “This can involve complying with regulations as well as implementing security measures to prevent data breaches.”

A base level of security needs to be in place, taking in encryption, access control, firewalls and employee training. “Businesses should have a robust backup and recovery strategy in place to ensure that they can recover their data in the event of a cyber-attack or data loss,” Norman says. “An incident response plan should outline the steps to take in the event of an attack.”

Good governance should be part of any data strategy. Effective policies should define data ownership and access rights and establish processes for data quality management, data integration and security.

Help is available with data

All of which might sound complex and time consuming, but data management is not something that most companies can ignore. Many businesses with digital touch points will be collecting and storing data anyway, so getting value from that information is a natural next step. If data is the new oil and you have it anyway, why not use it to your advantage?

Of course, advisory firms have to put their own houses in order first, before they can offer these services to others. Accountants, consultants and other third parties need well developed data policies of their own, especially if they operate online. But those with mature and comprehensive data management strategies are in a position to serve clients in new and exciting ways.

“UHY can help companies develop a comprehensive data strategy that aligns with their business goals and objectives,” says Norman. “This can involve assessing their current data capabilities, identifying areas for improvement, and developing a roadmap for data-driven transformation.”

Professional service firms with expertise in the area will be in high demand, because data is becoming such a crucial business tool. From data governance and integration to analysis and insight, helping organizations to use ever-growing volumes of data is a future-proof service with huge potential.

 

Read more stories in Issue 16 of the UHY Global Magazine published by UHY International.

 

07/06/2023

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