The ability to collect, analyze, and use data to make strategic decisions can make the difference between an organization’s success and failure.  Recent studies show that companies that invest in Datafication perform better than those that do not. 

Thus, Datafication is transforming the way companies interact with their customers, by improving operational efficiency and providing valuable insights for decision-making.

Therefore, knowing what Datafication is and how important it is has become the first step in order to transform the reality of your company. We will also further discuss 6 good practices to extract the power of data in your company’s day to day. Enjoy! 

What is Datafication?

Datafication is the process of transforming information into digital data, by enabling the collection, storage, analysis, and use of that data for specific purposes.

The concept  of Datafication has become increasingly relevant in our digitized and ultra-connected world, being used by companies, governments and individuals in order to make decisions, predict behaviors and improve efficiency in various areas.

In practice, datafication can be applied in all sorts of different contexts, from collecting user information on digital platforms to capturing sensor data on IoT devices.

Another common application is the analysis of large data sets in order to identify patterns and trends. Through Datafication, it is possible to gain valuable insights into user behavior, consumer preferences and market trends, among other aspects.

Read also: Internet of Things in companies: benefits, examples and market success case

The importance of Datafication and its benefits

Datafication is extremely important in an increasingly digitized and connected world, as it allows organizations and individuals to gain valuable information in order to make more assertive decisions.

This involves knowing the information, designing scenarios, predicting trends and behaviors, as well as understanding what the future outcomes are, whether positive or not.

Thus, we can talk about some of the main benefits of Datafication:

• Improved decision making: Data collection and analysis can help organizations make informed decisions based on valuable evidence and insights. This can lead to better resource allocation and more effective actions.
• Operational efficiency: Datafication enables organizations to monitor and analyze data in real time, improving operational efficiency and reducing costs. We discuss 3 real examples on the use of data in this article about Big Data in Industry 4.0.
• Personalization: Data collection can help customize user experiences by providing personalized recommendations, offers, and relevant content. This is the case with Spotify music recommendations, movies on Netflix and videos on YouTube, but also Google, Facebook and Instagram ads;
• Risk forecasting and mitigation: Data analytics can help identify risks and predict future trends, allowing organizations to take steps in order to mitigate those risks before they occur.
• Innovation: Lastly, Datafication can provide valuable insights for innovation and the development of new products and services. That is, new products can emerge based on user behavior and identification of their real needs.

However, it is important to consider that Datafication can also have negative implications, such as the privacy and security of personal data, the lack of transparency in the collection and use of information, algorithmic discrimination, and other ethical issues.

On these last two topics, algorithmic discrimination and ethical issues, the video below summarizes the contents of the book “Weapons of Math Destruction,” which addresses how data can be harmful to society when used without care:

Therefore, it is essential that organizations that use Datafication adopt responsible and ethical practices, by protecting the privacy and rights of the individuals involved, as well as their social classes and the like.

How to apply Datafication in a company?

Now that we understand what Datafication is and its importance, it is time to get to know the best practices in order to apply it in your company. We have separated 6 steps for this arduous task, one which may also require a cultural change in the organization: 

1. Set clear objectives: Knowing the business objectives you want to achieve with Datafication is essential to the success of the project. This includes defining the metrics that will be used in order to evaluate the actions and correct any data management problems;
2. Identify relevant data sources: Another important point is to get to know the data sources that are relevant to your business objectives. This may include internal data, customer and supplier data, social media data, among others;
3. Ensure data quality: Make sure the data you collect is accurate, complete, and reliable. Regularly question processes in order to find flaws and avoid biases that could compromise the quality of analysis. 
4. Choose the tools and technologies according to your own reality: each company has a need and, therefore, may require specific tools in the Datafication process. Therefore, avoid blindly following the recommendations found on the internet in order to invest in what your business really needs;
5. Ensure data security and privacy: Ensure that the data you collect is stored and used securely and ethically. This involves implementing data security measures such as encryption, backup and disaster recovery, as well as compliance with data privacy laws;
6. Educate the company through results: Analytics results and insights can be great tools for educating employees and spreading data culture, especially to stakeholders. So, make it a habit to run regular reports, create interactive dashboards and presentations for the entire company. Get everyone to “breathe” the idea of Datafication on a day-to-day basis.

Even if these 6 steps are followed, it is important to understand that adopting a data-driven company culture is extremely challenging. However, the ability to transform your business is such that the effort is certainly worth it.

Did you like this content? Take the time to read this related article: What is Data Analytics and how is it used by companies?