Data has been vital for the pandemic response, allowing businesses to understand how customer behaviour is changing in real time. But the ability for organisations to use data is threatened by a lack of trust among customers: a recent study by EY found that only 34% of CEOs believe their customers trust their companies to use their data. Reviving that trust will be crucial for the success of digital transformation strategies.
The data-driven imperative
EY’s recent CEO Imperative Survey polled 305 chief executives from a range of industries. The study categorised respondents into those from ‘thriving’ companies, whose revenue has grown during the pandemic, and those who are merely ‘surviving’. It found that 80% of ‘thriving’ businesses had increased digital transformation spend in response to Covid-19, compared to just 37% of ‘surviving’ companies.
As a result, data-led business transformation has gone from a high priority to a matter of urgency. Over two-thirds (68%) of CEOs surveyed by EY are planning a significant investment in data and technology in the next three years. Almost as many (63%) consider ‘accelerating technology and innovation’ to be the most important trend impacting their industry – ahead of any other trend, including geopolitics. And more than half (53%) said digital transformation is an area of increased focus to drive growth, more than any other option.
“The disruption of the pandemic made it imperative to innovate businesses and business models,” says Bill Kanarick, global consulting transformation leader at EY. “Most organisations recognised they were unprepared and don’t want to be unprepared again.”
A recent survey of IT decisions by data analytics provider Teradata, meanwhile, found that the importance of data in decision-making has increased since the onset of the pandemic, with 95% identifying data as an essential asset and a key factor for recovery.
“Now is the time for business leaders to gear up for the future of true data-driven businesses, where data is at the centre of a company’s strategy and operations,” says Kanarick.
However, their ability to do so is jeopardised by a lack of trust among customers in their ability to handle data securely and effectively, Kanarick adds. Only 34% of CEOs surveyed believe that customers trust them with their data, including only 15% of energy sector chief executives.
Digital business initiatives will fail without this trust, Kanarick warns. “Ultimately if a customer doesn’t trust you, they won’t use your product or service and then you don’t really have a business.”
Addressing the data trust gap
One source of mistrust among customers is the fear that their privacy will not be protected. Aoife Sexton, chief privacy officer and chief of product innovation at privacy-enhanced data analytics start-up Truata, argues that new approaches to analytics help companies harness data without compromising trust.
“Instead of using the consumer data with all the names and addresses, companies can use non-personal data in order to understand trends,” she says. “[For companies], it’s not really about the individual, it’s about understanding cohorts and segments.”
Effective privacy governance need not be a burden on businesses – in fact, it can be a commercial benefit, Sexton argues. “A lot of privacy-centric companies are starting to understand the ROI on privacy and that if they can communicate with their consumers around issues like this in a meaningful way, they actually can gain a competitive edge.”
Another reason for mistrust is poor data quality and accuracy, which can lead to negative customer experiences or outcomes. By increasing companies’ reliance on digital systems, the pandemic revealed many shortcomings in this area. In Teradata’s survey, more than three-quarters of IT decision-makers said data accuracy is under greater scrutiny as a result of Covid-19.
But the roots of this poor quality pre-date the pandemic, says Martin Willcox, vice-president technology EMEA at Teradata. He attributes it, in part, to the enthusiastic adoption of ‘big data’ systems in the preceding years. “In the industry’s rush and enthusiasm to harness the potential of big data, in particular, we threw some the data management baby out with the bathwater,” he says.
Lots of organisations have invested a great deal of money in the last several years in very high-profile data lake projects. Some have been outright failures and expensive fiascos.
Martin Willcox, Teradata
“Lots of organisations have invested a great deal of money in the last several years in very high-profile data lake projects,” Willcox explains. “Some have been outright failures and expensive fiascos and some have just delivered far fewer benefits than were anticipated, so there is a certain amount of healthy cynicism in the C-suite.”
Companies need to adopt an approach where they prioritise data and analytics that are core to their business strategy, says Willcox. “A lot of commentators argue that we should shift the focus away from big data to good data,” he says. “When you divorce the data strategy from the business strategy it almost always ends in failure — it’s really important to be intentional about which data you collect [and] which data you integrate because data management and integration have costs and those costs can be fairly significant.”
Indeed, what defines companies that have pursued digital transformation successfully is a clear idea of the business value of data, says Willcox. “What sets those organisations apart very often is a clear vision of why they’re digitising… and clear strategic focus on how they’re going to leverage data and analytics to improve existing and create new business models.”
For companies without the ability to manage data effectively, he adds, “this has been a very brutal couple of months”.
Home page photo of a smartphone and laptop by Primakov/Shutterstock.
Amy Borrett is the resident data journalist at Tech Monitor.