What Every Business Owner Should Know About Data Hygiene
When you read the word “hygiene,” you may immediately think about the importance of washing your hands or brushing your teeth. But there’s another use of the term that every business owner should know: data hygiene.
This refers to the ongoing process of ensuring that the information your company relies on is accurate, complete, consistent and up to date. Whether customer contact info, financial records or vendor agreements, data that isn’t wholly clean puts your business at risk of making poor decisions and costly mistakes.
Specific harms
How can dirty data harm your company? For starters, inaccurate or outdated information can lead to billing mistakes and delays, ineffective marketing campaigns, missed or mishandled sales opportunities, and compliance troubles. When employees must constantly question the validity of data and fix errors, productivity falls and costs rise. Over time, lack of reliable information can erode trust with customers, vendors, lenders and investors — all while lowering staff morale.
And now that many businesses widely use artificial intelligence (AI), there’s a cybersecurity angle. Among the many threats currently evolving is “data poisoning.” It occurs when bad actors, either internal or external, intentionally corrupt the information that an AI model relies on to operate. The objective is to manipulate the model’s behavior by introducing malicious, biased or inaccurate data during the “training phase.” Without strong data hygiene safeguards in place, these cyberattacks can compromise an AI system and ruin the reputation of the company using it.
Best practices
The good news is your business can significantly improve its data hygiene by adhering to certain best practices. Begin by setting clear standards for data entry. Employees should input information the same way every time, according to a well-defined process. Train staff members on the definition and importance of data hygiene. Ask them to routinely verify critical details related to financial transactions, such as customer contact info and vendor payment instructions.
From a broader perspective, set up regular audits of your databases to remove duplicate items, catch and correct inaccuracies, and archive outdated information. Consider investing in software tools that flag inconsistencies and prompt updates to key systems.
Above all, assign the responsibility to promote and oversee data hygiene to someone within your company. If you run a small business, you may have to do it. But many companies assign this job duty to the chief data officer or data quality manager.
Financial performance benefits
Robust data hygiene can translate directly to stronger financial performance. As the accuracy and reliability of information are continuously improved, your company will be able to generate more dependable financial records and reports. In turn, you’ll have the tools to make better-informed decisions about budgeting, cash flow management and strategic planning. Clean data benefits sales and marketing as well. For example, it helps you target the right audience, reducing wasted efforts and improving return on investment.
Of course, there are costs associated with data hygiene. You’ll likely have to spend money on software, training, and potentially engaging consultants to audit your systems and upgrade your technological infrastructure. However, handled carefully, such costs will probably be far less than those associated with lost sales, compliance penalties and reputational damage.
More important than ever
Data hygiene may not be top of mind for business owners dealing with hectic schedules and complex operational challenges. However, the quality and quantity of information are critical to running a competitive company in today’s fast-paced, data-driven economy. We can help you and your leadership team understand the cost implications of data hygiene and budget for it appropriately.
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