Although data’s importance to a business is understood at an abstract level, it is not on the strategic radar of the executive management of most firms, according to a recent report by the EDM Council. The report, Finger on the Pulse of Enterprise Data Management, is based on direct qualitative interviews with the heads of data management from a cross section of 20 global financial institutions from all industry segments.
Data management has a heightened prominence and is more mature than it was three years ago, says the report. However, despite the fact that 30% of the companies interviewed had taken a strategic view of data management, 70% saw it as a tactical or low level problem.
“The findings are a mixture of good and bad news,” says Mike Atkin, managing director of the EDM Council. “On the positive side, the importance of managing data is understood as a critical player in meeting business and compliance objectives. So there is maturity and it’s happened relatively quickly (within the last few years).”
He continues: “Even more significant is that in some cases, data has emerged as one of the top strategic priorities at the very top of the house (with the funding to move concept into practice). That’s really significant. On the bad news side, we haven’t moved very far on the delivery of business value objectives and we’re still talking about data as a problem to overcome, rather than as a strategic asset that drives all business processes.”
According to the report, the lack of recognition of data management as a foundational building block cascades throughout the organisation, reinforcing silo operations, making it difficult to manage social complexity and rewarding tactical workarounds. It suggests that there is still a lot of arrogance and “master of the universe” mentality from the business units that has a negative impact on data projects.
“The entire industry struggles to get executive and business management buy-in, says Atkin. “That’s because the ROI is still hard to articulate and even harder to document (given our love of immediate payback). And it’s because data content management is still a new (and difficult) concept to get your arms around. It’s easy for data to become invisible, in that no one complains when data is right, only when it is wrong. So data is not viewed as a business enabler, only as a problem if it’s wrong. And it’s because we can fix a lot of immediate problems by putting band aides on the problem. Tactical workarounds work in the short run and that’s the way most firms approach most operational challenges. The curse of the short view is still everywhere.”
Furthermore, the report indicates that data culture is “fragile and easily derailed by management changes or business events”. For example, 20% of firms interviewed indicated that they had recently experienced setbacks such as these and were back to square one.
However, the news is not all bad. Almost every firm the EDM Council interviewed was at the point of integration. “The key point is that we’re at the precipice of integration,” says Atkin. “And ROI is not delivered until data has been integrated into applications.”
The report found that the champion among leading firms was often an enlightened chief operating officer that understood that every trade, every business process and every client interaction relies on data precision and the ability to exchange data across systems. “Executive management engagement and sponsorship is essential to drive data management as a strategic priority. Without it, data projects will remain as operational tasks and reactive to the problem du jour. For many firms, data does not have a seat at the c-level table. We’re getting there, but we’re getting there slowly,” explains Atkin.
“That being said, successful data management, like every other horizontal activity, has a huge political dimension. The key to success is being able to navigate through the organisation. That means peer to peer and via relationships,” he adds. “Most firms that are serious about data management are operating their data programs at the managing director level. That’s critical in order to navigate through the complexities of organisational structures. The person holding the data management reins must have an equal footing if data is to compete for prioritisation.”
But it is not just a case of management buy-in. According to the report, most firms leading the data management charge have adopted a centralised funding model and pulled data out of IT. About 15% of firms have therefore successfully implemented the “corporate data tax” model for data management. Their goal is to reduce the amount of energy required to get funding and to eliminate “back door” negotiation on data projects.
There are two main benefits to this model, says Atkin: “The first is to get sustainable funding for the data initiatives. The second is that it reduces the amount of time, energy and political capital required to get data programmes funded. The less time data heads have to spend begging for dollars, the more time they have managing the delivery of value.”
Getting core stakeholders around the conference table to craft priorities is a faulty governance model and leads to secondary negotiations and internal competition, he explains. Currently, data heads spend an inordinate amount of time and political capital on the funding and allocation process.
Some firms have embedded funding and prioritisation into the normal business planning process in order to align data with the total cost of ownership over the full business lifecycle and to get “skin in the game” from the business units, the report states.
Business users love operational metrics as it puts data in business terms and helps clear the funding obstacle, the report says. Data groups that have a direct line of reporting to the business and are close to applications have an easier time with buy-in and funding.
Most industry efforts have been dedicated to the “clean and consolidate” function and we are just now starting to address the “unravel and disconnect “ integration challenge, says Atkin. Leveraging the reference data utility as a shared service is the current objective but this is easier said than done. The notion of data integration has not achieved the level of cognition it needs to become an organisational mandate. The current culture is for business to manage workflow and processes independently and this is unlikely to change, he explains.
The new requirement is for more assets and expanded data capabilities to meet the needs of research, pricing and investment modelling, the report concludes. As scope and requirements expand, governance needs to keep pace with these changes.
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