The Australian business landscape is awash with new regulations and obligations surrounding privacy and data use. Between the mandatory data breach notification scheme, new EU data protection regulations and the Australian government’s announcement of a new consumer data right, chief technology officers and in-house counsel could be forgiven for hiding underneath their desks with a stiff drink.
But complaining about the new data and privacy regulations misses the point. Rather than a burdensome, resource-intensive compliance hoop to jump through, good data and privacy management presents a major competitive advantage for businesses.
Strong data policies and practices needn’t be motivated by avoiding penalties from newly empowered regulators. They should be pursued because they have a material effect on our bottom lines.
As legal advisers to a spectrum of Australian businesses, from large multinationals to emerging high growth companies, we are increasingly seeing good data management as the difference between success and failure.
Here’s a scenario we’re seeing more and more: two organisations, let’s call them Company X and Company Y, are neck and neck in a race to get a new product to market.
Company X has been building its mailing list organically for years, collecting people’s contact details and information from multiple sources for numerous purposes in different jurisdictions.
They don’t have a clear picture of what data they own, and under new, tighter regulations, they’re also not really sure what they can do with it.
Before they can start beefing up their product with customer information or communicate with their prospective buyers, they end up locked in months of due diligence to sort out their data and privacy obligations.
Company Y, thanks to a persistent and forward-thinking (or pernickety, if you’re not a lawyer) general counsel, has always had robust procedures in place for collecting data, and has maintained a clear map of their information and how they can use it.
They have a data strategy in place that governs all aspects of the data lifecycle, from creation and collection to use, sharing, exchange, commercialisation, protection and retirement.
As soon as their product is ready, Company Y is able to populate it with relevant data and start marketing to customers.
Strict data and privacy management probably cost Company Y hours at the outset, but they’re now months ahead of their competitor. They’ll see a significant difference in their revenue, customer base and share price.
Their approach to data handling will also earn the trust of their consumers, who are increasingly rewarding businesses that engage in ethical handling of data with their loyalty.
Cisco’s 2018 Privacy Maturity Benchmark Study, released this month, provides concrete evidence for the extent to which good privacy benefits bottom lines. Data privacy issues contributed to sales cycle delays for 65 per cent of the 3600 organisations surveyed for the study. For privacy-mature companies, that delay amounted to 3.4 weeks. For immature companies, it was almost five times that, at 16.8 weeks.
Good data and privacy practices don’t just safeguard profits, they also protect against losses. When a business is confronted with a data breach – which, as we’re increasingly seeing, is only a matter of time – good data management could mean millions of dollars. According to Cisco’s report, almost three quarters of privacy-immature companies experienced a loss of more than US$500,000 in the past year, compared with only 39 per cent of privacy-mature companies.
The more we quantify the benefits of data and privacy management, the more old fashioned it seems to be complaining about compliance.
It’s clear that Australian businesses need to do more to front-foot the benefits of an era in which data is, as Sheffield mathematician Clive Humby so aptly put it, the new oil.
A holistic approach to data and privacy management, including a well-considered data strategy to help the business leverage its data for growth, is essential.
Australian regulators’ approach to data and privacy is gradually pivoting from rigid defence of privacy to unlocking value. While we’re seeing enormous variation in how our clients are using data, there’s increasing awareness of the value it could hold.
Let’s look at the litany of new regulations as an opportunity rather than an irritation. Australian businesses are at a turning point in their management of data and privacy. Businesses that get their ducks in a row early will reap the benefits.
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