The Case for a Strong Data Governance Program in 2023

Data is the key to understanding customer preferences, improving business processes, making effective decisions, and anticipating future demand. Successful businesses know this and have developed effective ways to manage data.

But today, as data is subject to an ever-growing body of regulations, businesses need to do more than simply manage it – they need to govern it.

Data governance is an umbrella term for the processes, policies, roles, and metrics that determine how data is collected, stored, processed, and eliminated. Organizations that develop data governance programs cans better manage and control their data, ensuring that it is consistent, accurate, and available to qualified users.

Effective data governance is also critical for complying with data-focused regulations, especially data privacy laws. Following in the steps of the EU’s General Data Protection Regulation, several U.S. states have introduced privacy laws, with more states poised to do the same. Existing regulations include California’s Privacy Rights Act and Consumer Privacy Act, along with similar regulations in Colorado, Connecticut, Utah, and Virginia. 

In addition, because many organizations today anticipate incorporating artificial intelligence into decision making, they must make efforts to comply with emerging AI regulations. The standard-bearer is the EU’s AI Act, which aims to prevent potential data misuse and privacy violations. Acts like these depend on organizations adopting strong data governance practices.

Clearly, every company today must have a data governance program. Lack of one can cause data inconsistencies, complicate data integration efforts, and create data integrity challenges. These issues can lead to a slew of negative outcomes: reputational damage, fines for noncompliance, reduced efficiency, and, of course, missed opportunities for business growth.

It all boils down to this: While data governance used to be a nice-to-have function, it’s now a must-have function (except maybe for the smallest mom-and-pop companies, although even that’s debatable).

The first step in starting a data governance program is to appoint the right leader. In some companies, that’s the chief data officer or chief risk officer. In others, it’s the CFO, CIO, or chief compliance officer.

Whoever takes that role should oversee a team that includes officials from every line of business and every function, from finance and IT to customer service and HR. The team should work together to develop a data governance framework. That framework should be documented, then widely distributed throughout the organization. Training should ensure that employees understand the data governance framework and how it works.

The next step to choose a management structure for the data governance program. There are three basic ways to do this, said Bob Seiner, president of KIK Consulting & Educational Services, which focuses on data governance. The first is the “command and control” option, a top-down approach that assigns employees to clearly defined data governance roles. The second is the “if you build it, they will come” approach, where a company builds data governance and training programs and makes them available to employees.

But Seiner is a proponent of the third approach: non-invasive data governance. This approach starts by assuming that an organization is already governing its data – but not in any formal sense. The organization would identify which employees are currently governing data, then formalize their roles so that those employees could be tapped when necessary.