Why Is Data the Core of the Digital Transformation?

14 May, 2020 | 5 minutes read

The core of every organization is data

Most organizations believe in the power and potential of becoming a data-driven organization; at the same time, they are challenged by the lack of knowledge and DataOps talent to monetize this potential.

How can organizations adopt and embed the data-driven way of thinking and acting to achieve the next generation of organizational performance and return on investment (ROI)?

Being data-driven focuses on the building of solutions, capacity, and most importantly, a culture that reasons based on data. Data is undoubtedly the key ingredient. However, we are not talking about any type of data; it must be relevant to the business-driven question/thesis. It also must be the source of a single point of truth, which means, integrated, centralized, cleansed, accurate, unbiased, but most importantly, reliable! 

The reliability of data forms a considerable challenge because data is much more contaminated than we would like to believe, which leads to subtle, hidden biases that influence conclusions and have an immense impact on the decision-making process. Although we are tempted to dive into the hype terminology of Artificial Intelligence, the brutal reality of most organizations is that they are still in the first stage of becoming a data-driven organization. The reason for this is the time-consuming process needed to achieve clean, integrated, and centralized data for the entire organization. 

The experience teaches us that 80% of the time goes into ingesting, processing, cleansing, processing, storing, and preparing data, and only as much as 20% of the time goes into building models, analyzing, visualizing, and deducting conclusions from the data. 

Becoming a data-driven organization is a journey and demands effort

No organization can immediately adapt to the ‘next generation’ analytics. It is a journey, and as with every journey, the time when not everything is clear might arrive, and the possibility of achieving progress will seem out of reach. Some organizations may be insecure about the best path to be taken. Others can hold back because they are not convinced that continuous investment in data, analytics, and AI will have a positive return on investment. Still, there will also be organizations that will be lost in the maze of data which is hard to use. And even the organization that has everything organized and is far ahead in its data journey can see the progress slow down. 

Data and Digitalization in the Netherlands

Many people might think that digital transformation refers to digitalizing all the processes within your company or making them digital. But, it is a concept that is broader than that and, in its roots, has data and analytics as prerequisites for its success. According to a recent study by McKenzie, evidence has shown that the leading companies in representative industries are leveraging data and analytics making them competitive in the market.

Let’s narrow this down to the Netherlands. What is the situation regarding data and digital transformation in the Netherlands?

The Netherlands is known as one of the most advanced digital countries in Northern Europe. There have been numerous digital initiatives, from the public and private sides of society, and the Netherlands was the first country with a national IoT network. 

Even though the study has defined the Netherlands as a leading digital country, recent research published by the management consultancy bureau Berenschot dating from January 2020, shows that digitalization, innovation, and disruption take the top place as strategic subjects discussed in Dutch boardrooms these year. They are focussing on the digitalization of their internal organization and processes, and the digitalization of their products and services. From this research, we can conclude that even though the country is digitalized, most of the companies in the primary Dutch industries are still in their digital transformation development phase.  

Digitalization table
Taken from: Berenschot

According to the research, 3 things should be appropriately addressed and changed in regard to digitalization, and those are (1) digitalization in all aspects of business operations, (2) increasing agility, and (3) optimizing work processes. These subjects are fundamental to the management agenda for the coming years.

The recent developments in the worldwide pandemic have put the digital environment for all industries to the test where most of the employees are obligated to work from home. This on the other side challenges the data availability, digital infrastructure, and the ability to continue working in a cyber-secure remote environment. Closely related to this, are the customers – their needs, fears, and availability.

This event forced companies to rethink their products and services, including their strategies. All those companies that weren’t digitally enabled, were forced to a rapid digital transformation.

How to get ready for digitalization, and why data is important?

“Organisations do not need a big data strategy; they need a business strategy that incorporates big data!” (Quote van Bill Schmarzo, CTO DELL EMC Global Services, University San Fransisco )

To be able to achieve full digital transformation, companies need to rethink and redefine their company strategy, improve their current processes, and invent new business models that are online-ready. These objectives align with the focus of Industry 4.0, being:

  1. Full digitalization and integration of business operations along the vertical and horizontal value chains. Development of digital products and services, enablement of digital customer orders, and total supply chain data integration, including integrated customer service. 
  2. Digitalization of existing and development of new digital business models, enabling the integrated real-time availability, monitoring, and control of systems throughout the company. 

Becoming a digital frontrunner is a journey, not one single step

The case can be that the organization has achieved success with a pilot or proof of concept project but did not think about how to implement the results into the primary process, so they benefit the whole organization. All elements may be in place, but the dominant organizational culture can be one of the biggest challenges to embracing the full potential. 

The hard reality is that the key to success in becoming a fully data-driven company lies in the transformation of the organizational culture. It is of essential importance that it is not ‘just a regular cultural’ change, but rather an analytically-driven culture. The data-driven organization provides a full availability of data. That means data availability outside the analytical organization but also between all departments and individuals. 

Analytical-driven culture uses data to support strategic decisions and to push the organization to the next level of growth. This type of culture is driven by asking the right questions and answering those within minutes. 

This approach broadens the available time for thorough discussions about the results of the analysis, what they mean, and how they can impact decision-making. 

Datamining & processing
Datamining & processing – Source: Logical Glue

Based on our research and interviews with our customers we can conclude most industries are expecting to be impacted by data, analytics, and Artificial Intelligence in the upcoming 5 years. The internal and external organizations, business models, and processes will be heavily impacted. If you are not investing in these topics you and your organization will be lagging behind.

If you are reading this and thinking that your organization has not even scratched the surface of the data possibilities, join our Webinar organized together with T-Systems and learn all about the options and the approach.