Honeywell Customer Master Data Governance Labor Costs / Low Return ... • Integration of multiple versions of SAP ... • Enterprise Customer Master Data Governance Council

Honeywell Customer Master Data

Governance

Visibility Changes the Game

Nancy Northrup, PMPCustomer Master Data Governance LeaderSix Sigma Black Belt, + LeanCreation Date: November 2007

N. Northrup CDI NYC Nov-07 HONEYWELL INTERNATIONAL 2

Contents

• Introduction

• Measure and Model – Six Sigma Lean as a core focus

• Building the Future

• Wrap up

• Appendix


Honeywell’s Strategic Business Groups (SBGs)

2006 Sales

35%35%

15%15%35%

15%AerospaceSpecialty

Materials

Automationand Control Solutions

TransportationSystems Total = $31.36B

Diverse Businesses, Technologies, Products, Channels


Customer Data on Demand (CD2) Usage Where we are today

Multiple uses for cross Honeywell view


What is the market for this product globally?

How is the Customer’s business growing and

changing?

What products does this Customer buy

(from other Honeywell businesses)?

Dave needs it by

Monday

It’s All About Growth

Source: Adapted from BI presentation D.Clark Dir. BI SM


Pre-Customer Data Integration

• Standard financial code namesBut definitions are not standardized

• Data maintenance at the individual line of business levelBut no central repository

• No Customer Relationship Management controlsLimited customer interaction awareness

• Mergers and Acquisitions create additional complexityAcquired competitors continue competing

Customer Knowledge Sharing Done by “Talking”

High Labor C

osts / Low R

eturnC

onstrained Grow

th


Barriers and Enablers for Governance

• Historic autonomy in a diverse company

• Accountability for strategic initiatives at

the operational level

• Integration of multiple versions of SAP

• Enormity of legacy data quality issues

• Complex distributed customer creation

authority in a global corporation

• Continued growth through mergers and

acquisitions

Barriers√Buy-in of top management

√Engaged middle management

√Business Case for CMD quality

√Well-executed communication plan

√Inclusive council membership

√Goal-driven program

√Regular progress measurement & reporting

√Distributed decision-making

√Data standards and best-practice processes

√Tool support for data cleansing, maintenance and system integration

√Data stewardship and quality activities integrated with the day-to-day processes

√Real benefits for front-line workers

Enablers


Honeywell CMD Governance ApproachSix Sigma plus Lean

Define the ProblemIdentity Data & SourcesDefine prioritiesDefine Core DataEngage Expertise

Measure Current StateAccessible

AvailableQuality

Consistent Auditable

Secure

Control QualityStandardizeMonitor complianceUtilize common tools, services, processesIdentify & sharebest practices & lessons learned

Improve Data Integrity

Ensure validityEstablish baseline

Re-design processes

Promote reuse / best practices


Problem Statement

• Honeywell is unable to consistently and clearly identify the complete relationship with our business partners which impacts:- Assessing credit risk management

- Analyzing the full relationship for cross sell & up-sell

- Maximizing value exchange in the relationship

- Understanding the full relationship with a partner and impact on working capital

- Providing consistency in product offerings and services, where appropriate

Exxon, Exxon/Mobil Buy/Sell positionCalendar Year 2006 2007

Honeywell Organization Purchase Sales Sales

$$$ $$$ $$$

CORPORATE $$$

$1,000,000 $$$

AUTOMATION & CONTROL $$$ $3,000,000 $$$

SPECIALTY MATERIALS $5,000,000 $$$ $$$

TRANSPORTATION SYSTEMS $$$

HONEYWELL

AEROSPACE SOLUTIONS

**Dollars are fordemonstration purposes onlyand bear no resemblance to actual data


CD2 Value Proposition• Enable growth through expansive customer views

- Establish Honeywell view of strategic customer account sales and purchases

- Support informed Customer and Supplier visits and negotiations

- Enables quick response legal and business development inquiries

- Serve as clearing house for D&B requests to reduce duplicate requests and costs

Aerospace

Specialty

Materials

Automation &Control Solutions

Tran

spor

tatio

nS

yste

ms Honeywell

Customer

Creating“One-Honeywell”

Aligned to the Customer

• Enable unified Customer Master Data Governance- Facilitate transaction productivity & success- Complete customer “sold to” information

360° customer relationship managementProvides standardized postal addressingEnables business intelligence reporting

- Strategic Business Groups (SBG) and Corporate entities aligned on data standards for self-governance and ownership

Source: IBM CD2 Study


Governance Council Principles and Responsibilities

• Strive for a core set of customer master data (CMD) standards

and guidelines, globally common across Honeywell

• Implement and oversee effective and efficient processes for

managing and ensuring the quality of the core set of CMD

• Build Data Quality into the stewardship processes, creating and

managing data at the source

• Set objective metrics and reasonable targets for managing data

quality

• Share lessons learned across SBGsGuiding Principles ground all design and recommendations


Customer Master Data Management Program Charter

Mission:Provide common master data standardized, agreed-to, consistent format across Honeywell for Customer Master Data (CMD) records independent of source system but with an SAP focus.

Value Proposition:•Data Integrity: Correct customer alignment•Improved productivity through common process•Improved reliability and validity of reporting & analytics



Scope:•Global Honeywell Organization

•Information domains—core customer master data

•Processes—customer master data creation & update supporting common processes

•Technology—ERP (SAP, Seibel, Oracle), data cleansing tools, MDM solutions (i2, WCC, SAP…)

Boundary Statement: This project will not attempt to “fix” legacy systems despite their continued operation through 2012, but highlight areas impacting the move to SAP for pre-load data remediation.

Implementation: Due to the independent schedules of SBG SAP implementation efforts, timelines will be negotiate with each SBG.



Mission Enablers:• Enterprise Customer Master Data Governance Council• Clear data ownership and supportive staffing• Common data management and cleansing processes• Data harmonization & consolidation process• Unified ERP platform with appropriate tools

Goals:• Develop business case & priority focus• Establish Enterprise Customer MDM program• Customer MDM education & communication• Solution & services aligned with SAP Enterprise Architecture direction and roadmap


Enterprise Data – Requirements

Customer Data is a Valued & Respected Resource

Accessible Data access is independent of source or structure

Available Data is available when, where & how needed

Quality Completeness and accuracy are defined

Consistent Consistent data definitions are used across the enterprise

Auditable Managed audit trails cross the enterprise

Secure Data is secure


Measure and Model

Incorporate 6ơ Lean Principles(The Toyota Operating System)


StandardWork

VOC/VOP

Quality Cost Alignment Taguchi & Deming

Lean Manufacturing

• Global Supply chainControl/Ownership

• Henry Ford - River Rouge Plant 1915

• Cars for income levels -• Paying by installments• Collect Requirements

• Collect historical defect data• Alfred Sloan - GM Variation 1926

• Resource constraints WWII• Focus on productivity• Noise isolation

• Process Robustness 1950• Toyota Operating System

•USA buy-in to teachings of Deming- Customer Metrics- Process Control Metrics- Functional Metrics

•Predictive ability (SPC)•Scorecards

Lean transformation requires changes to tools methodologies, standards, & procedures

1915

1980+• Waste triggers root cause analysis

- Determines opportunities for improvementProcess redesign for improved flowLoad balanced work groupsEnd to end performance management

The History of Lean Thinking


Value Stream

Common Repository Driving Common Metadata

IncomingSBG CMD

•Diverse Quality•definitions•Scrap: incomplete data•Files not on time to request (OTTR)

OutgoingReporting

Process D&B file

•CMD Hierarchies•Industry Reports•Customer Visit Preparation•Revenue Reports

•Send errors to SBGs•Load validated CMD into CD2 for reporting

DUNN & Bradstreet

Separation& Cleanse

•Validate, correct, standardize , enrich with hierarchy•Apply confidence codes

• ID new CMD for D&B send• Add established customer and revenue to CD2 for reporting

NVA NVA VA VANVA

Supply Chain Management is Cost Management

Speed through Standard Work• Re-work decreases• Cycle time decreases

Voice of the Customer• Predictable Quality• Continuous Improvement


Measure the Baseline

• Customer Master Data (CMD) Revenue Alignment- 64% Revenue ready for CASH recovery and Growth alignment- The hidden customer - one customer, many definitions

No cross Honeywell standard CMD definitions, or attributesNo system independent identifier to enable leveraging

strategic customer management

• Empower the Employees - Many source systems, little or no data ownership

Data resolution owned & largely executed by CD2 teamLittle understanding of DUNS#, D&B coverage, or the

need to align revenue for recovery- Information sharing void

No centralized forum for data managementNo Best Practice sharing through a stewardship

network

Rejects / RepairExcessive MotionOver ProcessingTransportation

Waiting

Over productionExcessive Inventory

Defective Information• Process Failure• Wrong or Sub-optimized Decisions


The 5 Lean Principles – Managing Change1. Specify value in the eyes of the customer - VoC survey for CD2

- Engage cross functional team for Governance

Predictable

Trainable

Measurable

3. Make the processes flow – Material Flow Analysis- Perform 5S

2. Identify all the steps along the process chain- Enable process re-design

4. Make only what is pulled by the customer- Reporting

5. Strive for perfection by continually removing waste- End to end performance management

★ Empower the employees - The business owns the data

Ownership & Responsibility Activates Problem Solving


Load Balancing: Leverage Business Knowledge

2007SBG Data Stewards own data integrity.

Project Manager trains, tracks, & reviews progress

Driving Business Data Ownership Institutionalizes Stewardship

2006Project Manager / Data Steward

I’m tired

N/A

N/ASBG

N/AN/A

SBG

N/A

N/A

N/A


Sort, Store, Shine, Standardize, and Sustain 5S Workplace Organization

Share Information

Share Standards

Build Standards into the Workplace

Prevent Abnormalities

(Error-Proof)

Stop Abnormalities(Prevent defects from moving on)

Warn About Abnormalities(Build in alarms)

Visual

Display

Visual

Contro

l

6

5

4

3

2

1SBU CMD Sold-to

Transactions Feed CD2

Governance Council Kickoff

Metrics

Man

agem

ent

Managed State

Lean Maturity Pyramid – Data Quality & CompletenessAssess the maturity level

Lean Begins with Information Sharing

Data Cleansing Effort

Define CORE CMD StandardsStandardize DUNS# Storage

Define Metrics Tracking & Trending

2007

2006/7

2005

2007/8

Mechanize CORE CMD Standards, stage II

Mechanize CORE CMD Standards, stage III

Enterprise MDM alignment, stage I

Enterprise MDM alignment, stage II

Enterprise MDM alignment, stage III

Mechanize CORE CMD Standards, stage I


SUSTAINSUSTAIN

Monitor / Measure

5 S Process

Utilize documented standards

STANDARDIZE

SHINE

Take corrective actionSTORE

Create a place for everythingSORT

Keep only the necessary to perform the task


SortEstablish goal and standard definitions

Store Shine Standardize SustainSortSort• Goal: Deliver continued improvement in Customer Master Data quality

• Establish Scope and Criteria- High confidence D&B DUNS# match to Sold-to customer records

aligned with sales dollars

• Define ownership - SBU owned and managed, CD2 team assisting


STORE

Sort Shine Standardize SustainStoreStore• Determine required quantities

• Label needed items- Maintain transaction traceability

- Define D&B DUNS# as key code

System independent & family linkage

• Create a place for everything

- Develop shadow boards aligning CMD by family

• Define scrap and remove from the process

• Enrich CMD records through the D&B process


Shine

Sort Store Standardize SustainShineShine

• Corrective Action resolves low confidence match to DUNS#- Identify SBG Data Stewards- Maintain audit trail – source system & customer number- Utilize Standard Work process- Track & drive results in weekly status meetings

• Create standard work- Provide consistent format- Conduct Training on documented process- Enable mechanized correction


Standardize

Sort Store Shine SustainStandardizeStandardize

• Create CORE Customer Master Data

- Define elements and attributes

- Obtain consensus across organizational lines

• Define unique system independent identifier

- D&B DUNS#

• Populate into SBG systems

- SAP FI Credit Master Credit Info. No. (KKK table)


Sustain

Sort Store Shine Standardize SustainSustain• Measure Quality & predictability

- Percentage Honeywell yearly revenue aligned with D&B DUNS#

• Measure Re-work- Drive Cost Containment & need for mechanized standards- Cost of employee time + opportunity cost

• Measure Scrap & On Time to Request (OTTR)-Drives Data Completeness -Scrap (unusable record) for first pass yield per file

Example: CMD record with no associated dollars, blank customer name, blank country, or unusable record


Current and Future Focus


One Honeywell Focus

Build in Quality:•Populate SAP FI Credit Master with DUNS#•Create SBG specific Roadmaps for Change•Roll out Informatica Data Quality Tool

Process Improvements:•Standardize data stewardship processes•Leverage CMD Governance Council for cross Honeywell best practices sharing, stewardship support, and decision making body•Leverage CD2 as D&B central


Quality and Completeness

Key Data Requirements:Customer master data from all SBGs and source systems

providing a comprehensive understanding of customer entities and relationships

Defined data qualityProperly identifying business organizations enabling

building corporate families & associationsProviding complete & consistent name, address &

codificationName Source system and organization identifiers, customer numberAddress lines; city, state, and countryTelephone number


2006 - Corporate Drives Enterprise Data Management

• Forming Governance Council formed

• StormingCorporate leads in data cleanup

• Norming Data Quality tools assessment

• ConformingAgreement to seek CMD alignment

Kickoff - Charter / SIPOCSub-teams

86.7% achieved

Informatica Data Quality Tool

Baseline data gatheringCMD Core field straw-man


2007 - Business Drives Enterprise Data Management

Goal Alignment across One Honeywell

Automated Control Solutions Common Standards

Aerospace Data Quality Integrity

Specialty Materials Strategic Management

Transportation Systems Business Reporting

Corporate One Honeywell

Honeywell Credit Services Improve Working Capital


Customer Data Integration • Standard financial code names

But definitions are not standardized

• Data maintenance at the individual line of business levelBut no central repository

• No Customer Relationship Management controlsLimited customer interaction awareness

• Mergers and Acquisitions create additional complexityAcquired competitors continue competing

Customer Knowledge Sharing Done by “Talking”

High Labor C

osts / Low R

eturnC

onstrained Grow

th• CD2 is a central repository for Customer Data Integration

- Consistent code definitions- Report requests OTTR 1 or 2 days

• CD2 enables view into customers across Honeywell- Insight into the customers of other Honeywell businesses- Managed CRM

• CD2 enables view into industry codes aligned to Honeywell customers- Alignment of customer by business through SIC codes (industry type)- Enabled competition

Managed and Enabled Customer Knowledge Sharing


Positive Feedback but What have you Done for me Lately?

It helps to see in total what Honeywell means to the customer

The tool is really valuable!

CD2 information is critical because each business unit is on a separate system.

CD2 helps identify our potential leverage and

risks, particularly for big contracts

It helps to understand our risk exposureThe visibility that CD2

provides really changes the game!

The people that use it frequently should think about the 5 things it has caused them to do differently and start tracking it

It used to take me 1-2 weeks to pull the information together that I can now get from CD2 in 24 hours!

CD2 saves a massive amount of time and

improves the quality of the data

We’ve had One Honeywell chats

forever, until you use these reports you don’t start thinking outside of

your business unit. CD2 is fostering collaboration across Honeywell.

Source: IBM CD2 Study


Data Governance Reality Check

• Don’t think that a tool will solve all your problems

• Don’t forget that Data Governance is required & on-

going

• Do remember that life is made up of baby steps

• Do pick your battles – be flexible

• Don’t ignore the significance of data stewardship

• Don’t over do it or do it at the wrong time

• Don’t think it will be easy


Questions?


Appendix


Sort / Shine - Scrap and Re-Work identified in the process

Data Steward Cross Honeywell Effort Enables Revenue Alignment Achieving 87% Match Rate to DUNS#

Hon

eyw

ell

CD

2D

un &

Bra

dstr

eet

Bus

ines

sU

nits

HONSource

Data

D&B FileReceipt

D&BMatchingProcess

SBG/CD2ManualMatch

Records

Match≥ 8 ?

HONLoad of DataInto CD2 Hub

QualityData?

SBG ManualData

CleansingProcess

QualityIssues?

SBG/CD2Issue

ResolutionProcess

Match Code <8; Load as Single Entity

Batch Load; Load into Family

Y

Y

YN

N

NM

onth

lyso

urce

Syst

em fi

les

Re-worked Data: Corrected Records returned to CD2

New

Dat

a;O

ne-o

ffen

trie

s

DUNS# known


Best Practices – Stewardship Methodology

Activities needed to support the establishment of a Stewardship Framework

Identify Key Data

• Identify critical data

• Identify business sources

• Identify IT sources

• Consolidate and validate

Define the Data

• Data naming conventions

• Attribute definitions

• Business and technical definitions

• Valid values and samples

• Enterprise (and external )modeling and cross-referencing

Define Business

Rules

• Ownership and authority sources

• Transformation and referential rules

• Relationship rules

• Constraints• Derived values

Manage Data Quality

• Define data quality

• Identify key metrics

• Establish quality measures baseline

• Create data quality control plan

• Implement on-going monitoring


Significance of Dun and Bradstreet (D&B) Information

• Required for US Government contracts- Managed by the Central Contractor Registration (CCR)- D&B information used for Registrant identification

• Supplier Performance Score Cards created using D&B family trees (i.e. General Motors)

- Based upon DUNS#- Delivery and quality performance

• Used as data base key- Boeing/Lockheed Martin supplier system-EXOSTAR- One Source – Honeywell supplier system

• DUNS# maintenance improves our ability to:- Establish a selling relationship with the US Government- Ship and invoice for product and services sold to the US Government- Have Customers accurately report Honeywell performance- Understand who the customer is (family hierarchy)

D&B DUNS# is an Industry Standard Code


What is a DUNS Number?

Source: http://www.ccr.gov/pdfs/DUNSGuideGovVendors.pdf


D&B Match Process

Cleansing & Parsing Candidate Retrieval Match Processing

• Identify key components of inquiry data• Name, Address & City Normalization• Address Standardization

• Keys optimized based on data provided in inquiry

• Keys used to improve retrieval quality & speed• Best possible match candidates gathered from

reference database

• Evaluate matches according to a consistent standard

• MatchGrade pattern• Confidence Code

• A letter is assigned for each of the eleven components that create a MatchGrade pattern

• Match Grade provides similarity score between components of customer & D&B reference info:• (A = 80-100) Same: ABC WIDGET MFG vs. ABC Widgeting MFG 94• (B = 35-79) Similar: ABC Widget MFG vs. ABC MFG 73• (F = 0-34) Different: ABC Widget MFG vs. XYZ MFG 34• (Z = -1) Null: One or Both are Null (Blank) -1

• Match pattern system (i.e. name exact match, phone similar, etc.)• Match Grades map to confidence intervals (1-10) & probability percentage (i.e. probability of matched entity described

by input data)• Candidate selection driven by components of the name/address &o measures match quality

BusinessName

StreetName

A A A B A Z B F A Z BStreet # City

State

MailingAddress

Telephone

ZipCode

Density

Uniqueness

SIC

* Last 4 elements are available for US only


Customer Data on Demand (CD2) Overview

Improve service & growth: •Establish Honeywell view of strategic customer account•Provide information expediently to support business development•Provide information to support informed Customer visits and negotiations

Improve Customer Master Data Governance:•Facilitate transaction productivity and success•Complete 360° view of customer relationship management•SBG’s and Corporate data standards for self-governance and ownership

ERP

DW

CRM

D&B

CustomerMaster &

Summary Info

Staging

User InterfaceAdministration

User Interface360° ViewTransaction

Processing

Customer Data on Demand Hub

Business UnitApplications

& Technologies

Cleanse, match & append:DUNS, Parent GlobalUltimate & SIC Code

User Interface

SAP BWDatamart

Reporting

Business Unit SAP Environment

Data & ServiceVendors


Source System Data Quality

Common Errors: Blank, special characters - Name – “Do Not Use, Unknown”- Address (lines 1 and 2) - “ Accounts Payable, Directives”- City - “ unknown, numbers, concatenated”- State - “ unknown, numbers, concatenated”- Country - “ unknown, numbers, concatenated”- Postal code - “ all zeros, punctuation”- Phone numbers - “ all zeros, punctuation”

• Lack of naming / codification standards- Trigger and compound errors- Store location numbers, country spelling, territories identified as

states, etc.• Captured on Monthly Scorecard


CMD Governance Council

• Vision - Improve

Establish business case for CMD qualityShare lessons learned, techniques and tools across organizationEstablish and implement CMD guidelines and standards

- Guide, Monitor, ControlImplement audit and metrics to ensure compliance

• Composition- Business process owners

Order ManagementAccounts Receivable

- StakeholdersInformation Technology

- Users and creators of CMDCustomer ServiceSales and Marketing

HCS

Documents

Honeywell Customer Master Data Governance Labor Costs / Low Return ... • Integration of multiple versions of SAP ... • Enterprise Customer Master Data Governance Council