How to Get Funding for Data Governance

Data is not just an operational necessity; it's a strategic asset that can significantly influence business outcomes when managed effectively. Despite this, securing funding for Data Governance programs remains a challenge, largely due to the difficulty of demonstrating immediate ROI to decision-makers.

According to Gartner, by 2022, 90% of corporate strategies will explicitly mention information as a critical enterprise asset and analytics as an essential competency. Yet, data mismanagement costs companies between 15% to 25% of revenue annually. These statistics highlight the urgent need for robust data governance to protect and enhance the value derived from data.

It goes without saying that establishing yourself as a leader in a data-centric business necessitates maintaining accurate, consistent, and accessible data. This empowers executives to depend on their analytics and reporting for strategic planning and making informed decisions that are in sync with the organization’s long-term objectives.

This guide is crafted to help CDOs articulate a compelling case for investment in a Data Governance program by aligning it with broader organizational goals and demonstrating its direct impact on financial performance and risk mitigation.

The Pitch Framework

1. Start with a Hook

Begin your pitch by highlighting a dark statistic or a recent high-profile data mishap. Data breaches cost companies an average of $3.86 million each, as reported by IBM’s Cost of a Data Breach Report. Use this to emphasize the financial and reputational stakes of inadequate data management. This approach not only captures attention but also underscores the immediate need for strengthened data governance.

2. Business Impact

Articulate the benefits of Data Governance across several dimensions:

a. Cost Reduction

Data Governance reduces costs by decreasing redundancies and preventing fines for non-compliance with regulations like GDPR, which can reach up to 4% of annual global turnover. Moreover, it reduces operational inefficiencies by eliminating redundant data storage and processing, saving up to 25% of annual IT costs, as found in studies by the Data Governance Institute.

b. Revenue Growth

High-quality data enhances decision-making, leading to improved customer targeting and product development. For example, according to McKinsey, organizations that leverage customer behaviour insights outperform peers by 85% in sales growth. Netflix saved $1 billion per year on customer retention by using data to personalize user experiences.

c. Regulatory Compliance

Highlight that governance frameworks help ensure compliance with evolving regulations like GDPR, potentially avoiding fines exceeding €20 million or 4% of the annual global turnover.

d. Competitive Advantage

A robust data governance strategy enables quick adaptation to market changes, giving a competitive edge. For instance, Amazon’s data-centric approach allows it to adjust prices dynamically, which has been crucial to its market success.

3. Risk Mitigation

Address the direct link between poor data management and increased risks, including security vulnerabilities and legal penalties. Discuss the high costs of data breaches and compliance risks, emphasizing how governance frameworks mitigate these risks by securing data and enhancing its quality and reliability.

4. Data-Driven Culture

Talk about why a data-driven culture isn't just a buzzword. It is a fundamental shift that can define success. Companies like Google and Netflix aren’t just using data; they’re designed around it. This approach empowers every decision, ensuring it’s backed by evidence. By fostering a data-driven culture, we’re not just making isolated good decisions; we’re setting a standard. This commitment transforms operations, making outcomes more predictable and strategies more robust.

5. Implementation Roadmap

Implementing a Data Governance framework isn't an overnight process—it's a journey. Start with assessing our current data landscape and identifying gaps and opportunities. Next, develop a tailored policy framework, integrating best practices to ensure consistency and compliance. Finally, roll out tools and training to empower our teams. This structured approach reflects setup and sustainable success, enabling the company to manage and utilize its data effectively long-term.

6. ROI Projection

Provide a conservative ROI estimate based on benchmarks from similar implementations, emphasizing both cost savings and revenue enhancements.

Convince them to think about what that means in dollar terms. It’s practical, measurable financial improvement. Investment in Data Governance positions you to capture full value from your data, avoiding costs from fines and inefficiencies while opening new avenues for revenue generation and fundamentally enhancing financial performance.

7. Success Stories

Cite success stories from reputable organizations that have seen significant benefits from investing in Data Governance, reinforcing the feasibility and benefits of your proposal. Share case studies from companies like British Telecom and Johnson & Johnson, which have seen significant improvements in operational efficiency and compliance after implementing Data Governance frameworks.

8. Address Concerns

Prepare to discuss common concerns such as budget constraints and resource allocation, providing reassurances through phased investments and highlighting the potential for quick wins.

9. Call to Action

End with a clear call to action, requesting specific commitments to begin laying the groundwork for a robust Data Governance framework.

10. Follow-Up

Plan to follow up with detailed documentation and a proposed schedule for the next discussion or decision-making steps.

Conclusion

Investing in Data Governance is not just about compliance or risk management; it's about fundamentally enhancing the way a company operates and competes in the market.

By ensuring data is accurate, consistent, and accessible, executives can rely on their analytics and reporting to strategize and make informed decisions that align with long-term business goals.

The framework comes in handy in paving the way for advanced analytics, artificial intelligence, and data monetization opportunities, creating new revenue streams, and delivering unparalleled competitive advantages.

For a CDO, making this case effectively means moving beyond technical jargon and connecting the dots between data governance and tangible business benefits. By doing so, you not only champion the cause of data as a strategic asset but also position yourself as a key strategic leader within your organization. Securing funding for Data Governance becomes a natural step in the organization's journey toward operational excellence and competitive differentiation.