Companies are sometimes slow to start Information management, data governance and MDM initiatives, and the reasons are many according to Mike.
– Lack of basic understanding of core master and transaction data, and where it is used in their business, is one reason. Plus insufficient understanding of how core business processes work and how these processes cut across multiple departments, add Mike. Applications mean that people don’t understand the impact of bad or inconsistent data. IT in particular often has very limited understanding of business processes and therefore cannot see how lack of information management impacts business performance. Therefore they find it difficult to create a business case. For these reasons they do not see how data problems can impact several things. Mike gives us several examples.
Long list of problems bad data can impact
– Operational costs. Data defects increase cost of operating, that´s for sure. And the speed of process execution, where data defects slows down process execution that will impact customers if customers are waiting on a product. The speed can also make it difficult to scale the business without imposing high operational costs.
– Then there is decision making. Data defects impact on timeliness of decisions or the ability to make a decision at all. The data also defects impact on accuracy of decisions, and may even mean event patterns that require action are not seen. Then comes reporting, where data defects cause reconciliation problems, inability to see across the value chain and inability to report on financial performance. You can also add risk management, where data defects can increase risk, if risk cannot be identified due to lack of availability of information or lack of accuracy. We also know compliance, where data security breaches cause brand damage and can lose customers, regulatory reporting errors result in penalties, and damage to share price that impacts executive pay. The list of impacts of data problems, is long.
– For example, Customer master data is needed in Sales, marketing, service, finance, and distribution. It is not just a CRM problem. In addition, IT needs to learn more about business to help to understand how to build a business case. I say ‘Follow your processes from end to end and see how they currently work”. This teaches you where data governance and MDM can make a difference, and the business impact it can have.
What kinds of industries are most likely to recognize the value of data governance and information related initiatives?
– Process oriented businesses like manufacturing and pharmaceuticals will see its value quickly, but financial services moving from product oriented to customer oriented risk management will also be receptive. Insurance is having it forced upon them with Solvency II EU legislation, and investment banks need customer master data to reduce risk, together with both customer and securities master data to improve process execution from Trade to Settlement to Custody.
What in your experience are the factors that trigger a company’s Master data management initiative?
– I9t`s very often the need to improve processes and the need to shift focus from product to customer orientation. The need to improve accuracy of reporting for financial position when they have multiple ERP instances and multiple charts of accounts are also factors.
When it comes to failure or delays in a MDM initiative, there are other ones according to Mike.
− Often lack of basic understanding, such as how core business processes work, how core master data entities are, used in their business. Factors as where the master data is located (i.e. what operational and BI systems), who currently maintains it, how it flows across applications, and how it is synchronized could be critical. And of course there is a huge impact on business performance from poor master data. Inability to recognize that master data is not owned by an application and should not be associated with just one application might create failures. Another path to failure is no business ownership of master data, and no one to govern it. No data governance control board and no Chief Data Officer, or architect, might give you both failure and delays.
Les mer om semiaret med Mike her.