5 Things CEOs Need to Know About Data Governance

Leveraging big data effectively can provide a competitive advantage by reducing costs across the supply chain, allowing for faster and more efficient acquisition of new companies or reorganization of the business and reducing risk related to financial disclosure.

However, if data is inaccurate, poorly organized or irrelevant, it becomes, at best, an expensive waste of time and resources; at worst, it can hinder high-level decision-making, risk the success of acquisitions and increase compliance costs.

To reap the benefits of big data, companies must establish strategies, objectives and policies for effectively managing and ensuring trust in the quality of the data collected—known as data governance.

For example, a leading life sciences organization created a data process to help streamline acquisitions, allowing them to provide financial-statement-level information about the acquisition within a week, saving money and enhancing strategic decision-making.

In another instance, a large manufacturer was able to reduce days of sales outstanding by analyzing big data on customer revenue by region across the globe, along with open receivables by customer invoice. They are now able to collect receivables significantly faster, possible only because the data was accurate and properly organized to accurately understand the customer exposure.

5 QUESTIONS TO ASK YOUR CIO
Do you know whether your organization is managing its data effectively? Below are 5 questions that CEOs can ask their CIOs to determine whether your business has an effective data governance framework and where serious gaps may exist.

1) Do we have a standard terminology across functions, business units and systems? Business terms referring to accounts, products, sales territories, employees, etc., often vary across different systems or applications, which makes data analysis more difficult and less reliable. The differences must be synchronized through hierarchies or mappings.

2) Are we getting the most value from our business-facing applications? Your CFO and CIO should be able to determine which applications—related to sales, pricing, customer relationship management, forecasting, profitability or human resources—are driving the most ROI and which are redundant.

3) Are sufficient controls in place for managing internal financial data? Companies must ensure that proper internal controls are in place for internal financial reporting systems to ensure trust in the quality of the data collected and make it easier to adapt to change and comply to regulatory requirements.

4) How are we using external financial data to optimize working capital? Make sure you’re not spending money on data that doesn’t mean something for your bottom line. External data should be organized and segmented in a way that makes the most sense for your business, and relates to governed financials.

5) What are we doing to simplify our processes and the data we collect? Simplifying the data collection and reporting processes as much as possible allows an organization to be flexible when dealing with growth and changes, such as mergers or acquisitions or restructuring.

Using information as a strategic asset requires a strong foundation. Governing data requires a rethink of your operating model, with new roles, responsibilities and processes emerging. The best of data governance and its principles will provide procedures to reduce risk while enabling analytics to drive organizational outcomes.