What Business Leaders Should Know About Data Quality

Solutions for Enabling Lifetime Customer Relationships Data Quality? That’s IT’s problem not mine What Business Leaders Should Know About Data Quality W H I T E PA P E R Clarence W. Hempfield, Jr., CIARP • Director, Global Analyst Relations & Strategy Pitney Bowes Business Insight WHITE PAPER Data Quality? That’s IT’s problem not mine What Business Leaders Should Know About Data Quality 2 ABSTRACT WHEN BUSINESS LEADERS MAKE STRATEGIC DECISIONS, WHICH ARE BASED ON BAD DATA, THOSE DECISIONS CAN RESULT IN FINANCIAL LOSS, NEGATIVELY IMPACT CUSTOMER RELATIONSHIPS AND IRREPARABLY DAMAGE AN ORGANIZATION’S CREDIBILITY IN THE MARKET. IN FACT, OVUM, A GLOBAL ANALYST FIRM, ESTIMATED “THAT POOR DATA QUALITY COSTS U.S. BUSINESSES AT LEAST 30% OF REVENUES—A STAGGERING $700 BILLION PER YEAR” (SHEINA, 2010) AND OUR DATA CHALLENGES HAVE ONLY BECOME MORE COMPLEX AND COSTLY AS ORGANIZATIONS ENTER GLOBAL MARKETS AND MUST INCREASINGLY MANAGE DATA IN MULTIPLE LANGUAGES, FORMATS AND CULTURAL TRADITIONS. WHAT CAN BUSINESS LEADERS DO? A CRITICAL FIRST STEP IS FOR THE BUSINESS LEADER TO ACKNOWLEDGE OWNERSHIP OF THE ORGANIZATIONS DATA AND ITS DATA QUALITY ISSUES. IMPROVING THE QUALITY OF THE ORGANIZATION’S DATA MUST BE LEAD BY THE BUSINESS, BUT THE BUSINESS WILL NOT HAVE TO GO AT IT ALONE. BUSINESS AND IT HAVE A SHARED OWNERSHIP OF AND ACCOUNTABILITY FOR PROTECTING AND ENHANCING THE ORGANIZATION’S DATA. www.pbinsight.com COMPANIES CAN ILL AFFORD TO LEAVE THE QUALITY OF THEIR DATA TO CHANCE, PARTICULARLY IN STILL-TOUGH ECONOMIC TIMES. HAVING ACCURATE, CONSISTENT, AND UP-TO-DATE INFORMATION IS NOW A BUSINESS IMPERATIVE RATHER THAN A LUXURY. —SHEINA, 2010 Data is the lifeblood that powers every organization the market. In fact, Ovum, a global analyst firm, estimated 3 today—big or small, commercial enterprise or government “that poor data quality costs US businesses at least 30% agency. Currently, organizations are capturing a tremendous of revenues—a staggering $700 billion per year” (Sheina, amount of data about their customers, partners and 2010). And our data challenges have only become more employees. IDC estimated that in 201 the amount of data 1 complex and costly as organizations enter global markets available in the “digital universe” has reached nearly 1.8 and must increasingly manage data in multiple languages, trillion gigabytes (Gens, 2010). However, the amount of data formats and cultural traditions. available continues to explode exponentially and will reach nearly 7 zettabytes (ZB) by 2015 (Gens, 2010) (A zettabyte is What can business leaders do? A critical first step is for a one followed by 21 zeros!). the business leader to acknowledge ownership of the organizations data and its data quality issues. Improving This explosion in data means that organizations have to the quality of the organization’s data must be lead by contend with both traditional forms of business data and the business, but the business will not have to go at a rapidly growing list of non-traditional data sources, it alone. Business and IT have a shared ownership of such as social media—blogs, communities, Facebook, and accountability for protecting and enhancing the Foursquare, YouTube, Twitter, LinkedIn, Google+ and others. organization’s data. In addition, there is a steady stream of potentially high value data emitting from radio frequency identification It is vital that business leaders take an active, leading role in (RFID) tags, devices with global positioning systems (GPS), fixing their organization’s business data. The business must bar code readers (i.e. QR Codes), etc. In an effort to better resist the urge to only implement a technology solution, understand and anticipate the needs of its customer, but rather partner with IT and address the larger “people organization’s have a growing need to process and analyze issues” which are at the root of its poor data problem: this data in real-time. An organization that is not in control business process, employee training, business rule creation of its data is not in control of its business. and enforcement. The business leader has to foster a culture that views data as a critical business asset and holds people An initial challenge is that few individuals can successfully accountable for the caretaking of data. Improved business discuss poor quality data issues with business leaders before data results in more accurate decisions, lower operational the executive has redirected them to the IT organization. costs, improved customer satisfaction and improved The belief is often that the business leader is focused on financial performance. driving their business and as a result they focus on issues directly impacting the business. The belief of many senior You’ll want to talk with IT executives is that “data quality” is an IT problem. However, there are many critical business issues which are directly Has anyone ever tried to have a conversation with you about impacted by missing, inaccurate, incomplete or corrupted data quality and its impact on your business? How long did business data. it take you to redirect them to IT? Data quality is a somewhat abstract term that once it is uttered in a business leader’s When business leaders make strategic decisions, which presence seems to generate an almost instantaneous and are based on bad data, those decisions can result in nearly unconscious response—redirection of the “utterer” financial loss, negatively impact customer relationships to IT. The belief is often that the business leader is focused and irreparably damage an organization’s credibility in WHITE PAPER Data Quality? That’s IT’s problem not mine What Business Leaders Should Know About Data Quality 4 on driving their business and as a result they focus on issues •  e seem to have an unacceptably high number of vendors, W directly impacting the business. The belief of many senior how can we reduce this number? executives is that “data quality” is an IT problem. Well, data • How can we ensure adequate inventory levels? quality is IT’s problem, right? • What can we do to improve the quality of our products? Have you, or your peers, ever considered any of the •  ur shipping expenses are excessively high, how can we O following: fix this? • How can we improve customer retention? All of these issues, and many more, are routinely faced • How can I reduce out-of-control expenses? by leaders within the business. And the answers to these questions are derived from an analysis of the organizations • Why are our customers churning? biggest asset—its data. What a business leader often • Which customers are most profitable? does not consider is that the quality of the organization’s • Who are our most valuable best customers? data plays a direct and critical role in their strategy formulation and it can ultimately undermine its execution •  hich customers segments can we grow through cross- W and performance. When business leaders make strategic or up-selling? decisions, which are based on bad data, those decisions •  ow much can we save through more effective H can result in financial loss, negatively impact customer marketing campaigns? relationships and irreparably damage an organization’s •  hy are our customer service/support response W credibility in the market. times increasing? How is my business impacted by bad data? •  ill I get fined or face jail time by signing this financial W disclosure? In one of the most powerful, and often quoted, research •  re we truly compliant with key industry regulations A reports to be published in the last 10 years—that you (Basel II, SOX,HIPAA, Gramm Leach Bliley, Office of likely never saw—The Data Warehousing Institute (TDWI) Foreign Asset Control, etc.)? estimated that “poor quality customer data costs U.S.