Will the Rise of Data Analytics Be the End of Privacy as We Know It?

At the Chief Analytics Officer Forum-Europe earlier this month, dozens of analytics leaders from a full range of industries came together in London’s Kensington neighborhood for the first CAO gathering east of the Atlantic. From financial services (Barclays, RBS, Bank of Ireland, etc) to retail products and services (eBay, Tesco, Unilever, etc), best practices and war stories were shared rather openly among European attendees.

In London, however, some topics emerged that likely reflect the European setting of the conference.  The varying topics also reflect the nature of analytics as both a maturing, strategic function of the enterprise and a supporting player for other areas of the enterprise.

As Research Director at the International Institute for Analytics, my interest in a cross-industry leadership meeting like the CAO Forum is three-fold: the opportunity to interact with fellow pioneers of the analytics movement, the chance to share advice based on my experience and IIA’s broad perspective, and fresh insight into leaders’ concerns and priorities on a range of topics.

Based on the discussions at the CAO Forum, those concerns and priorities surely are evolving. Just a couple years ago, even less in the case of some companies, the top issues for many analytics leaders (or, as CAO Forum organizers referred to some attendees, “de facto analytics leaders”) could be grouped into three themes: establishing relevancy and buy-in for analytics in one’s organization, designing the right organizational structure, and recruiting and training analytical talent.

As I wrote following the previous CAO Forum in New York, established analytics leaders largely have these themes figured out, or they’re at least conversant on the challenges and aware of options.  Analytics as a strategic endeavor, and the investments in talent and technology needed to achieve it, aren’t mystical notions anymore. Obstacles still exist (there always will be business partners who decide with their guts, or companies that struggle to attract talent), but the journey has a direction.

I’ll share my take on two interrelated topics: customer data, and privacy protections.

First, the capture and usage of customer data are front of mind for European analytics leaders in many industries. A central tenet presented at the conference relates to what one attendee referred to as the “customer contract”: beyond the privacy laws that govern the use of customer data, consumers have the implied expectation that their data will be used to their benefit. As a speaker at the event said, “customers are giving you permission to use their data, but only as long as they get something in return.”

Customers are giving you permission to use their data, but only as long as they get something in return.

As a consumer myself, the implied customer contract around the benefits of their data is an idea that resonates strongly. Do I mind that a department store sends me personalized coupons based on the store’s broad-reaching knowledge of my needs and shopping habits? Or that an airline offers me a sweeter mileage deal for a new credit card because my data places me as a creditworthy traveler in a certain income range? Personally, no. A company’s policy for customer data goes beyond consumer protection: it can be consumer empowering.

And while privacy is the cornerstone for the controls and governance around customer data, analytics obviously is at the center of the implied customer contract. What that means for analytics leaders is that a lot of business context, and a lot of care, are needed when striving to use customer data for good. It goes beyond the “creepy factor” that consumers experience when companies show they know more about us than we realize. Analytics leaders need close alignment with other business leaders to ensure there’s a mindfulness and strategy behind the unwritten customer data contract to avoid pitfalls.

Second, the topic of privacy itself arose several times at the CAO Forum. Privacy even took over a panel discussion I led that was originally devoted to emerging technologies. The timing certainly is being fueled by an ongoing, high-profile discussion in Europe on the movement and protection of personal data across country borders, with U.S. companies in the crosshairs.

The so-called EU-U.S. Privacy Shield agreement, which replaces old policies with updated rules for companies around personal data, was announced the week before the London meeting — but the rules might not carry much weight in practice. As Larry Downes wrote in a recent Harvard Business Review article about the impact of the Privacy Shield on businesses, given the weakness of the EU as a central government and various approaches to enforcement by member countries, “privacy law in the EU is even more disjointed than in the U.S.”

What does the EU-led privacy discussion mean for analytics leaders from Europe and other continents? That’s the open question. In the short term, it probably means that both American and European companies will take a wait-and-see approach and hold off on certain investments and expansion. In the long term, who knows? If the EU is able to drive broad adoption of the Privacy Shield, will consumers act accordingly? In his HBR article, Downes points out that Europeans often click through privacy agreements and warnings already, surely as long as they feel their lives are being made easier with all the data sharing going on. Back to the implied customer contract!

Overall, the challenges voiced by analytics leaders of European companies at the CAO Forum closely mirror the challenges of their American counterparts. The similarities create opportunities for broad best practice sharing, and I’m looking forward to participating in more of the events. At the same time, differences in priorities such as customer privacy demonstrate the need for analytics leaders to be responsive to their companies’ unique needs.

By Daniel Magestro:

Daniel Magestro, Ph.D., is the Vice President, Research Director at the International Institute for Analytics. An accomplished analytics executive with experience in healthcare, banking and insurance, Dan manages IIA’s robust research agenda and leads IIA’s international network of faculty experts and interface with IIA’s global community of analytics practitioners.

Prior to joining IIA, Dan managed multiple analytics teams at Cardinal Health in Columbus, Ohio, where he built an analytics center of excellence to serve the company’s large Pharmaceutical Division. He has also held analytics roles at JP Morgan Chase, Nationwide Insurance, and Investor Analytics. Since 2010, he has served as an Adjunct Professor at Ohio State University’s Fisher College of Business, where he teaches courses on data analysis and advises the university on analytics initiatives. Dan came to business from science; he holds a Ph.D. in nuclear physics and authored several research publications.

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