Blog

Information governance can directly contribute to top and bottom line financial results as well as improve IT productivity. Unfortunately, most IT organizations have not been able to quantify the value of information governance even though 70 percent of executives experienced information quality issues; and therefore, initiatives to correct this have not been kicked off. Accurate, complete and timely information is not an abstract concept but the underpinnings of effective business management and decision making. IT executives should understand the information quality gaps that are impacting the enterprise and develop phased business cases with near-term paybacks so that these initiatives are funded.

Since 2005 RFG has been involved with data, information and risk management councils in an effort to drive awareness and implementation of best practices. While a number of companies have committed substantial resources into these initiatives, most enterprises have not done so because they do not appreciate the return such an investment would bring. In many respects this is surprising because more than 70 percent of executives think information quality is important, according to a soon-to-be-released survey by BeyeNETWORK.

RFG’s research also finds information governance can make a significant difference in a corporation’s top and bottom lines as well as risk. For example, an analysis done by an oil company found that better information management of assets could derive billions of dollars of savings for the firm over five years. Similarly, the major financial institutions grossly underestimated their financial risks because they selected to ignore risk on an enterprise-wide basis, believing siloed risk management was sufficient. Furthermore, poor information quality management resulted in exposure to systemic risks and multiple restatements of income from many of the same institutions. The cost of correcting these shortfalls is a fraction of the benefits that could have been gained had policies and procedures been in place.

Effective information governance policies and procedures in companies that do not have them do not exist because they cannot be justified. The reason the enterprises have not invested in information management is due to lack of understanding of the internal gaps and a quantification of the costs and benefits. It is time for this lapse of judgment and action to be corrected.

The Value Proposition

The lack of effective data or information quality management can be a drain on any organization. Intuitively people know this but the lack of effort to prove it is costly.  RFG puts the value impact of information governance into four major categories:

• financial or stakeholder loss of upside potential
• financial downside exposure
• business operations gains/losses
• customer relationship management

The following chart shows the types of impacts that can occur within each of the categories.

RFG believes enterprises with effective information governance policies and practices are more likely to outperform enterprises without them. The business should experience gains in customer relations, productivity and revenues and lower capital and operational costs. In addition, the enterprise will reduce its risk exposure, which is critical in times of business uncertainty.  IT executives should work with business and financial executives to understand information quality gaps and pain points, and develop and fund initiatives to incorporate effective information governance policies and practices in areas that will yield near-term paybacks.

http://www.beyeresearch.com/study/14243

Executive Summary of Key Findings

This report presents the results of an online survey on information governance (IG) developed and sponsored by IBM. The goal is to understand how the marketplace views IG in several major areas in the context of IBM’s definition of IG: Information governance is a holistic approach to managing and leveraging information for business benefits and encompasses information quality, information protection and information life cycle management. IBM positions information quality, protection and life cycle management as the three core management disciplines within its IG infrastructure. They also serve as entry points for implementing an IG program.

More than 400 BeyeNetwork subscribers took the survey. A majority are from North America, primarily the U.S. Company size in annual revenue is relatively evenly split among categories, enabling the survey results to capture the perspectives of all size companies, from small (less than $10 million) to very large (more than $10 billion). 10% of respondents identified job titles in top management (CEO, COO, President, etc.); adding CIO, CTO, or IT Director positions brings senior management to 16%.

Two-thirds of respondents are already implementing or plan to implement an IG program within the next 18 months. Larger companies are more likely to be involved in IG, but even among the smallest companies, half are involved or planning to be. In line with critical business concerns, almost half of respondents include data quality in the scope of their IG efforts and this is the area where they are most likely to invest money this year and next.

Over 40% also indicated that their IG scope is enterprise wide and the number of organizations spending money on enterprise-wide IG projects will grow by almost 50% in 2011 over 2010. Thirty-eight percent (38%) of respondents have already established IG leadership roles within their organizations.

Seventy percent (70%) of respondents see IG growing in importance over the next three to five years in order to achieve business success. Only 1% of respondents see IG becoming less important in this time frame. This growing importance is supported by the business problems respondents have experienced and the high value they place on the ability of their IG efforts to solve these problems.

Importance of information governance will grow over the next 3 to 5 years

Respondents are clear on the significant business value of IG from the perspective of both business and IT executives, especially in the ability to increase confidence in information for decision making and improve data quality. These are the two top business concerns for respondents as well as the top two that respondents felt could be better addressed with a comprehensive IG program. Almost 70% of survey organizations have experienced data quality issues over the past three years. High quality data is a critical foundation for achieving goals such as increased revenue opportunities through better customer profiling.

Other business values supported by IG include the ability to better manage business risk and ensure compliance through effective security, auditing and retention of data. 46% of respondents have experienced audit failure over the past three years and 64% have experienced data retention and archiving issues.

Respondents are specific about the need for IG as the foundation for successful implementation of a wide variety of information-related projects, including business intelligence, master data management (MDM), analytics and data warehousing. Almost half of respondents view IG and MDM as symbiotic.

The biggest barrier to implementation is the fact that IG has a lower priority than other projects. Inability to communicate the value of the effort, cost and complexity are also major barriers for more than 30% of respondents.

Although getting an IG effort underway can be daunting, the cost of not doing so is high. The key is to start small in the area of most critical need: information quality, information protection or information life cycle management. IG is clearly a way to gain competitive advantage and reap significant long-term benefits.

Good article in this month’s Data Management Magazine on Data Governance and the Six Steps:

http://www.ibmdmmagazinedigital.com/dmmagazine/issue_3_2010?sub_id=zxQdKwsqxTTf&folio=28#pg30