Information governance is the formulation of policy to optimize, secure and take advantage of information as an enterprise asset. Practitioners are challenged to explain the value of information governance to business leaders and often find themselves talking more about technologies when they should be talking about business outcomes.
According to Aaron Zornes, chief research officer at The MDM Institute, “While most organizations’ information governance efforts have focused on IT metrics and mechanics such as duplicate merge/purge rates, they tend to ignore the industry- and business-metrics orientation that is required to ensure the economic success of their programs.”
To address these challenges, practitioners can follow these best practices to demonstrate the business value of information governance:
1. Focus on business outcomes
Information governance leaders need to focus on business outcomes. Often, discussing the technical aspects around an information governance plan isn’t enticing enough to sell the program to business leaders. Business leaders want to know why they should invest in an information governance program based on the potential resulting business outcomes, which manifest as increased revenues, lower costs and reduced risk. Councils, charters, and technologies should be addressed as a secondary point.
Consider the following scenario: a multinational bank established a state-of-the-art system to quantify overall credit risk exposure to counterparties as well as small and large companies. The credit risk department established a number of policies relating to information governance. For example, in the case of customers with operations in multiple countries, the credit risk department calculated sovereign risk based on the “worst” country risk across the country of incorporation, the country of the guarantor and the country of primary operations. As a direct result of the program, the bank was in a position to quantify its exposure to a failed financial institution within 30 minutes and to close down all credit limits within minutes after that.
2. Adopt an industry-oriented approach
As information governance is not a one-size-fits-all approach, every industry has its own set of key business issues that need to be addressed with information governance best practices. Information governance has a different value proposition for the chief risk officer in a bank compared to the vice president of merchandising in a retailer. Medical Loss Ratio is a very important measure within health plans. MLR refers to the percentage of total premiums that a health plan pays out in medical costs.
However, different departments such as finance and medical informatics might define MLR differently. In addition, different health plans might define MLR differently although the U.S. Patient Protection and Affordable Care Act is expected to bring about standardized definitions. For example, one health plan might include the cost of wellness programs within medical expenses (which increases the MLR), while another plan might include wellness costs within administration overhead (which reduces MLR). As a result, it is difficult to conduct benchmarking exercises across health plans.
3. Develop a business case
A strong business case is critical to obtaining executive sponsorship. It is critical to provide concrete results that can be achieved by implementing an information governance plan in order to show how it affects the business as a whole. For example, a medical device manufacturer implemented an information governance program focused solely on the “ship to” information for its business customers. The company’s customers experienced delayed shipments, because products would bounce from one department to another before they reached the correct destination. The company deployed data stewards within the sales organization to improve the quality of the ship-to addresses. The company soon experienced improved customer satisfaction as equipment began arriving at the correct destination faster. In addition, the finance department noticed an uptick in revenues from after-sale consumables as customers began to deploy the equipment earlier.
4. Improve consistency of business terms
Every organization has business definitions that need to be standardized. A lack of standardization can lead to faulty reporting, mismanaged information, or worse. Consider this example: due to severe budgetary constraints, the governor of a province had committed to the legislature that he would not increase total headcount above 150,000 full time equivalents. As far as the provincial government was concerned, the term “employee” could include full time, part time and contingent employees, and there were at least three ways to calculate FTEs. The business intelligence team had to ensure that the governor used the correct definition of FTE in his reports to the legislature. The consequences of using the wrong calculation of FTE were actually quite severe, including potential embarrassment for the governor.
While there is no one-size-fits-all approach to selling information governance strategies to business leaders, practitioners that demonstrate how their new strategies can advance their organization’s business goals stand a better chance to get their projects approved.
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