I am writing this month's column after returning from Tokyo. (It was my first visit to Japan.) My return was greeted by the headlines, "When Computers Fail: Y2K gets the headlines, but everyday glitches cost U.S. companies $100 billion a year"1 and "Software hell: Glitches cost billions of dollars and jeopardize human lives. How can we kill the bugs?" and its related story, "Will bugs eat up the U.S. lead in software?".2 These three articles highlight the phenomenal problems and costs caused by today's complex and nonquality software. Just to cite one example, Hershey Foods' $115 million SAP computer system implementation had quality problems that crippled shipments during the Halloween season and received the blame for Hershey's 12 percent decrease in third-quarter sales and 19 percent decrease in net income from the same period last year.
The Bad News
The bad news is that software quality problems only account for part of the costs of nonquality information. Even when software works perfectly, there is no guarantee the information created is accurate. Nonquality information causes business process failure and information scrap and rework that may double or triple the costs of nonquality software glitches. Organizations routinely spend from 10 to more than 20 percent of the sales or operating budgets in information scrap and rework due to nonquality information.3 Furthermore, considering that large organizations have each discrete data element stored redundantly on average 10 times,4 over 50 percent of the organization's IT budget is being spent on information scrap and rework5 not adding value, but moving data from one proprietary database to another, redundantly creating the same data multiple times and requiring maintenance to be applied redundantly in a vain attempt to try to keep data consistent.
Given the problem, why are books on information quality not among the best sellers in information systems and information management? Is it a matter of, "That's not my problem!"? Whose problem is it then?
The Good News
NTT DATA, an information systems consulting firm and the first information systems company to win the coveted Deming Prize for quality, invited me to come to Japan. They asked me to teach their information systems consultants and clients Total Quality data Management (TQdM). They see information quality as the next wave for providing quality information systems. So strongly do they believe this that they are translating my book, Improving Data Warehouse and Business Information Quality, into Japanese. They presented a translated version of the first four chapters to their clients and consultants. The entire book will be available in Japanese by April 2000.
While I was in Japan, I visited with Kirin Brewery, a company that has implemented a strong information resource management environment. Kirin has several divisions including beer, soft drink, food and whiskey. Assisted by an IRM consulting firm, Data Research Institute, they modeled their information from an enterprise perspective. Kirin implemented a single customer database and a shared product database for all divisions that have remained stable over time. There is no unmanaged redundancy of customer or product data. They have quality processes implemented at the source, where customer orders are taken to assure they are correct before being released into the order fulfillment system. The result is minimal information scrap and rework due to high quality data at the source.
Will America be Left Out Again?
The quality revolution started when the Japanese heard the message of American quality consultants, W. Edwards Deming and Joseph Juran. It was not that these two consultants had ignored America. In fact, they taught Americans why manufacturing quality was important and how to implement quality improvement processes.
Why Japan? Japan implemented manufacturing quality principles following World War II for two reasons. The Japanese economy was devastated, and they had to rebuild. But more importantly, they heard the message of quality, understood the economics and did it.
Why not the U.S.? The U.S. economy was booming after World War II, and companies did not need quality to sell products. The costs of manufacturing scrap and rework were considered economically viable in this boom time. The economics of proactive quality improvement were misunderstood and, therefore, went unimplemented. U.S. manufacturing companies were forced, reactively, into the quality arena when they saw their customers buy Japanese products that were cheaper and more reliable than shoddy, more expensive products made in the U.S.A. even when prodded with the patriotic guilt trip of "buy American."
The issues for management are: can your company afford to pass on the costs of nonquality information to your customers? Is your company serious about increasing shareholder value if it does not implement a program to proactively reduce the 10 to 20 percent of revenue costs of information scrap and rework?
The Big Question
The manufacturing quality revolution represented the maturing of the industrial age. The information quality revolution will represent the maturing of the information age. Until companies recognize that the costs of information scrap and rework are neither normal nor healthy costs of doing business, they are at risk in an increasingly global and competitive economic environment.
Who will usher in the next economic revolution that comes from proactively implementing information quality management processes? Will it be the U.S. or Europe, where information quality concepts have already been introduced? Or will the new economic revolution begin in Japan, where they don't just listen to information quality concepts they implement them?
1 USA Today cover story. December 7, 1999.
2 Business Week International Edition European cover story. December 6, 1999.
3 English, Larry. Improving Data Warehouse and Business Information Quality. New York. Wiley and Sons. 1999. P. 12.
4 Brackett, Michael. The Data Warehouse Challenge: Taming Data Chaos. New York. John Wiley & Sons. P. 21.
5 English. op. cit. P. 12.
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