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Steve Tuck wrote, on 16 Oct 2008

Profiting from Your Most Important Business Asset

Tom Redman, a.k.a. the “Data Doc”, believes that information is an organisation’s most valuable asset, but almost all companies grossly underuse their data assets. From his work with hundreds of companies across many different industries, Tom’s diagnosis is that the cost of poor data quality to a business is typically 20% of its revenues. Couldn’t your business benefit from a revenue uplift of one fifth right now?

With poor quality data costing organisations so much, it ought to be easy to build a business case for doing something about it, but projecting (and measuring) the return on investment (ROI) is something that many people struggle with. In my experience, data quality programmes nearly always realise sufficient tangible & quantifiable benefits to make their sponsorship a no-brainer.

My advice is to build a business case around the concrete benefits you can measure and demonstrate to your management. I’ve seen, for example, many customer data quality projects justified on the savings made by eradicating the printing and posting costs of sending mail to duplicated customers or undeliverable addresses. Sure, the improved customer service that results is also a benefit, but how do you measure its impact on the bottom line? Especially when there are other initiatives delivering improvements in the same area.

Building a business case with a clear ROI and continuing to measure the value of your data quality programme is critical. There’s nothing more certain to grab and maintain the interest of you executive. If it was ever acceptable to invest in data quality without achieving a measureable return, those days are surely now over.

Tom made this point in a recent webinar hosted by the IAIDQ; he went as far as saying that you should abandon a data quality initiative if you can’t demonstrate a return on investment. “Hear, hear,” say I. Tom’s new book, The Data Driven Company, promises to provide insight into new strategies for profiting from quality data (I’m expecting my copy any day), but I’m also keen to hear from you - send me your comments below.

5 Comments so far.

Allen Taylor 16 Oct 2008 wrote:

Nice writing. You are on my RSS reader now so I can read more from you down the road.

Allen Taylor

Sue Massey 16 Oct 2008 wrote:

I must say this is a great article i enjoyed reading it keep the good work :)

Sue

lee randolph 16 Oct 2008 wrote:

Hi Steve, thanks for dropping by my blog yesterday. I am happy to see that the only book I own to date (i’m a newbie) on data quality (journey to data quality) is on the dataqualitypro recommended booklist. As I progress over the next few months on the topic of data quality, I would be happy if you’d stop in and give me your thoughts.

Gary Palmer 16 Oct 2008 wrote:

Right on the money as usual Steve.

Particularly agree with your point about continuing to measure value. In my experience one of the key success factors in data quality is the creation of a data council - a group of senior stakeholders with sufficient authority to approve data quality programmes and ensure they happen, and the power to stop them too. In fact the most successful organisations make it a rule of thumb to can at least one faltering data quality activity for each new initiative that they give the green light. This survival of the fittest approach ensures finite resources don’t get overloaded while at the same time delivering steady incremental improvement in DQ

Oh and thanks for drawing our attention to the new Redman book, I am ordering my copy today!

Dylan Jones 16 Oct 2008 wrote:

As you’re a member of our expert panel on Data Quality Pro.com you’ll already be aware that “How can we build a business case” is a question we get asked all the time.

So many people get this wrong.

I truly believe it’s the biggest problem facing the industry right now because even if you are lucky to get initial funding you still need to prove the value of DQ continuously for it to be sustainable.

For example, people simply forget that the bigger cost of DQ is personnel.

Imagine a company buys a DQ product for say £50K with a £5K per annum maintenance charge.

Sure they can write that off as a one-off with minimal recurring fees but what about your staff?

You will need a DQ manager or analyst to lead the drive, other supporting staff, training services, probably additional consulting and before you know it your personnel costs are up there with the DQ product costs but people cost you every single day.

Quite often companies will take staff from their existing projects or departments so the impact of DQ is actually very personal to the business section who lose these key resources so if they fail to make a monetary impact the senior sponsors will no doubt be reminded of it.

Another problem is that companies need to get out of the single project mentality and think about what initiatives they can tie DQ into for 6 months, 1 year, 2 year, 3 years+. A one-off business case can be a really tough sell, people buy washing machines because they will save the launderette costs for a lot longer than 6 months!

In terms of your Tom Redman comments, can’t agree more. I’ve reviewed Data Driven and interviewed Tom on Data Quality Pro recently and I found his ideas really refreshing, particularly the chapters regarding monetizing your data to external markets.

Companies sit on a mine of data “gold” but lack the skills to tap this resource, his book is a great tool for discovering these techniques and is written in an accessible style regardless of your DQ knowledge.

You can check out the review, interview and even win a copy in our prize draw for the book here: http://www.dataqualitypro.com/tom-redman-interview

Great article Steve as ever.

Dylan Jones
Founder/Editor - Data Quality Pro.com

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