Data Debt Explained: Key Insights from Matillion’s eBook

Written by

Ajit Monteiro, Managing Director

Published

August 12, 2024

Data & App Engineering

Matillion

Data debt is a growing concern for organizations as they navigate the complexities of managing vast amounts of data. Much like its more familiar counterpart, technical debt, data debt refers to the accumulation of data-related issues that result from neglecting proper data management practices over time.

Our partners at Matillion authored a comprehensive eBook on this topic: Understanding Data Debt. In this blog, we explore some of the key takeaways.

What is Data Debt?

You’ve probably heard the term technical debt, which refers to the costs and inefficiencies that accumulate when software development shortcuts are taken or when outdated systems are not properly maintained.

Similarly, data debt encompasses the myriad challenges organizations face when data is not properly maintained, governed, or utilized. It includes issues such as poor data quality, lack of data governance, security risks, and the cultural shortcomings that prevent teams from leveraging data effectively. As organizations generate and store increasing amounts of data, the risks and costs associated with data debt rise dramatically.

Key Contributors to Data Debt

Data debt doesn’t happen overnight; it results from a combination of factors that, over time, lead to significant challenges in data management. There are several key contributors to data debt that organizations need to be aware of:

Data Silos

Fragmented data management across departments leads to inconsistent data and hampers integration efforts.

Lack of Governance

Without robust governance frameworks, data quality and security issues become rampant, undermining trust in data.

Low Data Literacy

When teams lack the necessary skills to manage and interpret data, poor practices proliferate, exacerbating data debt.

Rapid Growth and Mergers

Organizational changes can introduce new data sources and systems, creating complexity and leading to data silos and inconsistencies.

Why Data Debt Matters

The consequences of data debt are significant. It can result in decreased productivity, as teams spend excessive time cleaning and preparing data. Poor-quality data leads to misguided business decisions, missed opportunities, and increased operational costs.

Moreover, data debt can pose serious compliance risks, particularly when legacy systems fail to meet modern security standards. The hidden nature of data debt means these issues often surface unexpectedly, requiring urgent fixes that disrupt normal operations.

Strategies for Managing Data Debt

Effectively addressing data debt is not just about identifying the problem—it requires a thoughtful and proactive approach to mitigate its impact and prevent it from escalating further. Here are some recommended strategies to help guide this process:

Prioritize Data Quality

Implementing robust data governance practices is crucial. Regular audits, data cataloging, and setting standards for data entry can help maintain data quality.

Foster a Data-Driven Culture

Educating teams on data literacy and best practices ensures that everyone understands the importance of maintaining high-quality data.

Establish Ownership and Accountability

Clear ownership of data products and detailed data lineage records help track data across the organization, reducing the risk of accumulating debt.

Collaborate Across Teams

Effective communication between teams that manage data sources and those that use data products ensures alignment and minimizes disruption.

Don’t Let Bad Data Hold You Back

Data debt is an ever-present challenge that requires continuous attention. By understanding its impact and employing strategic management practices, organizations can mitigate its effects and harness the full potential of their data assets. Addressing data debt is not a one-time effort but an ongoing process that demands commitment from the entire organization.

To learn more about the impact of data debt and how to manage it, download Matillion’s eBook.

As a Platinum Matillion partner, OneSix is dedicated to helping organizations navigate their data challenges. Our Data & AI Strategy service is a solid first step. Get in touch with us to learn more.