Corrupt data a costly complication

Data, touted as a company’s lifeblood, is being spilt, corrupted or lost in the implementation of enterprise resource planning (ERP), supply chain management (SCM), customer relationship management (CRM) solutions. The result is bad data leading to misinformed business decisions, experts say.

A recent study by PricewaterhouseCoopers LLP (PwC) revealed only one in three traditional companies and half of the e-businesses surveyed, reported being very confident about the quality of the data they collect. Corrupt data costs global businesses more than US$1.4 billion a year, the study said.

The “code, load and explode” mantra for CRM solutions, which involves the ability to receive and analyze information in real time from a single viewpoint and watch the money roll in, becomes complicated when it is time to add the data, say data experts. Data that is lost or corrupted – due to complicated integration from disparate legacy systems – is crippling CRM implementations. However, the ownership of responsibility for data quality is an issue for business management, not for the IT department, experts agree.

Steve Hitchman, managing director of Management Information Principles (MIP), said: “SAP or Siebel solutions are not a headache to install, it is populating the system with the data that causes the problems.

“The only people that understand the data are the business users, but the IT guys are the ones that check it, even though they are five steps removed and may not understand the business processes the data is used for,” Hitchman said.

“The responsibility for the data goes all the way up to the CEO level of an organization. They dismiss it to IT, but the most important part of the business is data,” he said.

Trevor Richards, managing director of Interact Management Consultants, said, “Ownership of responsibility for data quality is at senior level. IT managers and architects don’t have an appreciation of the quality of the data.”

“The ‘extract, transform and load’ approach, to get a single viewpoint is essentially flawed. The rollout should be built from the ground up, not just stick it on the front end and hope it’s going to work,” he said.

Hitchman and Richards both agreed that, before implementing a CRM, ERP, or SCM solution, a company must clean up its data.

“The technology has the potential to deliver customer management, but you have to get your house in order first,” Richards said.

PwC’s data management analyst for Asia-Pacific, Willie Jordaan, said the study revealed a complacent attitude towards data quality.

“Boards blame management for quality, but it should be a board-level responsibility and CEOs have a big role in this. Data quality is not getting the right level of attention. Companies implementing a new software solution, such as CRM, over an old existing infrastructure are taking old information and putting it in without a proper cleaning of the data,” Jordaan said.

PwC found 60 per cent of respondents had no formally documented board-approved strategy on data management and data quality. Of the 40 per cent who claim to have such a strategy, results showed that it amounted to nothing more than a piecemeal collection of reactive policies.

Yet 75 per cent of respondents reported significant problems and losses as a result of defective data, while a similar proportion reported substantial benefits arising from good data management.

Richards said, “The most common thing we witness is that a CRM vendor interested in a sale claims the software has got the capability of a single viewpoint of all clients, products and services. But the vendor ignores all the existing disparate legacy systems. The sale goes through, only for the client to realize how hard it is to integrate all the data from all its back-end infrastructure.

“The CRM vendor will then back out of claims, saying the infrastructure the client uses is to blame, but won’t tell the client that information in the beginning when it may have impeded the sale.”

Some large enterprises may have 50 to 60 systems that need to be integrated into the single viewpoint, Richards said. A badly implemented CRM solution can cost enterprises tens of millions of dollars.

“The biggest cost is not the cost of the disruption to the business, but of missed opportunities such as the retention of customers. The most important aspect of a quick fix, short-term solution is it literally runs potentially into hundreds of millions of dollars a year. If it goes on, and sometimes it may take three years for enterprises to fix, you can imagine the costs.”