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A River Runs Through IT

Published
  • January 01 2005, 1:00am EST

How Executives Around the World Are Addressing Data Management

Think about the tremendous size of the investment - about the billions that businesses around the world are spending annually on implementing the latest ERP, CRM, and business warehouse and intelligence solutions. With so much invested, surely executives are paying better attention to data quality than they were, say, three years ago, right?

No. Not according to the CIOs, CISOs and IT directors at 450 Top 500 corporations and middle-market companies across the U.S., U.K. and Australia who participated in one or both of two global data management surveys conducted by PricewaterhouseCoopers in 2001 and in 2004.1 You may be surprised by the results. Here's a brief summary:

Most companies don't have a formal strategy. While 67 percent of respondents reported that their organization had a "company-wide" data strategy in place - up by a few points from 63 percent in 2001 - only 42 percent, or 2 out of 5 companies, have formally documented the strategy and secured board-level approval for it. If you're tempted to think that executives are slowly migrating away from a reactive data management approach toward a more coherent, long-term approach aimed at quantifying and realizing the full business value of their data assets, you're absolutely right; however, the migration - approximately 1.3 percent per year - is glacial.

The board is paying less attention, not more. Fully 81 percent of those whose organization did not have a formalized data management strategy believed that their company ought to view data management from a more strategic perspective. Certainly, with a little push from the board, that should be achievable. However, there's a problem: the board's involvement in establishing a data management strategy has actually declined in the last three years.

Privacy and compliance are driving changes in data management. What do executives consider the most important elements of a data management strategy? Compliance with external regulations as well as with privacy and security standards - just as they did back in 2001. That's not surprising, given the wave of regulatory scrutiny in the aftermath of the events that unfolded at companies such as Enron, WorldCom and Parmalat. Therefore, if organizations still see regulatory compliance as a critical issue but are not creating data management strategies, that suggests one thing: a lot more work needs to be done to improve the critical linkage between control objectives and data quality.

Confidence in data quality has not increased. Respondents' confidence in the quality of their own organizations' data remains unchanged since 2001, with the proportion of those feeling "very confident" actually declining over the three-year period. Yet this skepticism appears to be based on gut feel, because only 45 percent of organizations formally measure the quality of their data. While poor - or at best uncertain - data quality is acknowledged as a problem, companies are doing very little about it.

Not always sharing data ... but planning to. Six out of ten respondents reported that their organization provides little to no data to third-party sources - even with all the attention currently focused on outsourcing, offshoring, CRM and global supply chain management. However, more than half expect that sharing of data with third parties is likely to increase in the next three years. However, if executives' confidence in the quality of their own data has eroded a bit, how do they perceive the quality of data coming in from other companies? They do so with more concern than they had in 2001. It seems that greater sharing of data may actually be damaging confidence still further as more problems emerge and as recipients of third-party data become increasingly suspicious of its quality.

What's the value of data? A full one-third of the organization's worth. That's right - respondents estimated that, on average, the value of their data represents some 37 percent of the worth of their organization. However, only 15 percent admitted that they actually calculate the financial value of their data. Remember when HR was called personnel? Look at the transformation that unfolded when companies started noticing the impact that people have on business results. They started paying attention to things such as attrition, training and morale. Now executives regularly describe people, if not always data, as the organization's most valuable asset.

The news isn't all bad: there are some exciting indications of what the innovators are achieving - the group that helps define best practices in the field. They're the ones most likely to have a documented board-level strategy. They're the ones most confident in their data quality. They're the ones that define data up front as a strategic corporate asset - and then allocate resources in accordance with its prioritized status. They're the ones achieving the big benefits. After all, the river of data running through IT impacts every dimension of corporate performance.

For many, this report card won't be a surprise. Some of you will find it cold comfort to know that the obstacles you face in getting business management to address data quality as a critical business enabler of consequence are shared by others. However, others may be empowered to reinvigorate the case for change. Use these findings to help support your business justification for better data management practices. With this report providing support in the background, customize a short questionnaire focused on data management attitudes and practices among your organization's internal and external data constituents. Find out what level of confidence your decision-makers have in their own data as well as in shared third-party data. Ask line-of-business managers what percentage the data represents of the organization's total worth. Be persistent. Get visible. And if you feel like you're alone, relax. There are 450 CIOs, CISOs and IT directors that agree with you.

Reference:
1. The Global Data Management Survey 2004, PricewaterhouseCoopers (http://www.pwc.com/dataquality).

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