News
The Value of Enterprise Data Management and Data Quality
By Erik Post and David Turner
The ability to effectively manage a company’s
financial and operational data is quickly becoming a
measurable component of profitability. Therefore, it
is extremely important that this information be
treated as a company’s crown jewel and not a thorn
in its side.
How can you assess whether or not your company is
effectively managing its financial and operational
data? Start by asking the following questions:
1. Does your company have a chief data
officer (CDO)?
This is a senior management position that
maintains oversight of the information contained
within the financial and operational systems of a
company. The CDO would be responsible for the
integration of information (not infrastructure) and
ensuring that there is normalization and consistency
of data across the business and applications.
2. Financial Data:
• What is the timing of the month end accounting
close cycle? If it is greater than five business
days, then you are probably using processes outside
of the general ledger (GL). This process results in
variance between what is in the actual GL and what
is reported to the business leaders, or perhaps more
damaging, the marketplace. The most common cause of
errors is employees’ manually entering, changing,
adding or deleting data.
• Does the company maintain a database to manage the
terms of your supply, inventory, customer or other
major contracts? If not, then you probably are
inconsistently applying terms and are not optimizing
the company’s contract asset. If yes, then you
probably are working off of old information; when
contracts are updated, most companies are required
to apply a formal process to ensure that their
terms/contract management database gets updated to
reflect the revisions.
3. Operational Data: Does your company have a
customer profitability model?
• If not, then your company is not using the
information contained in their systems to ensure
that the needs of one of its most important assets,
its customers, are being managed properly.
• If yes, is the model linked to the main financial
and operation system? It is not uncommon for
companies to have offline (standalone and not linked
into their main financial or operational system)
models. However, these offline models are generally
not accurate because they do not reflect real-time
data. This causes customers and clients to be
measured inaccurately and can lead to lower
organizational profits.
4. Does your company perform an annual data
quality and integrity check?
In the same vein as
a financial audit, a company should now consider
having an independent party review its financial and
operational systems for consistency, normalcy and
quality. These reviews are becoming more commonplace
and can allow for investors and management to
receive a report that would provide them with areas
in which to improve the information they rely upon
to make decisions. These improvements would be
measurable and could lead to improved
decision-making and profits.
So what does all of this mean, and what steps can be
taken for a business to resolve these issues? First
and foremost, a company needs to define what data
quality means for their business.
Data is a significant asset of the company and
should be protected and managed accordingly.
Recent press indicates that most companies are not
considering the information contained within their
IT systems as an asset. However, managing data
effectively can be the difference in achieving a
strategic advantage, enhancing revenue, and reducing
costs. Not viewing data as an asset is the single
largest mistake that any company can make, because
it is not the system that makes a company what it
is, but rather, it is the information contained
within the system that allows the company to
maintain its customer relationships, provide
financial reporting, identify areas for growth, and
ultimately, determine the profitability of the
organization overall.
---Source: Reprinted excerpts from DM Direct newsletter March 14, 2008. www.demreview.com
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