Learn what you need to do to win buy-in for investing in data literacy at your organization, from quantifying ROI to finding funding to measuring results.
As digital transformation leaders increasingly recognize the immense value of data literacy — the ability to manage, analyze, evaluate and communicate data effectively — it's essential that businesses invest in strengthening their organization's data skills across all areas of their business. However, convincing C-suite executives or other stakeholders to invest in improving data literacy can be difficult without a strong case for return on investment (ROI).
Many contemporary and emerging trends require high data literacy, from big data and analytics to automation and machine learning to cyber security and the Internet of Things.
Each of these is important, even critical, to the bottom line of many organizations today. Yet the barriers to buy-in remain, so there's an urgency to overcome their hesitancy toward data literacy initiatives so data-driven digital transformation can occur.
Below, we highlight how data literacy affects an organization's bottom line and how to finance and evaluate data literacy initiatives.
Data literacy is more than understanding data. It's about creating a culture where everyone knows how to use available data, understands what good decisions look like, and can develop solutions to improve the company's performance. Digital transformation leaders know that this kind of actionable insight leads to better decision-making capabilities at higher organizational levels.
Digital transformation leaders know that this kind of actionable insight leads to better decision-making capabilities at higher organizational levels. “By leveraging data, companies can gain insights on customer preferences and behaviors, enabling them to make better decisions, better serve customers, and optimize operations,” notes Kli Pappas, Director of Director, Predictive Analytics at Colgate-Palmolive. “Data-driven insights can also help companies identify opportunities for growth, innovation, and efficiency.”
In other words: investing in data literacy pays off. It provides evidence-based insights into patterns across all key business functions while enabling improved forecasting abilities — invaluable components to successful digital transformation goals.
Among the top internal roadblocks businesses face in generating business value using analytics and data, poor data literacy is the second biggest, according to Gartner. Only around a fourth of professionals are either confident in their abilities or pass standard data literacy tests — a mere 25% of employees and 24% of decision-making executives, respectively.
The gap isn't simply by generation, either. Even for millennials, the generation that grew up with and is arguably spearheading technological adoption today, data literacy is only around 22%.
Here are some of the incentives to correct this data literacy skills gap, according to the Data Literacy Index:
So when decision-makers hesitate to invest in data literacy initiatives, they're missing out on a $500 million opportunity that impacts their bottom line in depth and breadth.
The first challenge for any digital leader looking to build the business case for data literacy is proving return on investment (ROI).
“Measuring ROI on digital literacy initiatives can be challenging, but the most important thing is to pick a tangible KPI as a starting point and work from there,” says Pappas. “We measure the return on investment of our digital literacy initiatives by tracking metrics such as the time and resources saved, improved employee satisfaction, improved decision processes, and improved collaboration between departments.”
Here are some considerations for demonstrating data literacy ROI.
What impact does analyzing different types of data have on engagement? For example, using insights gleaned from analytics tools provides leaders more visibility into customer behavior trends over time which translates into a better understanding of their needs. This information helps inform decisions about key areas such as product development or marketing strategies resulting in increased sales or other desired actionable metrics that translate directly into revenue growth.
Another important assessment involves evaluating progress by measuring performance outcomes thanks to enhanced analytics capabilities. What tasks could team members perform faster/better with resources or training dedicated to increasing their knowledge of working with large data sets? How did those improvements add value to overall business objectives?
Utilizing metrics like customer acquisition costs or total cost savings per task will help communicate specific benefits seen throughout the organization at both operational and leadership levels.
Lastly, consider any direct financial investments associated with reaching these goals. Were purchases for specialized software solutions required alongside education, training, upskilling, or reskilling services? These are often needed when transitioning personnel to new technology platforms for sharing and accessing real-time company intelligence.
Prepare this estimate ahead of conversations to assist decision-makers and give them greater clarity of requested allocations by explaining the immediate and long-standing fiscal benefits. These concrete, if estimated, values provide a tangible range stakeholders can use to consider how much enacting an enterprise-wide training program would cost. Then they have actual values to tweak and play with, moving the discussion from consideration to negotiation.
The next step is securing funding. It is important to understand that CFOs may need to shift their funding model when investing in digital initiatives. They need to change their viewpoints from treating these efforts as one-off capital expenditures to product-centric delivery that supports continuous investment. By categorizing data literacy as a "product" with product lines like training platforms or mentorship networks, organizations are more empowered, prioritize strategically with agile flexibility, and increase ROI more effectively over time.
But for the actual sources of funding, there are a few options.
One such option is leveraging existing departmental budgets and acquiring funding from corporate sponsors. Many companies have dedicated departments focused on using data correctly, such as analytics or IT — budgeting from these groups can be natural sources of revenue when seeking resources to support data literacy efforts.
Funding opportunities are available from both private and public sources. For instance, Correlation One works with private companies such as capital market giant Citadel and software company Anaplan to endow data literacy scholarships, training opportunities, mentorship programs, and more. Meanwhile, there are free public workshops such as the Walmart Data Science Bootcamp and programs such as Datathons that can confer cash prizes and other benefits.
There are also options that forego funding altogether, such as internal data communities that organizations can foster with support other than significant financial backing.
Of course, consistently measuring and evaluating outcomes is essential when assessing the ROI of any initiative — and data literacy is no exception.
A baseline assessment of the literacy level of employees will provide insight into which segments to prioritize. Data literacy programs can be personalized to each segment based on those results. For example, after conducting an assessment, the workforce could be clustered into discoverers, explorers, practitioners, and ambassadors depending on their data knowledge level so each leader could grow in the area they needed most.
Assessments will identify different levels of data literacy among team members, but just because they score highly on paper does not necessarily mean they can immediately put what they know into practice. This is why the assessments should occur at a predetermined and realistically set timeline, e.g., quarterly, to stay up-to-date with the team's progress and track data literacy skill set growth.
As measurements such as these show leadership how data literacy initiatives impact organizational transformation, good design encourages reflection, motivating more improvement — or at the very least, easing negotiations for further investments.
Investing in data literacy is a must for any organization that wants to maximize its digital transformation goals. With Correlation One, leaders can unlock the potential of data literacy training and make sure it's part of their success story. Reach out to discover how we help get them started.