The General Data Protection Regulation (GDPR) is changing the way businesses collect, store, and utilize data from their customers ever since its enforcement on the 25th of May, 2018. But what exactly is this regulatory demand? How does it impact businesses? And, more importantly, can you leverage the full potential of your digital transformation initiatives while also staying GDPR compliant?
These are the three questions this article will answer for you. Let’s dive in!
1. What is GDPR?
The GDPR is a fairly recent European privacy regulation that has been implemented in all local privacy laws in the EU and EEA region. It applies to all businesses that are either selling or storing the personal data of EU and EEA citizens. This regulatory demand that requires businesses to change the way they handle personal data is great news for EU and EEA citizens, as it gives them more control over what happens to their private information. But can the same be said about the businesses involved?
While this new regulation sparked some controversy in the beginning, it has also garnered support from businesses that consider it a great opportunity for data management improvement—much to the contentment of the European Council, which has stated that the GDPR should be regarded as “a prerequisite for the development of future digital policy initiatives.”
Yet, many companies have a difficult time keeping up with the new requirements imposed by this regulation. For instance, the improved rights for the data subject, such as the right to be forgotten or the right to data portability, create new challenges for the businesses trying to accommodate these rights and make them an intrinsic part of their internal processes.
Additionally, the GDPR lays out specific principles that companies should adopt. This makes compliance very process-driven and time-consuming. Likewise, the regulation imposes an obligation on businesses to maintain records of their data protection activities and, it goes without saying, but failure to comply attracts significant fines and sanctions.
2. How does the GDPR impact businesses?
Although for many businesses the GDPR represents a compliance burden, other firms regard it as a foundation for digitization that comes with some key benefits.
For all of its challenges, the GDPR managed to clarify the most important terms regarding the relationship between a user and a company when it comes to personal data usage. The basic definitions of rights and obligations of the involved parties provide a roadmap of what is permitted and what is prohibited.
As long as they are GDPR compliant, businesses can lavish in increased consumer trust. And in today’s consumer-centric environment, having a seal of approval from users can boost any brand’s reputation and lead to stronger customer loyalty as well as brand recognition.
The new granularity of the information collected enables businesses to personalize communications with customers, thus deepening the contrast between interested and uninterested users. In this, companies can see an opportunity to focus their marketing efforts on pursuing interested customers and save costs otherwise spent on the uninterested ones.
Other significant costs can also be saved on data maintenance. The GDPR demands businesses to keep their data inventory up-to-date, so companies can save resources by consolidating siloed data and retiring costly legacy data applications that are no longer relevant.
The GDPR also puts the weight of increased responsibility and accountability on businesses, which, although it may sound overwhelming, can actually lead to more calculated and cautious decision-making and even better risk assessment.
But perhaps, one of the greatest benefits of being GDPR compliant is the incentive to improve the security framework so that it is well-organized and impenetrable through a healthy combination of regular system audits and continuous monitoring. To achieve the level of security demanded by the GDPR, businesses must adopt cutting-edge technologies, and this is something that can create profitable opportunities and competitive advantages that go beyond simple compliance.
3. Is GPDR compliance a hindrance to digitization?
When it comes to GDPR compliance, businesses are wondering if:
- Stricter data protection rules will limit their potential in digital commerce
- Implementing new procedures to protect personal data will divert resources from other digital initiatives
- The GDPR will put European companies at a disadvantage in the global market
While these concerns are valid, companies should keep in mind that stronger data protection can enhance digital commerce, enabling them to create better service offerings. Companies that rely heavily on customer feedback on their website or mobile apps to propel their digital initiatives and marketing efforts, can still accomplish their goals without failing to comply. To achieve that, businesses should:
- Appoint a Data Protection Officer (DPO) to manage GDPR compliance
- Collect only necessary data and ensure that they have the customer’s consent to use it for marketing purposes
- Ensure that any third-party involved with data collection, such as a feedback software provider, is GDPR compliant as well
Although it’s not as easy as it used to be to collect and store customer data, it’s important to note that being GDPR compliant limits the impact of potential data breaches that could affect customers that may be unnecessarily and unfairly exposed to security threats.
Another key consideration is that the GDPR offers a great deal of leniency by allowing businesses to set their own deadlines for data retention. The GDPR only demands that businesses document and validate the timeframe they establish through legal arguments such as audits or other guidelines. Once the retention period has passed, businesses can either delete or anonymize the data.
Staying GDPR compliant
Data protection is an ongoing process—you cannot simply implement a security policy and move on. As you continue to collect and store data, you need to constantly ensure that your customers and business reputation are safe. Keeping up and aligning yourself with the latest security technology will help you in achieving that.
Last but not least, don’t forget that GDPR compliance is not just an obligation. It’s also an opportunity to revise data management policies, security frameworks, and technological advancement in a world where data rules the digital economy.