Why CEOs Must Care About Data Quality
A good CEO takes good care of business assets to ensure the longevity of the business. Data should be no different. After all, it’s an asset like all of the others.
Some CEOs are picking up on this sooner than others. For many, the quality of information simply isn’t a priority to them (perhaps because bad quality data has not yet had a tangible impact on the business).
But neglecting information critical to the business is clearly a mistake. Data quality is always vital to profitability, and it always needs attention in order to be of a reasonable quality.
In this blog, we’ll examine the potential impact of bad data in more detail.
Data Quality: How it Declines
There are two main threats to data quality, and these are the two areas where CEOs must intervene.
- Good quality data always goes bad over time. Even the most pristine database will eventually become less and less useful to the business. The CEO must realise that his or her staff cannot function without data that is well maintained.
- Data may be incorrectly entered from day one. If employees are busy, or not fully trained, the chance of incorrect or sloppy data entry increases greatly. Both scenarios are likely in fast growing businesses and large companies with a high staff turnover. The CEO must recognise that his or her business will eventually be one of those affected by poor data entry, poor workflow or inadequate knowledge.
In modern business, data is acquired from a dizzying array of sources: text message, social media, email, post and more. Industry estimates state that databases tend to include 10 to 30 per cent duplication – a staggering figure.
CEOs must recognise the risk that poor data quality presents, and he or she must put measures in place to prevent negative outcomes.
Why Data Matters
What are the consequences of poor data quality as far as the CEO is concerned
You might assume that they are fairly minor: a misspelled name here, or a duplicated address there – things the CEO need not worry about.
Consequences that affect practically every aspect of a company and its interactions with clients:
- Inaccurate quotes
- Wasted time and materials
- Missing shipments
- Unfulfilled orders
- Inaccurate invoices
- Poor governance
- Missed growth opportunities
- Duplication of work
- Irate customers
- Legal action
All of the above essentially result in the one thing a CEO doesn’t want: lower profit margins. Lower profit margins mean a risk to the health of the business. Neglecting to pay attention to data quality can affect the business’ future viability in a very real sense, and it doesn’t take long for the cracks to appear either.
According to Larry English, an expert in information quality, there’s a real, tangible cost to businesses: around 20 per cent of revenue, according to his calculations. Clearly the CEO must take action to resolve this kind of massive waste.
Achieving ROI In a Data Quality Project
Most CEOs focus on the business’ finances, and the cost of a data quality project is normally an important factor. Rather than thinking of data quality as a cost, it’s far more effective to think of it as an improvement on ROI.
Once data is of a better quality, business leaders can:
- Make better decisions
- Move quickly to capitalise on market trends
- Make informed strategic decisions
- Grow quickly with fewer risks
- Head off data disasters
- Meet changes in the industry
- Spend less on wasted effort
- Spend less on postage, paper and other basics
- Plough less money into unwise initiatives
- Benefit from an improved reputation
Since data is continually accumulated from a range of sources, the CEO must find a data quality solution that maintains, fixes, deduplicates and cleans data completely, wherever it’s acquired. This solution must be retroactively deployed on existing databases, incorporated into day to day business activities and embedded into the company’s culture to ensure data stays clean. Multiple systems may need to be meshed or connected so data can flow between them, and duplicates will always need to be proactively found and merged.
What About Compliance?
Compliance is one area where CEOs should take heed of data quality challenges. It is simply not possible to be compliant if the business does not have full awareness and visibility of its data.
Corporate governance is essential in controlling terrorist and other criminal activity, and there is currently a sea change in business culture that has been triggered by several high-profile US scandals.
If compliance targets have been set, failure to meet those targets could result in substantial fines and other consequences. In rare and extreme cases, employees could end up in jail.
When it comes to governance, the buck stops with the CEO, so he or she must engage the whole organisation in data quality initiatives that ensure good quality outputs, such as reports. Processes and procedures should match the overall goal to embed compliance into the entire business lifecycle, ensuring that all information kept in business databases can be used to produce accurate figures. Data quality is key to achieving this goal.
Data Quality: Your Bottom Line
Data quality is essential to the CEO. Marketing, sales, accounting, support and other key functions all rely on data. All of the employees working within those functions rely on each other to record the best possible information. They rely on the business to keep the data in a good state so that it can be used to make decisions and build reports. Some of these will be business critical.
While many employees may be urged to take ownership of data, the CEO is ultimately responsible for ensuring that the business profits and grows. Data quality software always makes a huge difference to profit and growth. Implementing a data quality solution also raises staff morale; simply put, good quality data makes everyone’s job a lot easier.
CEOs are beginning to realise that data quality challenges are not something the IT department deal with. It isn’t something the marketing department can handle on its own. Data quality is a matter for the whole business. That’s why CEOs must put data quality measures in place across the whole company, and before the business’ reputation is damaged and profits are squandered on waste.