Invest in a Data Culture or Fall Behind: Q3 2021 State of Data Culture Report

It’s been one year since we’ve started publishing the Alation State of Data Culture report, and uncertainty still remains the only sure thing. Inflation and the Delta variant are causing chaos, while the chip shortage and working from home seem to have no end. Yet, through it all, organizations that rely on, and invest in, building a data culture have consistently outperformed those who don’t. Let’s unpack why and what you can do to get on the winning side of the game.

Ignore Data at Your Peril

The Alation State of Data Culture Report provides a quarterly assessment of the progress enterprises have made in creating a data culture. The report explores the challenges leaders within these enterprises face in embracing data-driven decision-making, and recounts their progress in leveraging data to drive business value. This is our fifth installment of the report, which means we can make year-over-year comparisons and explore longer-term trends, as well as the areas that have seen minimal change due to the market.

First, the bad news: 97% of data leaders have felt the pain of ignoring data. There are an abundance of consequences from ignoring data. They include missing out on new revenue opportunities, poorly forecasting performance, and making bad investments.

Ignoring data also causes blind spots. For example, organizations lacking a data culture underestimate competition. The report found that, for organizations that aren’t great at using data, only 44% reported that they were at a moderate to significant risk of disruption by competitors who are better able to use data. On the other hand, for organizations with top-tier data cultures, 73% were aware of this critical, competitive risk.

The report shows that ignoring data is a ubiquitous problem with huge potential risks. When organizations fall short of goals, data leaders place the blame on CFOs. Three-quarters (74%) of data leaders say that, despite the positive potential impact of data and analytics, their CFOs do not invest enough. The report also found that 89% of organizations that fell short of their revenue goals blame their CFO for not investing enough in data and analytics.

Data Culture Separates Winners From Losers

Of course, there’s an easy solution to this pain of ignoring data: stop ignoring data. Or, rather, start building a data culture. Enabling your employees to find, understand, and use trusted data empowers them to make informed, data-driven decisions with accuracy and confidence. It’s obvious. But lack of investment in data and analytics can thwart efforts to build a data culture, which then impacts competitive advantage, and potentially the bottom-line.

Yet awareness of data’s great value is growing. More and more organizations are moving in the right direction by building, nurturing, and improving their data culture. More than half (56%) say their data culture has improved over the past year. In a nod to the CFOs who believe in data, the respondents point to the following catalysts as improving data culture:

• Investments in new data tools (54%),

• Collaborative data governance (48%), and

• Improved data literacy (51%)

However, these improvements are creating a “wealth gap” between businesses with top-tier data cultures and those that aren’t investing in a data culture. Nearly every organization (86%) with a top-tier data culture met or exceeded revenue targets. Only 36% of low-tier organizations can say the same.

Worse yet, only about one-third (37%) of low-tier organizations have seen any data culture improvements in the past year, as opposed to the 74% of top-tier organizations that saw improvements by continuing to invest in their data culture. A pattern emerges: those who invest in data culture see a return on investment that fosters further internal support. As momentum for the cultural change picks up, so too does buy-in from leadership. This makes the lack of investment even more poignant for those that need it most.

It’s almost as if organizations with a robust data culture see the data that shows data is critical to success.

Data Culture Starts at the Top

The c-suite is growing more data literate. More than half (54%) of those who have seen an improvement in data culture say their c-level executives almost always rely on data over gut instinct. That’s a 20-point improvement over last year.

Top-tier organizations are also more likely to have a c-level data executive (60%) than low-tier (46%). This finding reflects how data expertise in the executive ranks influences the overall culture of the organization. To whom that highest-ranked data leader reports is split nearly evenly, with 51% reporting to the CEO or an executive board and 49% reporting to a technical executive (CIO, CTO, or CISO)..

Which departments are leading the data charge? Within the organization, Operations and Sales continue to be the biggest proponents of data across all data culture tiers. At top-tier organizations, two key business drivers for data and analytics priorities emerge: Product innovation and operational efficiency are the two most popular reasons for pursuing a data culture.

For 2022, Invest in Data Catalogs and Formal Learning

If you’re a data leader looking to improve your organization’s future prospects, or a CFO in trouble, what’s next?

For starters, get a data catalog. Nearly all data leaders (93%) cite data catalogs as important or essential to establishing a data culture at their organization. That’s unsurprising, as the top three challenges data leaders say they face are:

• Data discovery (40%)

• Data silos (38%)

• Data democratization (38%)

As for top challenges, roughly one-third of all data leaders cite a lack of buy-in from leadership (36% – hi CFOs!) and lack of a data-driven culture (32%). For top-tier organizations, their biggest challenges are data democratization and lack of analytical skills; these findings indicate they have the tools to discover data but lack the skills to get it into the right hands and use it effectively.

This is why education and training remain a core focus. Investing in formal learning is another way most (57%) top-tier organizations are improving data literacy and nurturing their data cultures. These types of programs give workers the knowledge to put data to better use, thus creating a snowball effect to grow the data culture.

A data catalog is an ideal training ground for formal learning. And both of these tactics are fundamental to building a data culture. Year over year, the Alation State of Data Culture Report shows both defensive and offensive competitive advantages for those that do so.

On defense, organizations can evaluate risk and better prepare for uncertainty with more predictability. On offense, organizations can increase customer retention and drive product innovation. These benefits are likely why data leaders are doubling down on data culture, showing year-over-year growth in adoption rates for data literacy, data search & discovery, and data governance.

Start Today with the Alation Data Catalog

Organizations with a strong data culture use data to drive more new revenue opportunities, more accurate forecasting, and smarter investments.

Here is how you can improve your data culture:

• Just getting started? The survey shows that investing in a data catalog or data intelligence solution is key to building and improving data culture

• Already on the way? Education, including formal learning and development programs to increase data literacy, was key to improving data culture and empowering everyone to better use data

• Have a strong data culture? Measure, monitor and continuously improve to increase data-driven decision making

A data catalog is a key foundation to begin building and improving your data culture. Your next investment should be in education. Indeed, by teaching your workers how to best utilize data, you empower them to:

• Drive innovation

• Improve efficiency

• Increase revenue

• Measure and continually refine processes

• … and so much more!