Why corporate data should be governed

15-04-2011 - Wouter van Aerle

By: Wouter van Aerle

In the debate about corporate data, the primary reason for its importance is often the quality aspect. Bad data quality impacts your operations and has an effect on costs or lost sales. Although the argument is true, I have always found this reasoning rather narrow. One reason why is that the required data quality-level depends on the way data is used and that use may vary over time. A minor data quality defect may be of no importance at one point in time, but can become an operational nightmare if a business model is changed or a business process is reengineered. I’ve recently witnessed such an occasion demonstrating this particular effect.

Therefore, we need to look for other reasons why companies should govern their data. These reasons should be less correlated to the varying ways in which data is specifically used at one point in time but more fundamentally describe the importance and relevance of corporate data for a company. My draw are the following ones:

  1. It is your property: the data you create with your company, your business process, your employees is your property. As we normally do with property – like our house, our car, our assets – we take good care of it.  Likewise for corporate data.
  2. It is about your business: your corporate data is the single source of most detailed information about your business, your customers, your sales, your business processes. Want to know something about your business? It’s in your data, it is NOT in your system. This subtle but important distinction is most apparent when systems are replaced or new systems are implemented. They are empty boxes! They don’t contain any information about your company at all.
  3. It is raw material for day-to-day operations: this is where the data quality argument comes into play. Without proper data at all or without the proper level of quality, your systems will be useless or not delivering the value they need to.
  4. You can’t buy it: data tells something about behaviour that occurs within your specific business processes. Whether it is customer buying behaviour, timeliness of a logistics provider, or the level of claims fraud of an insurance company, the only source of information, is your own corporate data. Therefore, by definition, you can’t buy that particular data from a 3rd party.

Maybe apart from the 3rd reason, which relates to the data quality argument, the other reasons are always true. Or if you will, one can believe they are either true or untrue. In other words, contrary to the data quality argument, there is no different level of relevance for each of the arguments for a particular company.  As for data quality, its importance depends on the way the data is used and therefore its relevance does differ per company. This makes the other reasons more fundamental to the need to govern corporate data.