SAP InformationManagement 04 2010

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Copyright Forbes 2010

Maai Iormatio i the Eterprie:Perpective or Buie Leaer

in association with:


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KEy FIndIngsWhat are the data challenges acing the worlds top companies? A recent Forbes Insights survey o more than 200

business and inormation technology (IT) executives at leading global enterprises uncovered signifcant trends,

misconceptions, and underlying roadblocks to better inormation management:

Data-related problems cost the majority o companies more than $5 million annually. One-fth estimate losses in excess

o $20 million per year.

95% o organizations agree that strong inormation management is critical or business success.

Line-o-business executives and IT requently disagree about the source o data-related problems and the potential

solutions.

Fragmented data ownership is the single biggest roadblock to an enterprise inormation management program.

CIOs and their IT managers need to communicate more requently and eectively about inormation management

projects and their benefts to lines o business.

Turning endless piles o data into timely, actionable inor-

mation now dominates both business and IT agendas. Th is

new ocus means companies must apply rigorous strate-

gic thinking to inormation management both to contain

costs and retain their competitive advantage. It also means a

much greater emphasis on business processes and tools used

to assure data quality in the enterprise.

With the data growth rate accelerating at a rapid rate,

businesses must act now i they hope to leverage data as a

strategic asset.Forbes Insights, in association with SAP, surveyed more

than 200 business and IT executives about the data chal-

lenges their organizations are acing. There was widespread

agreement that inormation is a strategic asset or an

enterprise and that quality data is paramount, yet poor

inormation may be costing companies millions o dollars

each year. However, beyond that concurrence, there exists

a disturbing divergence between IT proessionals and line-

o-business executives on how to best manage inormation

in the 21st century.

First, business and IT managers appear to disagree

the details o data qua lity issues. The two groups al so do

agree on who owns the datausers or IT. Theres also

communication gap about how inormation managem

is being handled within organizations. And while there

general agreement about the cost o poor data quality, or

nizations are sti ll unclear about how they can measure R

accurately or solutions available in the market.

The survey results point to specic areas where IT a

line-o-business groups need to work together to sotheir data qua lity problems. They give top management

economic incentive to push or strategic inormation-ma

agement solutions. And they show the common ground

and lines o business share that can be the oundation or

eective inormation strategy or the business.


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Organizations clearly believe that inormation is the stra-

tegic asset that will set them apart rom their competitors

and drive their success. Its not just the opinion o the IT

department either, as line-o-business executives see inor-

mation as integral to achieving their business goals.

Fully 85% o survey respondents agreed that their orga-

nizations treat inormation as a strategic asset. (Fig. 1) And

nearly all (95%) go the next step, believing that in ormation

management is essential to business success.

This is denitely true at the worlds leading semicon-

ductor manuacturer, Santa Clara, Cali.-based Intel Corp.

Inormation is a major component o our intellectual

property and gives us an advantage in terms o manuac-

turing eectiveness, quality, and product capability, said

David Aires, general manager o IT actory automation.

An executive at Petrobras, the Brazilian oil producer,

echoed Aires view. Petrobras believes inormation and

knowledge are a competitive dierential, thereore, strate-

gic assets.

Iormatio Maaemet:The dierece Betwee Kowi a doi

Figure 1. Executives views on inormation management

39 48 9 2

47 43 2 6 2

53 42 2 2

36 49 2 11 2

0% 50% 100%

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Other companies are building their IT strategies to empow

lines o business to make aster, more inormed decisions.

Roger Parks, CIO at J.R. Simplot Company, a Boise, Idah

based agribusiness and ood manuacturer and one the larg

private companies in the U.S., observed, Inormation ma

agement does have a very strategic role in our company an

an important part o our overall IT approach and strategy. W

recognized several years ago that converting the right busin

data to inormation can provide us with a competitive adva

tage and we must view and manage inormation as a strate

corporate and business asset.

The big question is, i managers agree that inormati

management is a strategic dierentiator, and access to in

mation as an essential part o the decision-making proce

why are inormation management initiat ives oten not w

communicated or overlooked?

Taking acTion

Establish information managements priority in your enterprise.

Raise the visibility of your information management initiatives

and successes.

Strongly agree Agree Dont know Disagree Strongly disagree

2

1


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Many times, data quality issues center around master data.

Master data includes all core business inormation used

across an enterprise and other attributes such as metadata

(i.e., the data about the data). This data must comply with

an organizations governance policies (i.e., how the data is

controlled and handled).

Hood Abu Bakar, general manager, inormation and

communication technology at Kuala Lampur-based MISC,

the worlds third largest shipping company, said, I data

quality i s suspect, users will not have the condence in the

data and might make decisions that [could] aect the bot-

tom line or expose the organization to unnecessary risks.

The main issue that we have aced with regards to data qua l-

ity is with the master data. We have a number o partners

and stakeholders that might call the same item by dierent

names, which in turn will cause some mismatches and ine-

ciency. We enorce certain controls to ensure that these

errors are kept to a minimum i we cant eliminate them.

We also have periodic reviews to ensure that the data qual-

ity is suciently high to ensure condence in the system.

Few companies escape data quality pitalls. Richard

West, president o Peachtree Data Inc., Duluth, Ga., which

How data Qualit Aect Buie Proce Efciec

i d quly ue, uer

[mg] exe e rgz

ueery rk.

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Figure 2. The consequence o poor data quality

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33 49 3 12 3

Bd rm requely led ly mke by bue mger

our bue ree uer rm e r ere ledrm

0% 50% 100%

Strongly agree Agree Dont know Disagree Strongly disagre

cleanses marketing mailing lists or hundreds o compan

yearly and processes more than 1 bil lion records per mon

observed that even the most sterling consumer brands

company works with have data quality problems, noti

that ve to seven percent o each new customers reco

are wrong.

Most organizations have taken the critical rst step

identiying their data problems. According to the surv

82% o respondents agreed that bad inormation leads

costly mistakes by business managers and 61% agreed t

business processes suer rom inconsistent or otherw

fawed inormation. (Fig. 2)

Taking acTion

Assess the state of your data quality, starting with high-priority el

ments, such as supplier, customer, material, or product data. Does

the quality meet business expectations?

Evaluate how incorrect or ambiguous data is affecting your compa

nys ability to make smart, inormed decisions.


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No organization has absolutely perect datanor is that

practical. Al l sizes o companies are bound to experience a

data qual ity problem eventually. Companies may duplicate

their data gathering, incurring unnecessary expenses. Bad

data can erroneously inorm decision-makers, leading to

pricey mistakes. And data entry errors can keep you rom

knowing what your customers have bought rom you or

cause you to ship products to the wrong location.

Few among those surveyed thought data quality prob-

lems did not hit their enterprises balance sheet. In act,

a majority o respondents said the yearly damage to the

bottom line due to data quality problems exceeded $5

million. Nearly one-in-ve (18%) estimated the annual

cost to be more than $20 mill ion. (Fig. 3)

The Cot o Poor data Qualit

Figure 3. What do you estimate that data-related issues cost your company

annually?

8%

18%

15%

19%

14%

18%

9%

Under $1 million

$1 million - $1.9 million




$20 million-plus

Dont know

Despite the widespread awareness o the high price

low-quality data, initiatives to improve data quality are n

necessarily easy to measure in classic budgeting logic becau

there is oten no single, well-dened goal that can

achieved and measured. In many cases, the benet o ent

prise inormation management is the day-to-day reducti

in errors in business decisions and the resulting operatio

improvements (such as greater worker eciencies) that

gained or the business.

This can be rustrating to IT managers well versed

budgeting projects. (See sidebar: Getting to Master D

Management.) However, given the broad consensus on

strategic value o in ormation and the acknowledgemen

a mjry rede d e ye

dmge e bm le due d

quly rblem exeeded $5 mll


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the unacceptably high cost o poor data quality, eective

leadership can readily help IT and lines o business identiy

and resolve an enterprises key data quality issues as part o

an overall inormation management strategy.

Taking acTion

Determine how much data quality issues cost your company annu -

ally. Start with an examination o a single business task/process,

such as supplier on-boarding, product content sharing with resellers,

or creating a customer record in CRM.

Determine the impact of data-related issues on current analytical or

operational systems such as business intelligence (BI) or enterprise

resource planning (ERP). Find out what helps staffers in these areas do

their work, what obstacles they ace, and how they handle problems.

tere g e eerre

de buld mer d.

nel srkey, nk


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While many IT and line-o-business executives in the sur-

vey agreed that inormation in their organizations has its

problems, they dier widely on where and why these data

quality issues exist. While such dierences in opinion are

not surprising, they may prove to be signicant hurdles or

companies that try to improve data quality and the strategic

value o inormation or the business.

Poiti Fier: IT a Buie Executive diaree

Figure 4. How good is your data? (% o respondents rating data quality

high6 or 7 on a 7-point quality scale)

0% 50% 100%

68%

64%

64%

62%

59%

58%

57%

55%

48%

39%

45%

35%

36%

38%

31%

42%

30%

36%

26%

35%

32%

30%

25%

D vldy

overll d quly

D urg

D mele

D ury

D ebly

D mleee

D ey

49%

To succeed, organizations should consider taking ste

to ensure both groups can be held accountable. But t

may be easier said than done.

Line-o-business executives have a lower opinion o d

quality than IT respondents. Respondents were asked to r

the quality o their organizations data on a variety o att

butes. Consistently, IT respondents gave their organizatio

higher marks than did line-o-business executives. (Fig.

Even more telling, among lines o business, respondents

the data-centric nance, sales and marketing groups w

the least likely to give high marks or data quality.

There are other instances where IT does not appear

have an understanding o the data quality issues acing l in

o business. With the exception o inormation access (S

sidebar: Lack o Inormation Access), there was little agre

ment between business and IT executives on the sources

data quality problems experienced by lines o business. T

biggest data quality issue identied by business executiv

IT All lines o business Finance, sales & marketing


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in the survey was inconsistent data (40%). On the other

hand, IT respondents took a more technical approach, cit-

ing gathering o duplicate data (38%) and data migration

(38%) as the major problem areas. (Fig. 5)

These dierences about where data quality problems

reside could derail necessary work to improve data quality.

That is, while agreeing that problems exist is vital, obtain-

ing agreement on where to ocus eorts might prove to

be dicult as powerul individuals and departments in an

organization push or solutions that best address their spe-

cic issues rather than those o the enterprise a s a whole.

Taking acTion

Establish an executive sponsor for a data governance committee,

and encourage active participation in the committee.

Engage key IT and line-of-business stakeholders to get a clear pic-

ture o where data quality issues exist and how resources can be

prioritized.

Mitigate arguments on perfect data quality by focusing instead

the integrity and use o the inormation.

Figure 5. What are the primary quality o data issues experienced by line-o-business managers at your company?

0% 50% 100%

0% 50% 100%

Ug ld d

Med le due bd d

Uble ue d rm e ure u rd-r y rer

iure d due d ery errr

24%

18%

16%

13%

23%

20%

11%

17%

Gerg dule d

Lk e rl rm

Ug mlee rm

ie d

D mgred rm ld yem e e mlee r ure

38%

38%

27%

27%

27%

27%

28%

22%

35%

40%

33%

9%

24%

33%

38%

21%

10%

7%

19%

IT

All lines o business

Finance, sales & marketing

IT


Finance, sales & marketing


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Organizations appear to be wrestling with the natural

boundaries between the data users in a l ine o business and

the data management proessionals in IT. Business users

generally consider the inormation and how it is managed

to belong to them. While IT managers la rgely concede that

inormation is the users not theirs, they take the position

that data and inormation management systems are under

ITs purview. This diering perspective puts IT and busi-

ness executives in conficting camps, particularly when it

comes to data quality.

The survey bore this out. Nearly our-ths o IT exec-

utives believed they were responsible or data qual ity, while

more than hal o business executives thought those who

enter and use the data have primary responsibility. The

ownership issue is even more pronounced between IT and

nance, sales, and marketing executives. (Fig. 6)

When asked where responsibility or data quality

resided, 79% o the IT managers said it was with IT, but

74% o the nance, sales, and marketing, respondents said it

was their own job to assure data qualit y.

So, its not surprising that both IT and all line-o-busi-

ness respondents agreed that the number one roadblock to

establishing an enterprise inormation management program

is the ragmentation o data ownership. But each group was

looking at the other as responsible or the roadblock. (Fig. 7)

This seems to be the case at many companies. Each

employee must ensure that the data input in the dierent

systems is correct, said Petrobras. The IT proession-

als are in charge o ensuring the availability, integrity, and

condentiality o the in ormation entrusted to them.

Collaboration between lines o business and IT is essen-

tial i inormation management initiatives are to progress. As

Nokias Neil Storkey said, an abiding rule or such projects tosucceed is to communicate, communicate, communicate.

Taking acTion

Discuss in a data governance council what can be done to gain the

right balance between IT and line-o-business involvement in your

inormation management initiatives.

Consider tying manager performance evaluations to their collabora-

tion on executive-sponsored inormation management projects.

Clearly delineate responsibility and accountability in all areas of data

management.

diareemet Over data Owerhip I a Top Iue

Figure 6. Where does primary responsibility or quality o data reside at yo

organization?

79%

20%

43%

54%

24%

74%

i it

a e le bue

0% 50% 100%

Figure 7. What are the major business roadblocks to establishing an

enterprise inormation management program in your organization?

0% 50% 100%

oer d rgmeed

Lk leder

n budge

c lle d rm ure

c r d quly k r uderd

Quly eerre rm gd eug

n kledge ere r beg EiM rgrm

n l mleme EiM rgrm

D ru rm

41%

23%

22%

20%

20%

18%

13%

13%

12%

IT All lines o business Finance, sales & marketing


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Without deep collaboration between IT and line-o-busi-

ness managers, it can be hard or organizations to be on the

same page in terms o inormation management projects

and their value to the enterprise. As J.R. Simplots Parks

explained, There is a gap, quite honestly. One actor in

why there is a gap could be attr ibuted to not having a single

or common denition o enterprise inormation man-

agement. Its similar to business intelligence, where there

are variations o the denition o BI. Some CIOs ail to

communicate with and educate others about inormation

management within their enterprise.

The survey data underscores that business executives are

oten not aware o many o the top inormation management

programs at their organizations. For example, according to

IT managers 51% o their companies were engaged in data

quality management work. But only 25% o business exec-

utives said their organizations had similar projects. (Fig. 8)

The results clearly indicate that there is little communication

about data quality work in progress when the lines o busi-

ness are not aware o or involved in the solutions.

This knowledge and understanding gap between busi-

ness and IT respondents may point to communication lapses

Kowlee a Commuicatio gap Cotribute to Problem

Figure 8. The knowledge gap: Which o the ollowing projects are part o your inormation management program?

0% 50% 100% 0% 50% 100%

51%

34%

33%

48%

34%

32%

24%

38%

33%

27%

10%

25%

17%

27%

27%

26%

24%

18%

22%

27%

23%

24%

D quly mgeme

D gvere

D egr r rm l

Mer d mgeme

irm le-yle mgeme

D iegr

D reue r d mr

Bue ellgee r ly

ce mgeme

Med mgeme

ne/d k

on the part o IT executives with their line-o-busin

counterparts. And vice versa. Increased collaboration

data quality initiatives and overall enterprise inormati

strategy could go a long way to help improve the situati

or the entire business.

Some companies have addressed this gap. At Petrob

there is a standing committee whose charter is to adv

senior management about inormation policies in co

sonance with corporate strategies. And at J.R. Simpl

Parks has installed direct reports to his department with

all lines o business in the company to ensure that a stea

fow o project inormation is going back and orth betwe

the two groups.

Taking acTion

Are line-of-business managers aware of the benets of informa-

tion management efforts? Engage business managers on the data

governance committee. Educate all managers about the impact

of information quality on business operations. Enable them to be

accountable.

Ensure the IT department keeps lines of business apprised and involv

in current or uture inormation management project developments.

IT


IT



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Yes Currently developing o No Dont know

Despite dierences in perception about data ownership and

inormation management programs, many companies are

looking at enterprise inormation management (EIM) as a

way to gain greater control o data quality and consistency.

O the organizations surveyed, 45% conrmed they have

some type o EIM program in place, and 31% said they are

currently developing one. (Fig. 9)

It is not surprising that data integration, data quality

management, and master data management are among the

top projects currently implemented as a part o an enter-

prise inormation management program. (Fig. 10) These

markets recently have experienced substantial growth in

conjunction with a rapid maturity o avai lable technology.

Interestingly, nance, sales, and marketing executives

ranked business intelligence (BI) or analytics as their top

inormation management project. This may indicate these

business executives view a BI system as their vehicle or

leveraging inormation as a strategic asset. What they may

not ully understand is that data integration, data quality,

and master data management are enabling programs used in

support o BI solutions.

In addition, most organizations will increase or maintain

budget allocation or EIM program unding, according to

the survey. (Fig. 11) This trend indicates the strategic impor-

tance o inormation management despite the economic

challenges aced by organizations. Respondents in the Asia

Pacic and Latin America markets had the highest planned

budget increases or inormation management initiatives.

The state o EIM Toa

Figure 9. Does your organization have a dedicated enterprise inormation

management (EIM) program in place today?

45%

31%

17%

7%

Figure 10. I you currently have an EIM program in your organization, whic

o the ollowing projects are par t o that program?

35%

30%

28%

26%

24%

35%

29%

27%

25%

20%

1%

0% 50% 100%

D quly mgeme

Mer d mgeme

D gvere

Bue ellgee r ly

D reue r d mr

D iegr

D egr r rm l

ce mgeme

irm le-yle mgeme

Med mgeme

oer


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our deerlzed ruure mde dfu

ge mlee, e reree d lde y uble lyze bue errme

Bb tgrm, B-R

Figure 11. EIM budget allocations or 2010

23 37

23 41

24 37

25 39

27 34

29 36

34 36

0% 50% 100%

D quly mgeme

Bue ellgee

ce mgeme

D reug

Mer d mgeme

irm leyle mgeme

Med mgeme

Figure 12. Would your organization beneft i it could organize and analyze

unstructured data (i.e., emails, call center logs, images, audio/video fles, etc

41%

48%

5%

6%

The next wave o inormation insight may be in the

area o unstructured data. Many inormation management

initiatives are undertaken or an organizations structured

data ound in ERP, CRM, and database-centric applica-

tions. Yet 80% o the enterprise inormation is captured

in an unstructured data ormat such as email, documents,

and log les. In the survey, 89% o organizations agreed

that this new source o inormation would be benecial

i it could be organized and analyzed. (Fig. 12) And, 48%

said they are already doing it. Which hal o the innovation

wave are you in?

Taking acTion

Consider how you are allotting your budgets for information

management.

What is your organization doing to capture intelligence from

unstructured data?

Determine where master data will be centrally created and managed

and how much control and which attributes should be retained at

the local level.

Evaluate the efciency with which your employees are able to locate

documents related to the business processes they administer.

Yes, we are alreadydoing it Yes, we would like to d

it but are not yet able No Dont know

Budget allocation increase Budget allocation steady

70%

65%

61%

64%

61%

64%

60%


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chrisTiaan rizy

DiREctoR

sTuarT Feil

EDitoRiaL DiREctoR

Brenna sniderman

REsEaRch DiREctoR

mark evereTT hall

REpoRt wRitER

meThodology

te rm rer bed e reul urvey dued

Jury 2010 by Frbe ig sap. Frbe ig

reeved ree rm 219 exeuve d de mker ledg glbl

eerre nr amer (37%), Eure/Mddle E/ar (28%), d

a/pf (20%), d L amer (15%). i dd, e--e er-

ve ere dued er dze exeuve me ze.

Mre -rd rede (68%) eld c-level le, lud

cEo coo, cFo, d cio, e remg vg le er ve r

de, ve rede r drer. i erm ul rle, 37% red

ere vlved it, d e remg rereeed vru le bu

ludg bue er (19%), le d mrkeg (14%), d f

(11%), mg er.

Survey respondents overwhelmingly saw the strategic

importance o managing inormation as an enterprise asset.

They recognized that the impact o not doing so is costing

their organization millions o dollars annually.

The survey also uncovered that the biggest challenge to

launching EIM programs is not getting unding. Rather, it

is people and process related. Data ownership ragmenta-

tion and a lack o leadership were among the top roadblocks

to EIM. IT and l ines-o-business leaders both eel they own

the data, yet many business executives are not aware o

the solutions being implemented by IT to prepare data or

enterprise use.

your next MoveWhaT can an organizaTion do?

Identify a strategic system that drives a critical business process th

is experiencing inefciency (such as long lead times compared to

industry averages, or cost overruns).

Quantify the nancial impact of poor quality information on these

systems. For example, how much did a data-related mistake in bu

geting cost your company?

Establish a limited-scope information management initiative to

tackle a targeted problem; involve both IT and lines o business r

the beginning.

Use this experience to build repeatable expertise, policies, and com

petencies to drive change across other applications and initiatives

throughout the company.


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SAP InformationManagement 04 2010