Archive for the ‘Uncategorized’ Category

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When it comes to Data Quality Delivery, the Soft Stuff is the Hard Stuff (Part 4 of 6)

November 28, 2012

In my previous post I emphasized the importance of demonstrated project management fundamentals as a key enabler of effective data quality delivery. In this blog, I will discuss why an understanding of corporate financial concepts is so important to data quality success.

Despite the continued evolution of data management technologies and the growing awareness of the challenges and promises of data quality, business buy-in is still a major barrier to the widespread adoption of data quality as another lever to achieve operational effectiveness. One of the key reasons for limited adoption is a clear linkage between data quality and a business’s performance, which is measured in a myriad of ways from operational metrics to managerial reports to formal KPI’s. But, eventually, the enterprise’s performance is summarized in three key financial statements; the income statement, the balance sheet and the cash flow statement. Positioning data quality impacts or improvements in the context of these financial statements begins to “connect the dots” and moves data quality from the abstract to the concrete and from the theoretical to the practical. To illustrate this point, let’s take a look at the impacts and implications of a simple data quality issue like “undeliverable” billing addresses.

If billing address date defects within a company’s billing system prevent the delivery of customer invoices, there will be an increase in a company’s return mail volume. The obvious implication of this additional return mail is an increase in a company’s shipping and handling expenses associated with the analysis and correction of billing address data defects and subsequent invoice reprocessing. While a localized problem like this is typically not material from an accounting standpoint (i.e. important/significant), when combined with inefficiencies and costs associated with other data defects found throughout the enterprise, the impacts can manifest themselves as higher operating expenses on the income statement, which reduces operating income.

Another impact associated with “undeliverable” billing addresses is the delay in invoices being received by the customer. However, the implications of billing delays are less obvious. If the undeliverable billing address issue is large enough, invoice delays will likely have an adverse effect on the company’s Days Sales Outstanding (DSO – the average number of days it takes to collect revenue after a sale has been made), and therefore on the Cash Conversion Cycle (CCC – the time between outlay of cash and cash recovery). Additionally, an increase in DSO can have a negative impact on collections since there is often a correlation between the age of receivables and write offs. To counter the increased risk associated with customer non-payment, the company will have to increase its “reserve for bad A/R” on the balance sheet. The net implication of delayed billing will be a weakened cash position as reflected on the company’s cash flow statement. This “tightening” of cash increases the company’s need for, and cost of, borrowing for expansion, inventory, product development, sales and marketing efforts, etc.

While proactively eliminating billing address data defects can sufficiently mitigate these risks to business performance, gaining business buy-in and support is still a necessary first step. However, simply telling the business that they have data quality challenges that need to be corrected, without communicating the impacts and implications in the context of business performance, misses the mark and makes the job more difficult. In my next post, I will examine knowledge of commercial enterprise applications as a key enabler of effective data quality delivery.

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When it comes to Data Quality Delivery, the Soft Stuff is the Hard Stuff (Part 3 of 6)

August 17, 2012

In my previous post I discussed effective stakeholder management and communications as a key enabler of successful data quality delivery. In this blog, I will discuss the importance of demonstrated project management fundamentals.

Large-scale, complex enterprise Data Quality and Data Management efforts are characterized by numerous activities and tasks being performed iteratively by multiple resources, across multiple work streams, with high volume units of work (i.e. dozens of source systems and data objects, hundreds of tables, thousands of data elements, hundreds of thousands of data defects and millions of records). Without the means to effectively define, plan and manage these efforts, success is nearly impossible.

Thankfully, there are many recognized paths to attaining and developing solid project management skills; certification from an industry recognized organization like the Project Management Institute (PMI), a degree from an accredited university, formal on the job training, etc. Yet, one of the more common pitfalls continues to be the belief that smart people, common sense, regular meetings and a spreadsheet are adequate to effectively manage a project or a portfolio. However, one glance at any project management manual or text book, or a quick spin through any formal project management framework is all that it should take to convince even the biggest skeptic that there is much more to project management. Take PMI’s Project Management Body of Knowledge (PMBOK) for example. Within PMBOK, there are 9 discrete knowledge areas covering everything from scoping to quality assurance to risk management to financial controls, and each of these knowledge areas demands specific skills, practices and techniques to be effectively performed. Without a formal project management structure, rigorous discipline, and appropriately skilled resources, even small work efforts can spiral out of control when seemingly minor issues and challenges quickly accumulate and lead to missed deadlines and blown budgets. And when you multiply these “minor” issues and challenges across an entire portfolio, the impact can be disastrous. So the next time you’re looking to cut a few corners, think twice about underwhelming project management – it will likely come back to bite you.

In my next post I will discuss the importance of grasping basic business financial concepts to enable effective Data Quality delivery. Stay tuned.