With evolving cyber threats and increasing privacy scandals, incidents of data governance failures are becoming more frequent. As a result, organizations sourcing software vendors must thoroughly evaluate how the vendors manage and protect sensitive information, as maintaining the integrity of data handling practices is essential for sustaining the confidence and loyalty of your customers and shareholders. Conversely, failing to carefully consider a vendor’s data governance practices can significantly increase the risk of data incidents. These incidents can lead to substantial financial burdens, including costs related to remediation, legal penalties, and non-compliance fines, as well as severe reputational damage. Unfortunately, many organizations find themselves recovering from such positions due to the rising frequency of data-related incidents across the business world. For organizations aiming to achieve their enterprise goals, securing transparent and effective data governance from their software vendors is imperative.
To effectively unpack the importance of robust data governance, let’s examine the increasing cases of data incidents among software vendors and how they are linked to the rapid digitization of the business sector.
The Impact of Digitalization on Data Governance
The surge in digitalization has resulted in a spike in data-related incidents, which has substantially affected the overall level of data governance efficacy amongst software vendors. Since nearly all business operations rely on data handling practices, these incidents have led to many financial, organizational, and technological scandals over recent years.
Even with efforts to bolster security, data breaches have increased by 20% from 2022 to 2023, showcasing how the pace of technological change has surpassed the speed at which data governance and security frameworks can be updated. This is the result of emerging technologies like cloud computing, artificial intelligence, and Internet of Things (IoT) devices which have all introduced additional complexities and potential vulnerabilities that outdated data protection strategies struggles to address. As a result, the software vendor marketplace has varying data protection levels that necessitate vigilance to spot during the software vendor selection process. Moreover, organizations that don’t carefully assess the data protection efficacy of their software vendors can leave themselves open to operational risks that can seriously impact their business.
The Impact of Poor Data Governance
Without robust data governance amongst software vendors, there is a higher risk of data breaches, unauthorized access, and data loss, exposing sensitive customer information to cyber threats. This lack of security can lead to financial losses, identity theft, and customer privacy breaches. Poor data governance can also result in data inaccuracies and inconsistencies, leading to unreliable software performance and potentially flawed decision-making based on erroneous data. Furthermore, organizations partnered with software vendors that possess poor data governance increase their risk of facing major operational disruptions that can cause significant inconvenience and financial impact to their business.
The erosion of trust amongst one’s customers is another critical consequence, as consumers may lose confidence in the company’s ability to protect their data and ensure reliable service and or product performance. This loss of trust can seriously damage your reputation and bottom line as, according to Edelman’s 2019 Trust Barometer Special Report, customers who trust a brand are more than twice as likely to be the first to buy the brand’s new product (53 percent versus 25 percent). Additionally, they are more than twice as likely to stay loyal to the brand they trust, even in the face of disruption, such as an innovative new competitor (62% percent versus 29%). Overall, the impact of ineffective data governance among your software vendors can significantly undermine the value of your product and or service, jeopardizing your customer relationships and ability to maximize revenue.
How to Secure Robust Data Governance in Your Software Vendor
The best way to secure and maintain robust data governance is to ensure you partner with a software vendor that practices routine and holistic data governance transparency. This will allow your organization to make informed decisions about which software vendor you select to support your business. To accomplish this, make sure you partner with a software vendor that allows you to take the following actions when it comes to your data governance:
Request Documentation
To ensure transparency in data governance, customers should request detailed documentation from software vendors covering data governance policies, security protocols, and compliance measures. This includes reviewing data handling practices, encryption methods, and access control mechanisms. By thoroughly examining this documentation, customers can gain a clear understanding of how their data will be managed and protected.
Monitor Compliance
It’s important to monitor compliance through regular updates and reports on data governance and security measures. Verifying that your software vendor holds all necessary compliance certifications is crucial. These certifications, such as GDPR, HIPAA, and ISO 27001, serve as a testament to the developer’s commitment to maintaining high data protection and regulatory adherence standards. Regular updates and reports help ensure that these standards are consistently met and that any potential vulnerabilities are promptly addressed. Furthermore, compliance certifications provide a framework for best data security practices, helping safeguard sensitive information against breaches and cyber threats.
By diligently monitoring compliance, you can hold your software vendor accountable, ensuring they continuously uphold the stringent security measures required to protect your data. This fosters a more secure digital environment and builds trust with your customers and stakeholders, reassuring them that their data is managed with the highest level of integrity and care.
Evaluate Third-Party Assessments
To ensure robust data governance, it’s essential to verify your software vendor has undergone independent security assessments and risk evaluations applicable to your organization’s service and or product such as NIST AI RMF, CSF 2.0, IF 8374 or SP 800-53. Confirming that your software vendor has completed a collection of third-party assessments is crucial as it objectively evaluates their data governance practices, offering insights from credible, unbiased parties rather than relying solely on the vendors own testimonials. By confirming that your software vendor has completed multiple third-party assessments, you can be confident in their ability to protect sensitive data and manage security risks effectively.
Prioritize Secure Development Practices
Customers should prioritize secure development practices by confirming that their software vendor follows secure coding practices and conducts regular vulnerability assessments like penetration testing, vulnerability scans, red teaming, social engineering, code review, and patch management. These security measures are vital for verifying robust data governance as they ensure that potential weaknesses are identified and mitigated before they can be exploited. Additionally, they should inquire about the software vendors incident response plan and how potential security threats are managed.
Final Thoughts
In short, transparency significantly enhances responsibility among software vendors. By clearly communicating their data governance strategies and regularly reporting on their adherence to standards, software vendors become accountable for maintaining best practices in data governance. This accountability helps reduce the risks of data misuse and breaches, as software vendors are more likely to uphold robust security measures and promptly address any vulnerabilities. These insights into data management and protection enable organizations to make informed decisions about their software partnerships, ensuring alignment with their security policies and regulatory requirements. Overall, prioritizing transparency and compliance in software partners is essential for protecting sensitive information, maintaining operational efficacy, and building lasting trust with customers and stakeholders.