The road to innovation: The importance of data strategies

For companies, data is essential in terms of successfully deploying new technologies like artificial intelligence (AI) and driving the digital transformation. But not all data is created equal. Only curated and structured data can help companies truly create added value. And the basis for generating such data is a clear data strategy, says ERGO CDO Mark Klein. 

What do wood, metals, plastics and groceries have in common? They all serve as the base materials for future products and services: machines and buildings, furniture and textiles, foods, and packaging. These materials have to be processed in several steps – in which they are sawed, cast, melted or cooked. Because without these steps, they stay just as they are: base materials.

Data, too, forms the basis of many things. In our modern, digitalised world, it can play a pivotal part, driving advancements in numerous sectors by boosting efficiency, optimising processes, and laying the groundwork for innovation and technological breakthroughs. But for that to happen, it, too, has to first be processed – that is, curated and structured. 

As such, the catchphrase “data is the new oil” isn’t quite accurate; simply possessing data isn’t enough if the goal is to develop new business models or to successfully implement and apply new technologies like artificial intelligence. The data – and by that I mean the right data – has to first be processed in keeping with the highest standards of data protection and security. After all, while data is essential for companies, for customers it is highly personal and more than just base material.

In order to properly address all aspects, a clearly defined and consistently implemented data strategy is indispensable, as it ensures not only the quality and availability of data, but also its data protection-compliant use and management. It defines e.g. which internal and external data sources a company uses, how data is gathered – manually, automatically, or through interfaces – and in which form, i.e. structured data, real-time data, or historical data.

Essential: data governance and data strategy

Moreover, in order for a company’s data strategy to adequately meet all legal (data protection), security-relevant and operational requirements, it must also include appropriate “deletion concepts” for data, and a data governance structure, which defines who in the company is responsible for data management, quality and security. This ensures both data protection and adherence to applicable compliance guidelines.

Systematic implementation and the quantification of specific data projects are also part of the data strategy, as the mere existence of data, while of course necessary, is not in itself sufficient to guarantee its value-creating use. In turn, the data architecture offers a basis for doing so, as it defines the technical infrastructure needed in order to efficiently and securely save and process data.

A well thought-out and orchestrated data strategy allows a company to optimally maintain and expand its data inventory, and to use it with a consistent customer focus in mind. Then data can be used to make sound business choices, optimise processes, offer personalised products and services, and develop new business models. Accordingly, data is a key competitive factor in today’s economy – and continues to grow in importance. By utilising a data strategy, companies position themselves in a future-proof manner, both technologically and organisationally, to drive innovation and the digital transformation.

Data Literacy: company-wide data competence

In this regard, besides legal, regulatory and technical aspects, another factor for successfully establishing a data strategy shouldn’t be overlooked: an actively practised “data culture”. Staff at all levels must understand the importance of data, of its quality, and of handling it in a data protection-compliant manner. What is called for is company-wide data competence, or “data literacy”, which should be consistently promoted through basic and advanced training programmes. The goal is to be able to understand, interpret and analyse data, and to work with it effectively and securely.

Training programmes should also sensitise staff to topics like data minimalism – that is, how to consciously and sustainably work with data. After all, larger amounts of data don’t automatically mean better outcomes, e.g. when it comes to using AI. These larger amounts often result in the purging of data pools, which takes considerable time and resources. Here, both quantity and quality are essential.

Data Excellence Center and Data Council at ERGO

We at ERGO have developed a comprehensive data strategy, one that we consistently implement. As a result, we already had a basis for Gen AI use cases before ChatGPT was brought to market. Our data strategy is operationally executed by a dedicated unit, the Data Excellence Center. As part of the strategy, we have established a central data directory, or “Data Catalogue”, which promotes transparency on the available data and fulfilment of data governance tasks. The Catalogue is updated / expanded by selected Data Stewards from our respective units and Data Custodians from IT on a regular basis.

In addition, every four months a Data Council is convened, where the participants discuss various strategic questions. In the course of these meetings, the top management are also informed regarding the latest plans and progress in connection with the data strategy, giving them the opportunity to help shape it. A company-wide training programme on data competence is also part of the concept, just to name a few main points.

Data is undoubtedly an essential pillar of future financial success and will play a pivotal part e.g. in the digital transformation. But it will take the right data, which is gathered, maintained, expanded and converted into a form that can spark innovation – for customers, employees, and the company as a whole. In this regard, dealing with data carefully and securely is always the top priority. Only then can we create trust – besides security, one of the core elements that insurers offer. 

Text: Mark Klein, CDO ERGO Group

Please note: This article was first published by Versicherungsmonitor.