How to Become a Data Driven Organization + Benefits & Challenges

Did you know that despite the immense potential benefits, a staggering 76% of businesses struggle to achieve true data-driven status? In an era inundated with data, where every click, purchase, and interaction generates a digital footprint, the failure to harness this wealth of information poses a significant obstacle to organizational growth and competitiveness.

The journey towards data-driven decision-making is fraught with challenges and complexities. Businesses across industries grapple with the daunting task of transforming raw data into actionable insights that drive strategic initiatives and fuel innovation. Yet, despite the compelling benefits, numerous obstacles hinder progress and impede the realization of a truly data-driven culture.

In this article, we delve into the key challenges that prevent businesses from embracing a data-driven ethos, exploring the intricate dynamics that hinder progress and offering actionable insights to surmount these obstacles. Join us as we unravel the complexities of data-driven transformation and illuminate the path towards organizational resilience and innovation.

Exploring The Future of Data Analytics

Analytics and data capabilities have developed at an alarming speed in recent years. It increasingly fuels the adoption of data driven business strategies. A Statista survey of industry-leading firms shows interesting facts about how businesses adopted big data and analytics in 2020 compared to the previous year. The report reinforced the central role of data in reshaping business decisions, reimagining competition, enhancing innovation, and developing data driven companies. According to the survey, 37.8% of respondents were able to build data driven businesses in 2020.

Yet, it seems that, although promising, becoming data driven is very hard.

According to a Harvard business survey, only 24% of respondents regarded their organizations as data driven. The beneficial promises are amazing, the results even better, but the actual work can be quite hard to achieve.

Why Becoming Data Driven is Imperative to All Businesses

Data is undoubtedly the most valuable asset in a business. It contains useful insights about business clients, their behavior, and updated industry trends that you can leverage to your advantage.

A data driven enterprise fosters the culture of using data and business intelligence for all corporate decision-making. These organizations don’t scale in a straight line. Among the reasons why tech giants like Google and Amazon record exponential growth are because their business models are fundamentally based on data.

The goal of a data driven organization is to design a structure where all members approach each decision by intelligently exploring and analyzing relevant data.

What Does the Research Say?

A PwC research shows that data driven organizations can outrank their competitors by 6% profitability and 5% productivity.

Another research study found that data driven businesses are 162% more likely to exceed revenue goals. 58% more likely to hit their revenue goals compared to their competitors who aren’t data driven.

In addition, this report highlights that 81% of businesses agree that data should be at the center of all corporate decision-making.

While the statistic numbers make it look great, it’s critical to remember that data in its raw form isn’t going to be much helpful or informative. To make the most out of the data you collect, you must collect it appropriately and interpret it into something you can use. For effectiveness, you must create:

• Organized and Centralized Data. Data from external and internal sources should be aggregated centrally to serve the entire organization as a single source of truth.
• Easy Access to Data. Ensure employees across various departments can access relevant data and insights to drive their daily decisions.
• Standard Policies to Safeguard Data Quality. Having a set of guidelines and policies helps establish governance and ensure superior data quality is maintained for deriving data based intelligence
• Integrated Data Analytics. Data analytics tools allow easy adoption and encourage smooth data correlation across business functions to derive valuable insights.

The current unprecedented climate of constant change creates changing market dynamics. Organizations experience the apparent need to start going the data driven way. Today, companies witness the accelerated urge to change into a more agile and data first business that understands the value of data reliability and how it can impact business in the new paradigm.

There are a few key drivers of this inevitable corporate transformation:

5 Benefits of Becoming a Data Driven Organization

In today’s data driven world, businesses face a pivotal choice: to embrace data-driven decision-making or risk falling behind in an increasingly competitive landscape. The journey towards becoming a data driven organization is not merely a strategic imperative but a transformative endeavor that touches every aspect of operations, from customer engagement to strategic planning.

By harnessing the power of data analytics, organizations unlock a myriad of benefits that drive growth, innovation, and competitive advantage.

Let’s delve into the five key benefits that await businesses on the path to becoming data driven:

1. Enhanced Customer Visibility

In the realm of data driven enterprises, understanding customers transcends mere demographic profiles. Through comprehensive data analysis, businesses gain profound insights into consumer behavior, preferences, and purchasing patterns.

By leveraging data analytics tools, organizations can discern where their customers originate, discern their evolving needs, anticipate future purchases, and tailor the buying experience to align seamlessly with customer expectations. This granular understanding enables businesses to personalize interactions, optimize marketing strategies, and cultivate enduring customer relationships based on mutual value and trust.

2. Better Strategic Agility

In the dynamic landscape of modern commerce, agility is paramount for sustainable success. Data driven organizations harness the power of analytics to fortify their strategic decision-making processes. By synthesizing a myriad of data points encompassing material costs, sales figures, market trends, and consumer sentiment, businesses gain invaluable insights into market dynamics and competitive landscapes.

Armed with this comprehensive understanding, organizations can swiftly adapt their strategies to capitalize on emerging opportunities, mitigate risks, and navigate uncertainties with confidence. Strategic agility fueled by data empowers businesses to stay ahead of the curve and proactively shape their future trajectory.

3. Useful Insights for Innovation

Innovation lies at the heart of organizational evolution, and data serves as a catalyst for transformative change. By mining insights from vast troves of data, businesses uncover hidden opportunities for innovation across diverse facets of operations. Whether refining product offerings, optimizing service delivery, or enhancing customer experiences, data driven insights provide a roadmap for innovation-driven growth.

By discerning emerging trends, customer preferences, and market gaps, organizations can channel their creative energies towards developing innovative solutions that resonate with their target audience, fostering brand loyalty and market differentiation in the process.

4. Efficient Operations

Operational efficiency is the cornerstone of organizational effectiveness, and data-driven insights serve as the bedrock for optimizing processes and workflows. By scrutinizing operational data encompassing supply chain logistics, production cycles, inventory management, and resource utilization, businesses identify inefficiencies, streamline workflows, and enhance productivity.

Real time data analytics empower organizations to respond swiftly to changing market demands, mitigate disruptions, and optimize resource allocation in alignment with strategic objectives. By fostering a culture of continuous improvement guided by data driven insights, businesses cultivate resilience and agility in the face of evolving market dynamics.

5. Competitive Edge

Gaining a competitive edge is imperative for sustained growth and profitability. Data driven organizations leverage advanced analytics tools and techniques to unlock actionable insights that drive strategic decision making and foster innovation. By harnessing the power of big data exploration and embracing cutting edge technologies such as hybrid and multi-cloud data platforms, businesses gain a holistic view of their operations and market landscape.

Armed with these insights, organizations can identify untapped market opportunities, anticipate customer needs, and outmaneuver competitors with agility and precision. The ability to translate data into strategic advantage enables businesses to stay ahead of the curve, capture market share, and position themselves as industry leaders in an increasingly digital world.

7 Challenges That Prevent Businesses From Becoming a Data Driven Organization

Data Analytics Team

Many businesses have been trying to transform into data first operations for some time now with mixed results. This is because there are numerous challenges to overcome despite many reasons to work toward a data driven culture.  And according to research, the biggest challenge for a data driven business strategy doesn’t have anything to do with technology. It has more to do with the fact that organizations and their people are resistant to change.

It doesn’t help that the need to become data driven keeps getting harder. Corporations now encounter massive new amounts of data as well as new data sources, including texts, sensor data, pictures, signals, and other forms of unstructured data that are not easy to capture or make quantifiable.

1. Cultural Dynamics

When you consider cultural dynamics such as the rise of self-service and the 2020 global health pandemic, it has become even more challenging for businesses to shift to more data driven methods. Today’s consumers receive information and data how and when they want it making information more decentralized. This allows consumers to choose the social media platforms they engage with, the news outlets they follow, and the information they rely on.

Then when you factor in the structural aspect considering data is created at an exponential rate, it’s no longer surprising that so many organizations struggle to become data driven. As time goes on, the task becomes more difficult.

Furthermore, one dramatically emerging concern confronts organizations these days when it comes to management and ownership of data. This is the assurance of ethical and responsible use of data. This topic has been extensively discussed and written about recently and has been the central subject of critics.

In general, without the right datasets, analytics tools, and data specialists to support your business, it can be quite overwhelming.

So the following are some of the key challenges holding businesses back from adopting a data driven approach:

2. Low-Quality Data

Not all data is good. Low-quality data is one of the major reasons behind companies’ reluctance to utilize data driven support for decision-making. Bad data can significantly harm business ambitions and overall corporate decision-making. According to Gartner, poor data quality costs businesses an average of $15 million annually.

Due to the lack of systematic and continuous, collected data becomes too noisy, and insights based on bad, incomplete, or incorrect data become faulty. It’s therefore important to never assume the accuracy of the data used to drive business decision-making.

3. Inaccessible Data

Employees often face data inaccessibility since data is trapped in functional silos, which are not easily accessible outside the department or application. Unlike the modern automated data management method, most departments in traditional companies maintain data manually rather than use the system. The absence of centralized data prevents others from access, making it difficult for decision-makers to plan and collaborate as one unit.

There should be infrastructure and tools that enable data sharing between departments. Also, organizations can have data governance policies that create a single source of truth for the entire company data.

4. Lack of System Integration

Businesses don’t lack data. The problem is the vast amount of unstructured data stored across different platforms. The underlying problem for many businesses is the absence of standard data capturing practices and the lack of effective data integrations to unlock the value and achieve a holistic view of this data. The more systems you work with, the more complicated data management becomes. It is daunting to analyze and correlate disparate data from multiple sources lying across functional silos and applications to add value to the business eventually. But done effectively, it should seamlessly bring various functions, interfaces, and technologies together to drive productivity and boost the organization’s capabilities.

It’s, therefore, crucial to map how incumbent and future data systems will integrate while still in the planning phase.

5. Insufficient Data Interpretation

As sources increase, getting a complete view of various data is critical for effective interpretation. Inadequate visualization makes understanding inventory data, employee performance data, production information, vendor data, or financial transactions data difficult and hinders strategic planning. Furthermore,  the traditional systems’ inability to proactively process real-time data to derive insights into the business processes makes it difficult to identify relevant data points to help make decisions.

6. Limited Actionable Data Insights to Support Corporate Decision Making

The lack of adequate analytics capabilities makes it impossible to unlock the power of automation tools such as AI and machine learning to gain faster and better insights. AI-powered data systems help organizations automatically streamline data aggregation from various sources, recognize patterns, correlate data points, and present data intuitively to use real-time insights for business actions.

7. Lack of Skills and Data Driven Culture

Becoming a data driven organization takes more than the right technology and strategy. Businesses can only become data driven if they effectively incorporate a data first culture. However, most companies still struggle to build a data driven culture and handle situations where employees make decisions based on gut instincts instead of data driven facts.  A data driven culture also needs skills as it should start from the C-suite executives and permeate through each division of the organization.

Ready to Become Data Driven?

The journey to becoming a data driven organization is both challenging and rewarding. As businesses navigate this transformational shift, they must recognize the imperative of embracing data-driven decision-making to stay competitive in today’s dynamic market landscape. While the transition may require teams to step out of their comfort zones and embrace new approaches, the potential benefits far outweigh the challenges.

If you find yourself grappling with the complexities of building a robust data strategy and harnessing the full potential of your data assets, know that you’re not alone. Many organizations are on a similar journey, seeking to leverage data as a strategic asset to drive growth and innovation. It’s crucial to remain flexible, invest in digital tools, and prioritize the development of well-structured processes to support your data-driven initiatives.

At this pivotal juncture, ClicData stands ready to empower your organization’s data journey. Our comprehensive self service analytics platform enables you to seamlessly collect, integrate, and analyze data from multiple sources, empowering you to derive actionable insights and make informed decisions with confidence. Take the first step towards unlocking the full potential of your data by signing up for a free trial of ClicData today.