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The Information Quality Act: Mandate for IQ

By
  • Larry English, Andres Perez
Published
  • February 01 2003, 1:00am EST
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Larry would like to thank Andres Perez for his contribution to this month's column.

Information Quality Legislation

Organizations must either provide quality information expected by their customers or run the risk of legislation that forces them to provide such quality. Legislation-forced quality to meet customers' needs usually costs producer organizations more and generally produces far less desirable results to the consumers.

The agricultural and manufacturing sectors have encountered legislation to "help" them provide quality products because nonquality poses health and safety risks to consumers. We already have information quality legislation in the form of "Truth in Lending" laws. Mazda was fined $5.25 million for failing to properly disclose to its leasing customers information about the leasing costs and conditions.1 Inaccurate product prices in bar-code scanning databases have forced many state and local governments to provide legislative solutions to protect consumers' pocketbooks. Unfortunately, this legislation attacks the symptom ­ not the cause. Existing legislation forces retailers to put price stickers on the items rather than addressing the processes that fail to maintain accuracy and currency of the electronic prices.2

Now we are witnessing similar legislation addressing "pure" information products. Called "The Information Quality Act," Public Law 106-554, H. R. 5658, Section 515 requires Federal Agencies that disseminate important information to the public to address information quality of that information.3 Warning! Private sector organizations that fail to provide quality of critical information to their customers may force information quality legislation on themselves.

The Privacy Act

The Gramm-Leach-Bliley (GLB) Act shook financial institutions just a few years ago. This act was a response to customers' concerns regarding the use of their personal information (referred to in the act as "non-public personal information") by these institutions in ways they had not anticipated, and frequently not appreciated. Banks, insurance companies and other institutions frequently shared customer personal information with other affiliated and unaffiliated organizations. This law requires these institutions to provide notice to customers of their privacy policies before releasing the customers' personal information to an unaffiliated organization. The act also requires financial institutions to provide customers the ability to request that their personal information not be shared with unaffiliated institutions.

As is typical with legislation, the GLB privacy act implementation had negative side effects. For example, two unaffiliated institutions that had been able to change a customer's address when the customer notified one of the companies became unable to do so if the customer requested "privacy please." Thus, while customers' privacy was protected, they lost some previously provided customer services such as forwarding of address changes, forcing customers to make address changes multiple times. Customer-oriented organizations developed work-around solutions, at additional cost. For example, if the customer contact is by phone, the customer is advised they need to make the change directly with the other company. A postal mail request triggers a pre-filled return form requesting the customer to sign and return to get his or her address updated in the other company's database. Customers' expectations of privacy resulted in more work for customers in order to keep their information accurate and current.

The Federal Information Quality Act

Federal agencies regularly publish information on which influential policies or decisions are made that have significant impact on the economy of a region or even the entire nation or that can influence wrong decisions about public and private investments, opportunities and other issues. States, cities, counties, as well as private and public organizations, and citizens in general have had difficulties getting the federal agencies to either substantiate the information published or correct the information to ensure its quality. Martha Lynn Craver in her recent Kiplinger Report stated that "for years, regulated industries have complained that too often, regulations cannot be backed up by solid data."4

In response to the public's concerns, Congress issued the Information Quality Act OMB Section 515. This act directs the Office of Management and Budget (OMB) to issue government-wide guidelines that "provide policy and procedural guidance to Federal agencies for ensuring and maximizing the quality, objectivity, utility and integrity of information (including statistical information) disseminated by Federal agencies."

Effective October 1, 2002, Federal agencies must have in place their own implementing guidelines that include "administrative mechanisms allowing affected persons to seek and obtain correction of information maintained and disseminated by the agency" that does not comply with the OMB guidelines. These guidelines require the agencies to provide annual reports on the number and nature of complaints and how the complaints were handled beginning January 2004.

In the same way financial institutions did in 2000 with the GLB Privacy Act, Federal agencies are struggling to respond to this mandate. Most have published their own guidelines, but many are still struggling to figure out how these new rules impact their operations. Part of the challenge in the deployment of the Information Quality Act is that the agencies must come to grips with Information Quality Management. Agencies must determine what information is within the scope of disseminated information, identify or prioritize what information is influential information, what information quality means and how to implement effective information quality management processes. OMB defines information "quality" as information that offers utility, objectivity and integrity to information consumers where:

  • Utility is the usefulness of the disseminated information to the intended consumers.
  • Objectivity is that the disseminated information is presented in an accurate, clear, complete and unbiased manner and, as a matter of substance, is accurate, reliable and unbiased.
  • Integrity refers to security – the protection of information from unauthorized access or revision (modification) to ensure that the information is not compromised through corruption or falsification.

Agencies must define these terms in a rigorous, operational fashion to ensure that they have a shared understanding with their customers of the information provided.

Will Legislation Make Us Do Good?

The OMB Section 515 Information Quality Act is law. It was brought about because of the high costs and negative impact nonquality information causes private and public institutions and citizens. Complaints about poor information quality forced legal action to address improvement.

As we move toward the realized information age, we must lead our organizations to understand that information is a product, not a by-product. Nonquality information causes high costs of process failure and lost customers. The business processes that produce information are a business system where the customer, internal or external, is the most important component. Understanding customer needs and expectations can lead not only to higher information quality, but also increased customer satisfaction, decreased costs of information scrap and rework, and increased profits and shareholder value.

Warning! Private sector organizations that fail to provide quality of critical information to their customers, an act that can cause harm to their customers, may force information quality legislation on themselves. After all, "What's good for the goose [the Federal agency sector] is ...."

What do you think? Let us know at andres-perez@msn.com or Larry.English@infoimpact.com.

References:

1. "Mazda to pay fine," The Tennessean. October 2, 1999.
2. Beck, Rachel. "Item-pricing nice, but not for retailers." Associated Press, reported in The Tennessean. August 24, 1997.
3. U. S. Government, Office of Management and Budget, final guidelines for the implementation of the "Information Quality Act" (ref. 67 FR 8452, February 22, 2002. See www.whitehouse.gov/
omb/fedreg/reproducible2.pdf). Date of access: December 15, 2002.
4. Craver, Martha Lynn. Kiplinger Report "Data Quality: New Battleground for Regs." December 2, 2002.

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