GRC decision-making in the data age: Are leaders ready to help businesses thrive through big data, AI and automation?
Today’s boards and executive teams know more about the companies they lead than ever before. Digitisation has created vast quantities of data related to every facet of a business’s performance and its commercial environment. Interrogating this data allows the board to discover almost anything it wants to know. By leveraging emerging artificial intelligence tools to analyse it and react within agreed parameters, leaders can even automate decision-making itself. At least, that’s the theory!
The reality, for most organisations, is somewhat different, and achieving this nirvana – of automated decision-making based on perfect knowledge – is a long way off. To find out just how far, we partnered with Board Agenda to explore how boards, executive teams and governance professionals are introducing technology to support data-driven decision-making in the business and boardroom. We surveyed 85 directors, senior leaders and company secretaries across a range of industries, asking for their views on data and technology adoption within their business.
The results are illuminating. There is undoubtedly strong momentum behind a data-driven approach, with more than nine in ten research participants saying access to data and business intelligence has increased dramatically in the past five years. Almost half (48%) say they expect artificial intelligence will increasingly automate decision-making by leaders in their organisation. Seven in ten expect to invest further in business intelligence capabilities to facilitate this, and 61% believe the investments they’ve already made have improved the process of decision-making in their business.
But the practical implementation of data-driven decision-making may falter, because 60 percent of participants admitted that board and enterprise leaders lack understanding about how data or AI can be applied to improve decision-making processes. There’s also a sense of data overload, with more than two-thirds agreeing or undecided about whether their boards are overwhelmed with the amount of data in the business.
When leaders lack data literacy, they may struggle to decide on the right questions to interrogate the data with. They may also misinterpret outcomes. The problems this presents should not be underestimated; the UK COVID-19 public inquiry has thoroughly underlined how difficulties in understanding data concepts can significantly impede decision-making. Therefore, organisations pursuing business intelligence projects should also factor in the existing skillsets and data competencies of leaders, investing in training where needed.
Data quality and governance are critical to success
Data quality and relevance is another key area. Decisions based on flawed or incomplete data are imperfect and, as a result, boards that are highly dependent on data to inform decisions could put the organisation at risk. Fortunately, this doesn’t seem to be a major issue yet, with only 20% of respondents saying their board is over-reliant on data in its decision-making. But as the use of business intelligence grows, this risk may grow with it.
One respondent neatly summarised underlying concerns about data reliance, saying: “The quality of the input into the data is a concern. The governance of how data is used both in the business and in decision-making in the boardroom needs to be explored in more detail, to understand the risks, mitigation, and consequences of making decisions on incorrect information.”
Businesses pivoting to a more data-reliant approach must therefore build confidence in the integrity of their organisational data. This is particularly important if they aim to introduce artificial intelligence and automation; leaders will only trust AI-generated decisions if they know they are based on accurate inputs. Creating that trust requires companies to design and implement sound data governance structures and processes that minimise the risk of errors, duplication, and disconnected data siloes. The aim should be to build a comprehensive data estate that is the single source of truth for the enterprise, and which can be easily interrogated by the relevant analysis tools.
This position is still some way off for most organisations, as our study showed fewer than two-thirds of those surveyed have integrated data across systems and make this data available to the board.
Our research has uncovered a definite opportunity for companies to get smarter about data, and outside research shows that it pays off. Enterprise data platform Splunk recently published analysis showing companies that use data for innovation, improving business resilience, and disrupting competition gain a 9.5% profit edge. For leaders tasked with maximising stakeholder value, this is a clear indication that developing a strategic approach to data and analytics to drive confident decision-making should be high on the agenda.
Diligent and Board Agenda’s ‘Leadership, decision-making & the role of technology’ report provides a fascinating insight into the state of data-driven decision-making among corporate leaders in the UK and Europe today. Get your copy now.
