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.
|Financial Upside Potential Loss|
|Financial Downside Exposure|
|Customer Relationship Management|
|Business Operations Impacts|
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.