Data Governance Foundations for Boards – Governance guidance to drive innovation

The AICD’s latest governance resource helps boards of all organisations navigate both the opportunities, and also the risks, from harnessing key organisational data. The resource was informed by extensive insights from senior Australian directors and includes case studies from Coles and Ramsay Health Care.

The AICD has partnered with law firm Allens and the Melbourne Business School’s Centre for Business Analytics to publish Data Governance Foundations for Boards – Key principles for director oversight and value creation.

The resource assists directors of all sizes of Australian organisations effectively oversee data management practices, including recognising the potential value of key data to drive innovation and improved operational and financial performance.

High quality and secure data sets are the lifeblood of effective use of artificial intelligence (AI) applications. As the take-up of AI tools and systems continues to grow, the importance of effective data governance, including the board’s oversight, will only increase.

Accompanying the main publication is a 3-page boardroom ready Snapshot of the resource and separately a checklist for boards of small businesses and not-for-profits.

The publication is intended to complement, and build off, the AICD’s existing cyber security and AI resources. Members are encouraged to consider the three resources together to gain a holistic picture of recommended digital governance practices.

This article draws from the key insights shared by leading Australian companies and senior directors.  

Data as a driver of competitive advantage – Insights from leading Australian companies

The case studies from Coles Group (Coles), CAR Group (CAR) and Ramsay Health Care (Ramsay) demonstrate that with strong board support, investment and the promotion of a data-driven culture that data can be a significant driver of growth and competitive advantage.

Coles is one of the most data rich organisations in Australia driven by 1,800 retail outlets, 115,000 employees and millions of customers each week. In recent years it has invested in a sophisticated AI system to forecast demand 100 days in advance, generating 109 billion daily data predictions. The board has also supported significant investments in automated warehousing and promoted a data-driven culture, reflecting the strategic importance of data and analytics to maintaining Coles’ competitive advantage.

CAR, better known as carsales.com.au in Australia, is an ASX 50 company with significant online automotive classified businesses in Australia, United States, South Korea, Chile and Brazil. CAR, from the board down, has sought to promote a data-driven culture as key to driving innovation and meeting the needs of customers recognising that it operates globally in highly competitive digital classified markets. This culture includes a dedicated unit that is focused on developing and implementing innovative solutions based on the richness of the data that CAR collects and holds. All employees are also encouraged to take time out of regular business duties to work on individual side projects and there are separate incentives and prizes for innovation.

The Ramsay board has supported significant investments over recent years that have transformed how Australia’s largest private hospital operator treats data with the goal of improving patient experiences, clinical outcomes and operational performance. At the centre of this effort was establishing Ramsay Data Hub which has harmonised over 50 inconsistent and siloed information systems. Ramsay Data Hub has saved analysts up to 1.5 days per week and has assisted in identifying risks across Ramsay.

Data to drive and demonstrate charitable purpose

Melbourne based charity Fitted for Work (FFW) demonstrates how a board of a charity can work with management to enhance data practices to further the organisation’s purpose and impact.

FFW’s purpose is to help jobseekers become work-ready and find meaningful employment. It does this through practical services, including assisting with developing resumes, skills development and providing professional clothing.

The FFW board has played a hands-on role in building the digital and data capability of the organisation, including via a board technology committee. Directors have also accessed personal contacts and networks to provide FFW with external expertise. The board has challenged management to improve data management practices as key to demonstrating impact to clients, donors and supporters.

While there is still work to be done the charity’s data was recently utilised by an external consultant to find that FFW delivers $2.19 in direct net economic benefit to society for every $1 invested.

The importance of effective risk oversight - Director reflections

The reflections of senior directors Carmel Mulhern GAICD and Fiona Pearse FAICD have a consistent message of the need for close board oversight of the risks that can result from poor data governance practices, including weak security controls.

Ms Mulhern stressed the importance of the board having a clear visibility of responsibilities for data governance across the organisation, including accountability for privacy obligations. All staff should be aware that meeting privacy obligations is critical to maintaining an organisation’s trust and confidence with its customers and clients, employees, regulators and other stakeholders. Ms Mulhern noted this is particularly pronounced for charities and not-for-profits which often collect and protect highly sensitive information, including about vulnerable people.

Ms Pearse recommends regular, focused data governance discussions at the board or risk/audit Committee to give the board a deeper understanding of data risks, the organisation’s data governance architecture, and critical controls. She also considers there is considerable value in the organisation undertaking a data asset stocktake that assists in setting risk controls and board oversight. This baseline exercise covers what key organisational data is collected, where it is stored, who has access to it, how it is utilised by the business, and when it is destroyed.