Board attention to cybersecurity is no longer an anomaly. Directors, corporate secretaries and other governance professionals are educating themselves on rising cyber risks and discussing how to defend against them. Collectively, these parties are focusing not only on oversight of organizational cybersecurity, but also on the mitigation of cyber risks associated with boards themselves.
When contemplating cybersecurity, organizations are increasingly encouraged to identify and defend their crown jewels. What constitutes a crown jewel? That would be data ' those nuggets of information that are of the highest value to the organization, and to any parties that may want to pose a threat to your organization and its capacity to function. McKinsey & Company defines digital crown jewels as '...the data, systems, and software applications that are essential to operations.'
Identifying an organization's crown jewels is not a minor undertaking; nor should it be a one-off project. Organizations need to routinely review their information assets in order to determine which ones have the potential, if compromised, to generate major adverse business and operational impacts.
Some corporate data, though, is intended for internal use. Consider all the information you see in the board and committee agenda packages you prepare. Your management team and the board both rely on data to help inform critical decisions. On an operational level, we can take production costs as one example of the value of corporate data. In May 2019, McKinsey Digital published its interview with Informatica CEO Anil Chakravarthy, who discussed both organizational and technical practices that aid companies wanting to create value with data. Chakravarthy reflected on value derived from capacity to collect and collate information from different kinds of systems.
He cited traditional data models historically used by a major oil company to identify a given oil well's profitability. Companies would collect inputs on costs, production levels and oil prices and use such data sets to determine whether an oil well was productive. With the Internet of Things (IOT), though, companies have much more real-time data on which they can draw. Companies have the capacity, through the IOT, to review correlated data such as actual productivity and output, maintenance status and more, in order to develop increasingly effective predictive analyses. Chakravarthy highlighted the capacity to make real-time decisions by integrating IOT-accessible data pertaining to maintenance, status and efficiencies with long-established data sets such as cost, expense and profitability.
Has your board raised discussion and questions about how the organization collects, stores and utilizes its data? Whatever the sector and nature of your organization, there's tremendous value to be mined from its corporate data. With notable exceptions, though, many organizations carry on with past practices. Just as risk management practices have evolved to the point that we now have enterprise risk management (ERM), organizations can embark on enterprise-wide approaches to data. If your organization already has a C-level executive whose responsibilities are centered around data and analytics, that suggests that your board and management are well aware of the value of corporate data.
In late 2017, KPMG published an interview with Takehiko Nagumo, Mitsubishi UFJ's Executive Officer and General Manager of Corporate Data. Nagumo expressed interest in the development, as a public good, of data management standards that would be data's equivalent of accounting standards. He also spoke to the challenges associated with establishing a data culture and discussed '...reinforcing the importance of data models in the minds of company executives.'
It's critical for not only executives, but also their employees and their boards, to wrap their heads around the value of corporate data. Gartner, Inc. VP Research Ted Friedman has cited key trends, beginning with the use of data and analytics to drive ' and not simply reflect ' an organization's business operations. Friedman's 2017 observations that executives will incorporate data and analytics within business strategies, thereby positioning data and analytics professionals to step into new positions and create business growth, is already evidenced in the existence of roles such as those filled by Nagumo at Mitsubishi and Thomas at GM.
In fact, Gartner has found that businesses with data science teams and enterprise information governance systems in place, and whose organizational charts include Chief Data Officers (CDOs), already command higher-than-average market-to-book ratios. Corporate data may not currently be assessed in the same manner as other assets, but its value should not be underestimated.
As a governance professional, you recognize and support the board's attention to strategy. Has your board yet to tap into the value of corporate data to inform its strategic planning and discussions?
When contemplating cybersecurity, organizations are increasingly encouraged to identify and defend their crown jewels. What constitutes a crown jewel? That would be data ' those nuggets of information that are of the highest value to the organization, and to any parties that may want to pose a threat to your organization and its capacity to function. McKinsey & Company defines digital crown jewels as '...the data, systems, and software applications that are essential to operations.'
Identifying an organization's crown jewels is not a minor undertaking; nor should it be a one-off project. Organizations need to routinely review their information assets in order to determine which ones have the potential, if compromised, to generate major adverse business and operational impacts.
The True Value of Corporate Data
Some of the organization's crown jewels may be embedded within its corporate data. Corporate data can include information intended for public consumption, such as the company name, head office coordinates, and board and corporate executive officers. Incorporation date, business affiliates and segments, major products or services, employee headcount and revenues are also among publicly disclosed corporate data.Some corporate data, though, is intended for internal use. Consider all the information you see in the board and committee agenda packages you prepare. Your management team and the board both rely on data to help inform critical decisions. On an operational level, we can take production costs as one example of the value of corporate data. In May 2019, McKinsey Digital published its interview with Informatica CEO Anil Chakravarthy, who discussed both organizational and technical practices that aid companies wanting to create value with data. Chakravarthy reflected on value derived from capacity to collect and collate information from different kinds of systems.
He cited traditional data models historically used by a major oil company to identify a given oil well's profitability. Companies would collect inputs on costs, production levels and oil prices and use such data sets to determine whether an oil well was productive. With the Internet of Things (IOT), though, companies have much more real-time data on which they can draw. Companies have the capacity, through the IOT, to review correlated data such as actual productivity and output, maintenance status and more, in order to develop increasingly effective predictive analyses. Chakravarthy highlighted the capacity to make real-time decisions by integrating IOT-accessible data pertaining to maintenance, status and efficiencies with long-established data sets such as cost, expense and profitability.
Has your board raised discussion and questions about how the organization collects, stores and utilizes its data? Whatever the sector and nature of your organization, there's tremendous value to be mined from its corporate data. With notable exceptions, though, many organizations carry on with past practices. Just as risk management practices have evolved to the point that we now have enterprise risk management (ERM), organizations can embark on enterprise-wide approaches to data. If your organization already has a C-level executive whose responsibilities are centered around data and analytics, that suggests that your board and management are well aware of the value of corporate data.
The Role of Data Analytics In Corporate Data
While the role of data analytics has been around for some time, its professionals have sometimes had division-specific responsibilities, perhaps focusing on areas such as marketing or human resources. Knowledge@Wharton has noted the relatively recent emergence of Chief Data and Analytics Officer (CDAO) roles on organizational charts, and the trusted advisory role that such executives fulfill for those atop the org chart. In his conversation with Wharton, A. Charles Thomas, who is General Motors' first-ever CDAO, offered that analytics should be '... touching every single ...thing that you do' within a company.In late 2017, KPMG published an interview with Takehiko Nagumo, Mitsubishi UFJ's Executive Officer and General Manager of Corporate Data. Nagumo expressed interest in the development, as a public good, of data management standards that would be data's equivalent of accounting standards. He also spoke to the challenges associated with establishing a data culture and discussed '...reinforcing the importance of data models in the minds of company executives.'
It's critical for not only executives, but also their employees and their boards, to wrap their heads around the value of corporate data. Gartner, Inc. VP Research Ted Friedman has cited key trends, beginning with the use of data and analytics to drive ' and not simply reflect ' an organization's business operations. Friedman's 2017 observations that executives will incorporate data and analytics within business strategies, thereby positioning data and analytics professionals to step into new positions and create business growth, is already evidenced in the existence of roles such as those filled by Nagumo at Mitsubishi and Thomas at GM.
The Future of Corporate Data
All this is significant given expectations that, in the very near future, information portfolios will be reflected in company valuations. Gartner has projected that the degree to which equity analysts will value organizations on the basis of their information portfolios will, in turn, drive internal audit practices and information valuations. While the value of the information an organization possesses isn't capitalized under current accounting practices, the firm projects that the day will come when those involved in corporate investment valuations will need to consider a company's information in order to conduct a proper valuation.In fact, Gartner has found that businesses with data science teams and enterprise information governance systems in place, and whose organizational charts include Chief Data Officers (CDOs), already command higher-than-average market-to-book ratios. Corporate data may not currently be assessed in the same manner as other assets, but its value should not be underestimated.
As a governance professional, you recognize and support the board's attention to strategy. Has your board yet to tap into the value of corporate data to inform its strategic planning and discussions?
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