Data Strategy Definition: 7 Key Elements of Data Strategy

Data strategy is a roadmap for how a company gathers, saves, and manages data to best benefit its business goals. The overall business strategy of the organization informs data strategy. The company’s business leaders create a unique plan depending on its needs, and the chief data officer oversees its execution.

The critical components of data strategy vary from company to company, depending on its strategic goals and business needs. The major elements of data strategy include:

1. 1. Business strategy: The first step when outlining an effective data strategy is knowing your organization’s business needs. From there, determine how to best use data to meet those needs.
2. 2. Data access: This involves optimizing accessibility to your team, including the organization of data sets and creating easy-to-understand dashboards for team use.
3. 3. Data architecture: You’ll need knowledge of your organization‘s data storage framework. Decide where to store master data, such as in an on-site data warehouse or in cloud-based storage.
4. 4. Data integration: Integrating your data into one system allows each business unit to access enterprise data (data that organizations use across all departments and regions) with the ability to share and utilize it as needed.
5. 5. Data management: Data management or data governance means you have set business processes and rules for how your team manages data, making the information easier to access and share. Proper data management decreases decision-making time, as all data is treated similarly in the company‘s data framework.
6. 6. Data sources: It’s important to identify the metadata (the origin information such as file size, date of creation, and the creator) of the data assets and know if it’s from your own data or an outside source.
7. 7. Transformation of data into business insights: Data analytics is the primary purpose of a data strategy. In data analytics, visualization tools translate abstract data into concrete observations and inform how the information can positively influence your corporate strategy.

Though there is an investment of time and resources, the benefits of data strategy are:

1. 1. Increased productivity and efficiency: A data strategy improves your organization’s operational efficiency and enhances productivity, as your team will spend most of their energy on profitable tasks revealed by the data.
2. 2. Enhanced business reputation and performance: A data strategy leads to better business processes and increased sales and customer loyalty. Using data properly allows you to cut costs in underperforming areas and increase profitability.
3. 3. Improved data quality: According to a 2020 Gartner survey, low-quality data costs organizations an average of $12.9 million annually. A data strategy cuts down on human error and increases accuracy.
4. 4. Improved regulatory compliance and reduced risk: If you have a large company, a data strategy with streamlined auditing capabilities will help you comply with state and federal business regulations and protect the data privacy of your consumers.
5. 5. Informed decisions about your business: Accurate data reveals the truth of your business strengths and weaknesses and supplies information on how your clients or customers behave. This information can help you plan and adjust your product or service.

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