- Author: Nicole Madigan
- Posted: July 7, 2022
Driving Value in a Data Driven World
Since before COVID, CFOs have been looking to the cloud to build agile, data-driven, secure and scalable organisations, able to withstand sudden changes to market conditions, provide faster access to crucial data and drive innovation.
Throw the pandemic into the mix, and the importance of data has dramatically increased.
Last week, the CFO Magazine panel was joined by leading futurist, Mark Pesce, Chief Economist, Stephen Koukoulas and Chief Technology Officer, Hitachi Vantara A/NZ, George Dragatsis.
As data volumes continue to rise, CFOs are charged with the task of funding, storing, organising, and governing what is now arguably one of the most valuable assets within a business – your data.
But when it comes to using data effectively, the most important aspect of any organisation is being data driven, says Dragatsis.
In other words, all companies are data rich. The way to gain advantage is to figure out how to unlock the value of your data.
“Data driven organisations are 23 times more likely to win customers,” says Dragatsis.
“Six times more likely to keep customers and 19 times more likely to be profitable. There is some interesting research out there, around that.
“So, there’s opportunity for our customers to actually drive revenue and innovation, and that’s a really exciting part of what I do, at Hitachi Vantara, from a strategy perspective.”
No stopping data growth
As a futurist, Pesce agrees that being able to effectively manage your data is critical, especially as data volumes continue to grow exponentially.
“It’s doubled five times in a 10-year period. That’s how we got 32 times more data in 2020 per year than in 2010,” says Pesce.
“And that means that every organisation, and every individual in that organisation will be generating twice as much data two years from now, as they are today. And you need to plan for that. You need to think about everything in that context.”
Storing this ever-increasing flow of data is just one side of the problem. On the other side, as Dragatsis points out, is how we use that data.
“Most organisations have gotten good at storing the data, but often what happens at that point is that the data just sits there.
Scalability is critical
“Data has been collected; it’s been stored. And what are you doing with it? And this is I think a useful lens for a CFO to look through when they’re taking a look at their company’s technology investment and the related ROI expectations.”
When it comes to cloud technology and the role it plays in our increasingly data driven business world, CFOs must avoid over or under investing versus requirements, business growth and market fluctuations.
One option is to scale up or scale down as business demands change to keep costs in line with organisational needs. But is that even possible?
“We know that there are three things we’ll never escape – death, taxes, and data growth,” says Dragatsis.
Dragatsis says being able to understand scalability options in the context of your own business requirements and challenges is essential.
He outlined common headwinds that must be considered.
“First – businesses are accelerating to the cloud, many with cloud first or cloud only strategies,” says Dragatsis. “Whether you choose pure public, private, hybrid or multicloud, challenges include application migration complexities, controlling costs across disparate environments, security, privacy, and even data sovereignty.
The secondheadwind is that your business data is everywhere – or, in other words, it is distributed across your IT environment.
Third, every company is becoming more software driven, able to deploy applications that are increasingly modular and scalable. Companies are becoming more software defined and require infrastructure that suits.
“The fourth headwind is the skills shortage in which it is a challenge to ensure your people have the skills and know-how to squeeze the juice out of your IT investment and drive the desired objectives,” says Dragatsis, “and this leads us to the fifth. Many companies are doing this with legacy infrastructure that wasn’t designed for it.
“To manage a distributed application and data environment across a hybrid and or multicloud landscape, you must be able to scale your resources – such as data management (compute, protection), connectivity, security and other layers independent of each other with zero impact to performance or capacity.”
Dragatsis suggests that it’s easy to understand why scalability is critical if you think of it this way: You need to be able to start small if you need to, to scale as it makes sense for your business, and adjust your IT infrastructure to support changing requirements, commercial appetite and business objectives.
“When everything seems to be going against you, remember that the airplane takes off against the wind, not with it,” he says, “So any headwinds you’re facing should be identified to understand the opportunities and figure out how to drive the change you want to drive.”
Cloud storage – what happens when the worst-case happens?
So, where does the cloud come in? And are there any considerations and implications CFOs should be mindful of?
According to Pesce, it’s not always as simple as it seems.
“Particularly with financial data, you have to be very careful about where your data is living,” he says.
“It’s very easy for us to imagine it living pretty much where we want to think it’s living, but it could be living in China or Russia or Singapore or New Zealand, or here in Australia.
“When you have a cloud agreement … you need to be quite clear about this, and you need to be clear about what regulations mandate how and where your cloud data is being stored.”
The next thing to consider is what happens when the worst happens.
“It’s important for CFOs to understand that the cloud is not a way to abandon responsibility. It’s a way to share the responsibility. And one of the things that we need to start to think about is how do we regard and how do we assess the risks and costs associated with data, whether that’s local or cloud based.”
Pesce is currently investigating a cost-based framework looking at the three possible issues a CFO might need to deal with if they’re storing data in the cloud.
The first is restoration.
“Can you bring it from a backup? And can you prove that you can bring it from a backup?
“If it works, it’s the cheapest and happiest alternative, and everyone dances away into the sunset.”
But if you can’t restore your data, then you’re looking at the next category – re-creation cost.
“So, you are going to have to either keep punching in a whole bunch of data or find some other way to re-create it – that may be from existing data sets.
“That will be slow. It will be expensive. It will be filled with errors. And in fact, we just saw Atlassian have to do this for a whole bunch of their clients.”
Then there’s the third category – reparation. It’s the big one, says Pesce, because it means a catastrophe has likely unfolded.
“This is where your data has gone so bad that it has ended up effectively in either a competitor’s hands or in enemy hands, and it is being weaponised and used against you. And this is happening more and more in the world now.”
This type of incident means organisations may face not only the cost of re-creating data, but potential liability costs due to the release of private and confidential client data.
“Plus, the brand reputational damage that you’re going to secure when the world finds out that in fact their data has been overshared, and that can be very expensive.
“So, all of these things have to factor into the way a CFOs are going to think and plan for storing and managing data.”
Pandemic impacted IT investment strategy
With data management and technology – and their associated costs – becoming increasingly important parts of business planning, what then does that mean for how CFOs manage their investment strategies?
According to Koukoulas, the critical nature of digital planning started slow, before rapidly becoming an essential part of the CFO remit thanks to the impacts of the COVID-19 pandemic.
At the micro level, working from home brought to light the poor condition of the technology that was available at the office, when employees did return.
“The 10-year-old laptop, really dodgy Wi-Fi connection and all these other things, you know, that’s not good enough,” explains Koukoulas.
“You’re downloading absolutely critical, valuable, confidential, corporate information. It’s an important issue when you’re managing some of the risk of fraud or bad activity. And of course, having a really slow and cumbersome computer that breaks down all the time was no good.
“I know that it’s only a micro part … but it sort of forced the hand of a lot of businesses who may have been a little bit slow.”
Koukoulas says these micro examples reflect the way society has changed, how businesses have changed, and capture on a more specific level what’s happening in a big picture sense.
In other words, it’s about getting on the front foot.
“That first mover advantage is always critical.”