23 Feb ROI on GDPR
Generate an ROI on your Data Protection (GDPR) spending
If the roof is leaking you fix the hole. The more difficult question is how many times does it need to leak before you invest in a new roof and the peace of mind from no more leaks? There is no straightforward answer because fixing the leak is not the only cost. The real cost is furniture, carpets etc. that are affected by the leak or may be affected next time.
This is my analogy for the question of how much to spend on Data Protection Act (GDPR) compliance.
The question is how many times does it need to leak before you invest in a new roof
You can fix the hole with a Data Protection Regulations compliance project but if you want to fix the roof for the long-term then we believe you are really looking at investing in a Data Governance project. If you are going to spend more, your CEO is will surely ask what the return on investment (ROI) will be!
A strong ROI based business case for Data Governance will also support you against the next wave of Data Protection and Privacy regulations
A one-off box ticking compliance project versus implementing Data Governance as a sustainable part of how you do business. How do you quantify the return on your data investments? This can be a difficult area but, where organisations are rigorously tracking costs and are able to get their heads around the true cost of data quality they find it runs into a few percentage points of their operating cost – expressed as waste and lost opportunity.
There are case studies. In 2010, Insurance Data Management Association, the estimated the cost of bad data for insurance companies is between 15-20% of operating revenues. According to the Harvard Business Review studies show that knowledge workers waste up to 50% of time hunting for data, identifying and correcting errors, and seeking confirmatory sources for data they do not trust.
Here are some of the factors to consider quantifying:
- Improving Organizational Efficiency
There will be improved efficiency from breaking down data silos and improving data quality. Knowledge workers particularly can improve productivity. Data can also be shared with partners and channels for incremental business opportunities.
- Reducing Cost
Focus on improving accuracy, lifecycle time, storage costs and data management costs. Remove redundant data, eliminate duplicate data, and examine the human/systems costs resulting from poor quality data.
- Increasing Automation
Automation will ensure that data is only entered once. It can be validated and remains consistent and up to date in all systems.
- Enhancing Insight
Better reporting will allow improved management insight. For example, a clearer understanding of customer and prospect behaviour will allow improved reporting and more personalised marketing.
- Increasing Revenue
Evaluate customer satisfaction, customer churn, loyalty, accuracy of customer communications and customer experience. Improve consistency across all channels of customer interaction to reduce support overheads.
- Improving Transparency
Improved transparency around personal data will generate more accountability, greater credibility and trust.
There are also qualitative benefits that are even harder to quantify such as reducing penalties by demonstrating regulatory compliance; reducing enterprise risk (e.g. contract, legal, brand) and increased data management maturity.
Good data quality is a launching point or springboard for other business improvement initiatives, where data accuracy allows the business to be more precise and fine-tuned in its reaction to and service offered to its customers or controls over operating costs and maintenance. Perhaps sharing GDPR costs with downstream projects that depend on quality data is another way to go.
Much of the money will need to be spent anyway but a strong business case for Data Governance will help move from a one-off tick box compliance exercise to embedding best practise into your organisation. More than this it will help protect you against the next wave of Data Protection and Privacy regulations. We don’t yet know what they are; but they will surely come.
Perhaps now is the time to consider investing in a new roof?