White Paper

Results and Analysis of Kalidos Data Governance Maturity Assessment

The State of Data Governance Maturity 2011

Kalido White Paper: The State of Data Governance Maturity 2011

Table of Contents
Executive Summary Section I: What is Data Governance Anyway? Section II: Survey Results
4 5 7 8 10 13 15 17 18 19 19 20 21 21 21 22 23 23 23 24

Data governance fuels business performance gains

Aligning metrics creates a business case for data governance Collaboration is indicative of mature data governance Sustainable data governance emerges when policies shape behavior

Section III: Data Governance Serves the Business

A practical example: Days Sales Outstanding and the Order-to-Cash process

How do these affect business performance? Data governance is a march to maturity

Section IV: Conclusion and Recommendations

Data governance fuels business performance gains

Aligning metrics creates a business case for data governance Collaboration is indicative of mature data governance Sustainable data governance emerges when policies shape behavior Conclusion

About Kalido Data Governance Director About Kalido About the Respondents

Kalido White Paper: The State of Data Governance Maturity 2011

List of Figures
Figure 1: The importance of information to overall business performance Figure 2: Data governance maturity stages based on perceived data value Figure 3: Data governance maturity level - aggregated results Figure 4: How does your organization manage master data? Figure 5: How do you measure the performance of data management activities? Figure 6: Which best describes your organizations view of data assets and their value? Figure 7: Data governance maturity levels based on role of survey taker Figure 8: How transparent and accessible are data flows among your systems/processes? Figure 9: What mechanisms are deployed for monitoring compliance to data policies and rules? Figure 10: How is data quality measured by your organization? Figure 11: Which group makes decisions for data across the enterprise? Figure 12: Understanding connection between data and cross-functional process owners Figure 13: Order-to-cash process and its two cycles Figure 14: Obtaining perfect order performance percentage Figure 15: Kalido Data Governance Maturity Model and stages Figure 16: Respondents by geography Figure 17: Respondents by company size Figure 18: Respondents by industry Figure 19: Respondents by primary job function Figure 20: Respondents by data governance program initiative 5 6 8 9 10 11 12 14 14 16 16 17 18 18 20 24 24 24 24 24

Kalido White Paper: The State of Data Governance Maturity 2011

Executive Summary
The most effective business processes are only as good as the information flowing through them.
Once upon a time, data was created or collected solely as a byproduct of a business transaction and shoved into the digital equivalent of the hall closet hidden and forgotten until the annual spring cleaning ritual. Data was stored and secured, but otherwise ignored. Though a fortunate few recognized there was value to be mined in mountains of bits and bytes, the chief beneficiaries were the vendors who gave us places to store them. My, how times have changed. In todays world, accurate, available and accessible information is the foundation of business performance. If business processes are the engines of business, business information is its fuel. There are many arguments for companies to build a culture where information is treated as a business asset, but for executives tasked with delivering results, perhaps three carry the most weight. Make more money. Accurate information, readily available to analytics tools, helps business professionals target the most profitable opportunities. The Cambridge Group reports that across product categories, roughly 10% of consumers account for more than 50% of profits. Whether selling toothpaste or subassemblies to heavy manufacturers those dynamics will likely trend the same. The ability to identify the profile and the names of your most profitable customers from the other 90% is a competitive advantage. Management advisory firm Booz Allen Hamilton finds effective promotion marketing yields between 7.5-30% improvement in operating profits. In either case, building a contextually deep, rich and accurate dataset to power the analytics used by business people is critical to gaining insights that lead to higher profits. Save more money. Eliminating data-related errors and delays directly impacts operating costs. As an example, Days Sales Outstanding (DSO) reflects the time a company takes to convert an invoice for an item shipped to a customer on credit into revenue. Financial institutions use DSO as a yardstick of operational soundness; a company with a lower DSO commands a better borrowing rate to service the costs while it waits for payment. For a $4B company, an improvement in DSO from 51 days to 46 and an accompanying two-point improvement in the borrowing rate results in a net recovery of nearly $14M in interest payments. That translates to $14M that is freed for investment in growing the business rather than maintaining it.

Avoid regulatory headaches and fines. Business information that is easily accessible, known to be accurate and readily available for reporting eases burdens and liabilities of compliance mandates. Regulatory reporting mandates, by definition, require that data be
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Kalido White Paper: The State of Data Governance Maturity 2011

accurate and timely. Defining information policies with an eye toward regulatory reporting establishes guidelines for data availability, accessibility and form. Making policies measurable enables proactive monitoring to keep a finger on the pulse of the business through alerts and dashboards. With penalties that can run into millions of dollars and civil actions that can far exceed that, there is ample reason to ensure that policies for creating, managing and reporting data are embedded within the organization culture. Plus, youll sleep better at night. And yet, despite these and many other compelling reasons for treating data as a business asset, Kalidos research shows that many organizations have yet to create and sustain a culture where this is possible. For many companies, the primary reason for this has historically been a lack of organization (and organizational will no one wants to take responsibility), and a lack of tools to help support such an organization. Today, these issues can be addressed with a strong data governance program. In our experience, data governance can be a tool used by organizations to drive business performance. Presumably business performance is an outcome equally influenced by the processes that power operations and the information that fuels those processes. In fact, common sense tells us the most effective business processes are only as good as the information flowing through them. With that logic in place, it is hard to argue that business information is anything less than a crucial asset. Making that asset available, accessible and accurate should be an organizational objective, and the vehicle to drive that process is data governance.

Data governance is the business process of defining, implementing and enforcing data policies.

Section I: What is Data Governance Anyway?

Although there are myriad definitions for data governance available, Kalido defines it as the business process of defining, implementing and enforcing data policies. By that we mean data governance is or should be a core business process that companies define, develop, deploy and manage as they would any other critical function. Beyond simply mandating policies for creation and usage, the focus should be on continuously improving that data asset which, after all, is one-third of the equation for business performance. In this report, we explain why these are important concepts for business process owners and data professionals to discuss. More importantly, in the quest for high performance, it is a critical area for collaboration.

Figure 1: The importance of Information to overall business performance

Kalido White Paper: The State of Data Governance Maturity 2011

Four themes are cornerstone to any effort to improve business outcomes through better governance of business information.

Agility has become the ante companies need to be a viable player in todays markets, and business processes and analytics need to be updated to deliver that agility.

Data governance improves information that fuels business process performance gains Aligning data and business metrics creates the business case for proactive governance Collaboration between data consumers, data providers and IT is indicative of mature governance Sustainable governance emerges when policies shape organization behavior Kalido surveyed more than 200 professionals to get a feel for perceived maturity against these themes. We were simultaneously encouraged about the awareness of the value that might be achieved through better governance of business data and discouraged by a general lack of execution in getting started.

Figure 2: Data governance maturity stages based on perceived data value

In spite of that spotty execution, we find that data governance is one of todays hottest discussion topics among IT and data professionals. New data sources like the social web and mobile transactions create new influence points with customers and partners. Exploding data volumes bring new opportunities for insights into emerging markets, consumer clusters and competition for companies who can harness them. Siloed business processes are giving way to more integration across functions as companies attempt to compound impacts for the business. Sadly, horizontal integration of data lags that for processes, languishing instead as unexploited islands of insight. Agility has become the ante companies need to be a viable player in todays markets, and business processes and analytics need to be updated to deliver that agility. Ensuring that business information is available, accessible and accurate to fuel those twin engines of performance is moving up the priority list. Using an online survey over the past year, Kalido has collected information from more than 200 respondents in order to gauge the maturity of businesses in their
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Kalido White Paper: The State of Data Governance Maturity 2011

approaches to data governance. We have gained further insights through 1:1 interviews with business people, data professionals, the analyst community and a data governance advisory group of companies across a number of industries, and we have identified the following common threads: While the vast majority of respondents suspect intuitively that data governance might improve business performance, for the most part they pursue it only as a disconnected set of ad hoc activities. Companies generally have not taken a holistic view of business information, technologies to improve it, or its impacts across end-to-end processes or businesses, instead treating data as information islands within specific system silos. Business and data metrics are aligned or compared only by a very few industry leaders. Improvements and issue management are generally reactive, and accomplished by informal networks rather than through more formal programs or teams. For the most part, respondents feel that quality of data used in their businesses is poor. Our net impression of what were finding? Money is being left on the table by companies who dont continuously and proactively govern information to improve its value as a business asset. We believe that data governance must move from backstage to center stage and that it is important to get it there now. In spite of evidence that better business information can improve both top- and bottom- line results, we found in our survey work that most companies still miss those opportunities through lack of action.

Money is being left on the table by companies who dont continuously and proactively govern information to improve its value as a business asset.

Section II: Survey Results

Kalidos Data Governance Maturity Assessment was designed to provide a way for people to determine how their organization ranks in terms of the business process for defining, implementing and enforcing data policies. The Assessment is divided into three sections people, process and technology and also provides an overall maturity score so that companies can understand where they stand among their peers and pinpoint where they may be lagging behind. This white paper provides our analysis of what the results mean and the next steps companies can take to raise their maturity level. First, lets take a look at the overall results. As we can see in Figure 3 on the next page, the vast majority (64%) of respondents fell into the second lowest tier of maturity (Enterprise-Repository-Centric). In contrast, less than half a percent rated the highest maturity level (Fully Governed) and a mere 13% were considered Policy-Centric.
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Kalido White Paper: The State of Data Governance Maturity 2011

Its clear that improvement across all three of the major areas organization, process and technology is much needed, but when we look at the data more closely, we find that Technology is disproportionately holding back overall maturity levels, with more than a third of respondents in the lowest tier of maturity (Application-Centric).

Figure 3: Data governance maturity level - aggregated results

Earlier we introduced four themes to improving business performance by better governing the information that fuels business processes. Against the four, what does the survey data tell us?

Data governance improves information that fuels business process performance gains
Making the argument that either an inefficient process or inaccurate information produces a poor result is easily demonstrated in Excel and applies virtually anywhere data and process come together. In this simple example a process @SUM is invoked on cells with incompatible data yielding a completely useless result. 1 + Jones = #VALUE! Simple, but this does make a valid point. If business information is not what it should be, where it should be, when it should be, a business process has little to no chance of executing to a successful outcome. This is further exacerbated in the real world. While Excel tells you there is an error in your process, there is usually no such control in your business process. As a result, errors are only identified after extensive and often manual calculation and reporting efforts are undertaken, wasting valuable time and effort on a business process that might require significant overhaul. A core tenet of data governance is that data authors understand and comply with requests from data consumers as to the form, quality and location of information that fuels the consuming processes. The underlying principle is that the two are symbiotic and both are equally important contributors to a positive outcome. Assuming that business information that is accurate, available and accessible to business processes and analytics contributes to better performance, what does our survey tell us about the state of industry in achieving this objective? What the data tells us:

Kalido White Paper: The State of Data Governance Maturity 2011

Companies are leaving business performance on the table and rely on ineffective and expensive manual interventions as poor quality data enters business processes. Not surprisingly, data quality is viewed as poor and not measured or measured on narrow use cases 83% of the time. 75% of respondents indicate no means to intervene or an ineffective channel to correct data errors they find. Only 1% are able to identify, communicate and remediate an issue before it impacts the business. Even with increasing focus on business processes as end-to-end and cross-functional, 88% of the time decisions about data are made either primarily by IT or only as a system-specific or point concern without consideration of broader impact. This can be meaningful when you consider that a $3B company can recover $400K in revenue for each day it reduces its cash collection process. Ensuring perfect information in that cross-functional process can virtually eliminate data-related disputes that would delay payment. Most companies have no means to drive continuous improvement of data as an enterprise asset that fuels business processes and analytics. Predictably, well over half 54% of respondents have no means to measure the performance of their data management activities. A further 28% do measure performance, but only on a system-by-system basis and oriented to IT operations. Despite nearly seven years extolling the virtues of managing master data by analysts and vendors, 49% of companies still do not manage master data anywhere but in their disparate applications. Only 11% have instituted some sort of data governance policy to be implemented across multiple sources of data. Without a measurement system and holistic set of policies across data points of origin, there is no way most companies can associate or control impacts of data with business outcomes. At best, they are in the lower echelons of maturity.

Despite nearly seven years extolling the virtues of managing master data by analysts and vendors, 49% of companies still do not manage master data anywhere but in their disparate applications.

Figure 4: How does your organization manage master data?

Kalido White Paper: The State of Data Governance Maturity 2011

Nearly a quarter (22%) of organizations still maintain a rigid boundary between the business and IT.
Figure 5: How do you measure the performance of data management activities?

Continuous information improvements can be engineered in to business process improvement efforts right up frontalthough they normally are not. While it is disappointing to see that nearly a quarter (22%) of organizations still maintain a rigid boundary between the business and IT, it is encouraging to find that 20% of respondents see the business sustainably engaged in creating and managing data policies. In 17% of respondents, the definition of policies, implementation and ongoing enforcement is viewed as an informal or formal business process in its own right. IT and the business are not exploiting the opportunity to look at business process and information as a holistic engine to drive business performance. Perhaps not surprisingly, business requirements and IT deliverables need tighter alignment if data governance is to emerge as a core contributor to business performance. In two-thirds of our responses, IT is completely accountable for data but not aligned or only somewhat aligned with business objectives.

Aligning data and business metrics creates a business case for a data governance program
Business performance is an outcome. When people, processes and technology execute flawlessly on a layer of trusted information, the outcomes are generally good. Data Governance is the mechanism that enables the business to better control the upstream inputs to its business processes---information---and turn it into a trusted strategic asset over time. In fact, the linkage to business value creation should be the primary driver behind any data governance initiative.
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Kalido White Paper: The State of Data Governance Maturity 2011

Of the respondents to the survey, 42% described themselves as connected to the business rather than IT functions. We found an interesting sentiment-toexecution gap in our survey data. Though business people express high interest in data governance, very few have been actively engaged by their organizations to participate in a formal governance process. This precludes alignment of data metrics with any associated value to the business, and results in a lack of quantifiable value to help justify investment in a program. What the data tells us: Businesses fail to attach quantifiable business value to the data asset. Although more than three-quarters of respondents indicate an intuitive or explicit awareness that data is a strategic enterprise asset, attempts to quantify its value only occurs in 24% of companies and 76% have no framework to assign business value. Only 2% of companies have full transparency of how data assets are produced and what datas downstream impacts are, and only 2% treat data as a strategic enterprise asset with quantifiable value. In other words, they are missing opportunities to better target their most profitable customers, create incremental product features in response to demand patterns they see, or leverage global spend into more favorable supplier terms.

Businesses are missing opportunities to better target their most profitable customers, respond to demand patterns they see, or negotiate for more favorable supplier terms.

Figure 6: Which best describes your organizations view of data assets and their value?

Interest from the business and serving the business interests are not necessarily aligned. Business people view information as a valued asset, evidenced by the fact that over 42% of respondents to the survey described their roles as non-IT or business. However, nearly 80% of respondents indicated that business either has no role, or only participates on a projectby-project basis in managing data and data policies.
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Respondents that identified themselves as business actually scored a lower level of maturity than respondents who aligned themselves with IT.

Further analysis indicates an even more concerning data point: Respondents that identified themselves as business actually scored a lower level of maturity than respondents who aligned themselves with IT. Only 9% of business respondents fell into one of the top two levels of data governance maturity compared with 17% of IT respondents. When we limit our analysis to the admittedly small subset of organizations that had both IT and business respondents, we find a fairly consistent trend: IT tends to more optimistic about data governance maturity than business. In fact, in each of the four areas (Overall, Organization, Process and Technology) IT respondents consistently scored at least one maturity stage higher than their Business respondent peers from within the same company. Overall, in this subset, business respondents scored in the EnterpriseRepository-Centric (second lowest maturity level) 100% of the time, while their IT peers did so only 50% of the time. This perception gap not only highlights the critical importance of business involvement, it further demonstrates that business requirements about data are often not fully understood even by IT.

Figure 7: Data governance maturity levels based on role of survey taker

Most companies have made little or no investment to sustain business engagement in an effort to continuously improve the data asset. Even with business process owners and users as the primary consumers of data, only 18% of respondents have established operational metrics for data management tied to business needs. Compounding the issue moving forward, the business is engaged in managing data and data policies only sporadically, with 80% participating on a short term or project-by-project basis rather than as a more formal and sustained partner to IT.

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Kalido White Paper: The State of Data Governance Maturity 2011

Collaboration between data consumers, data providers and IT is indicative of mature governance
This is the classic chicken and egg proposition: do we form a council and then launch an initiative or do we form a council because a grass roots initiative is taking hold? Does it matter? Councils, boards, committees, competency centers, or centers of excellence are all vehicles of collaboration used by business. The intent is always the same to rally disparate groups and interests around a common objective to achieve a common purpose. The same applies for data governance where a culture of collaboration exists between data author and data consumer that results in a more strategically managed information asset as a companion to business processes and analytics. In our survey, we find that IT and business dynamics are as muddled as ever and that work needs to be done to establish that rally point to enable business information to move from by-product of a transaction to strategic enterprise asset. As we polled organizations we tried to determine respondent sentiment and apply that sentiment to what we generally know about collaboration as an engine for continuous improvement or management of change. What does the data tell us? People do collaborate.when they have to. We find that the collaboration between business and IT is spotty - only 17% of respondents view it as routine or institutionalized within their organization. Nearly see a rigid wall between IT and the business. And as an ad-hoc activity on a day-to-day basis, 60% of respondents find the business and IT groups collaborating around data issues. When correlated with the finding that 55% of companies have loose and informal processes for data governance centered on major applications and systems, the data does show that people can collaborate when they have to. Cross-functional teams formalize a collaborative structure for holistic decision making, but are underutilized today. Given the relative low priority of data performance management (54% of companies have none), it should be no surprise that only 27% of respondents have formalized a council or board that incorporates representation from the business and IT into a decision making and policy implementing body. Where they do exist, progress is being made toward a more holistic view of data as an enterprise asset, with 12% of respondents finding a structured process for data decision making in their organizations. Meanwhile, in more than three-quarters of organizations, business users (the data consumers) have no insight into who or what has produced the data fueling their business processes. Without clear understanding of the data flow, neither data authors nor their consumers can appreciate the dependencies and impact their decisions make on each other.
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In more than 75% of organizations, business users have no insight into who or what has produced the data fueling their business processes.

Kalido White Paper: The State of Data Governance Maturity 2011

Tools selected by IT and tools needed by the business are not necessarily the same tools.

Figure 8: How transparent and accessible are data flows among your systems/processes?

Tools selected by IT and tools needed by the business are not necessarily the same tools. We find that 75% of organizations report that data consumers dont have a formal means to request remediation of data issues by stewards or other owners of data sources. Taking it to a more prescriptive level, nearly 90% of companies dont know who to notify when they find an issue with data or do not have access to the necessary tool to detect an issue prior to it entering their business process. In either case, the business has not been equipped with a means to participate in the issues remediation process.

Figure 9: What mechanisms are deployed for monitoring compliance to data policies and rules?

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Sustainable governance emerges when policies shape organization behavior

In business, policies are everywhere. They shape our interactions with fellow workers, dictate the types of employees we recruit, which hotels we frequent, how we manage relationships with suppliers and how we progress on an organizational ladder. They form the absolute fabric of organization behavior and how we develop and protect our physical, intellectual and human capital. Policies are needed to govern how information is managed as well. If we accept that information is the fuel for business processes and analytics and provides a foundation for business, then its health is critical. Eliminating data-related delays in orders, mistakes on invoices, double orders from suppliers or misallocated inventories drives profitability. Ensuring its health when it is created, routed, used and managed across multiple systems is a challenge. Policies are the only mechanism that can set compliance standards on an organizational scale. Right up front, lets be clear. The most well developed, articulated and consistently delivered policies will fail to achieve their desired results if they: Are not viewed as a mandate from management Are not communicated broadly and consistently Are only sporadically monitored Cannot be measured Carry no penalty for violation

If we accept that information is the fuel for business processes and analytics and provides a foundation for business, then its health is critical.

We again point to our earlier finding that more than 3 out of every 4 organizations intuitively understands that data is an asset that has value to the business, and fully are actually taking steps to extract that value. Our belief is that a well-executed policydriven approach to shaping data authoring and consumption practices can accelerate behaviors that will raise the value of the data asset. But in practice, the technology, processes and organization capabilities to develop that asset as a business would any other are lacking. What does the data tell us? For many, business information seems not to be as important as lunch receipts. Imagine the difficulties in getting reimbursed for an expense that is out of compliance with a formal policy. Not so tough to push business information up the chain that is inappropriate for its destination business process or analytic tool. In 83% of respondents, data policies either did not exist or were loosely documented. Only 15% make it easy for process owners to make data policies easily visible to data authors downstream either through a central repository or a pervasive policy layer. Not surprisingly, 88% felt that data quality was either poor or narrowly managed in an ad hoc manner.

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Kalido White Paper: The State of Data Governance Maturity 2011

88% of respondents felt that data quality was either poor or narrowly managed in an ad hoc manner.
Figure 10: How is data quality measured by your organization?

Management has a golden opportunity to make data value a corporate priority. There is no question that the value of business information is being recognized and that in a few cases, companies are establishing processes and cultures to find its value. Over half (52%) of our respondents feel that data is an asset but that their organization lacks a framework to determine its value, and nearly already prioritize data activities based on business impact. Nearly 50% informally govern data with general purpose collaboration tools and have at least a skeleton of a channel for raising data issues though viewed as ineffective. A formal mandate and structure are indicators of management focus and commitment, and we see early signs of progress. In 27% of responses, we find formal councils or boards established to set and administer data policy, and 1-in5 with a formal data steward role in the organization.

Figure 11: Which group makes decisions for data across the enterprise?

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Continuous data improvement cannot be a stealth mission but often is. With a focus on improving data assets and a structure in place to make it happen, success is directly dependent on communicating, measuring, managing and enforcing policies. The concept of policies and rules for data is present for nearly 70% of our respondents, yet they dont yet have the structure around them to drive behavioral change. Nearly 80% of respondents report informal, infrequent communications when policies are established, only 13% of respondents report active monitoring for issues and scarcely 4% use standardized metrics to track actual performance versus goals, significant barriers to any effort at launching or sustaining continuous improvement efforts.

Section III: Data Governance Serves the Business

Earlier, we talked about the following simple equation:

One of the core ways that we measure business performance is through concrete key performance indicators (KPIs). KPIs reflect the performance of a high-value business process. Far beyond a simple metric, a KPI is derived from a group of metrics that measure performance of specific tasks or behaviors. It typically reflects performance of a process that runs across multiple business functions, systems or groups. Moreover, as we see in the above, business performance is directly impacted not only by the structure of the business process itself, but also by the trusted information that feeds that process and the people who perform the tasks related to the process. For those reasons, a KPI is a great place to quantify the impact of improved business information on business performance.

Figure 12: Cross-functional process owners

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The key challenge isnt to describe the benefits of data governance, but to quantify those benefits for businesses that might benefit.

Kelle ONeal of First San Francisco Partners points out that information and business process are two sides of the same (business performance) coin. The relationship is just that direct. In a recent keynote, Forrester Research Analyst Rob Karel commented that every organization needs data governance and points to the same symbiotic relationship between data and business process. Analysts and practitioners agree that the key challenge isnt to describe the benefits of data governance, but to quantify those benefits for businesses that might benefit. Comparing data metrics to business metrics and looking at cause/effect relationships is the first step in that march to maturity.

A practical example: Days Sales Outstanding and the Order-to-Cash process

To truly appreciate the impact of business information on a business process, one needs to look at a KPI that most organizations would view as critical. Days Sales Outstanding (DSO) is such an indicator of how well a company turns orders into revenue and is often the initial litmus test applied to gauge operational soundness of a company. The Order-to-Cash process is the primary engine that drives a companys DSO up or down. Decomposing the Order-to-Cash process to its component pieces provides a snapshot of the business information/business process relationships across its lifecycle and reveals cascading impacts on business performance.

Figure 13: Order-to-cash process and its two cycles

Like many complex business processes, the Order-to-Cash cycle can be broken down into two high-level process streams, each measured by a unique KPI. Order-to-Invoice: The Order-to-Invoice stream spans multiple functions and is measured on order management, warehousing, transportation and billing efficiency. Its KPI - percentage of Perfect Order Performance - reflects cascading effects of execution as customer orders turn into customer shipments. In the calculation for Perfect Order Performance, efficiency for each process step is represented as a percentage of that steps transactions completed to perfection. Successive process step percentages are calculated using the previous steps performance as the baseline. Inefficiencies compound and the total impact on the end-to-end cycle is reflected in the overall calculated percentage. As the calculations are relatively standardized, performance results may be benchmarked against peer groups.

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Figure 14: Perfect order performance percentage

Kalido White Paper: The State of Data Governance Maturity 2011

Invoice-to-Cash: Where the final step in the Order-to-Invoice stream is to create an invoice, the Invoice-to-Cash stream turns that invoice (receivable) into revenue. This stream is critical in that it directly impacts a companys Days Sales Outstanding, a measure of the time it takes a company to collect on cash that is owed by companies to whom it delivered products on credit. Because DSO is a leading indicator of operating effectiveness and a gauge used to establish financial viability, the processes influencing it are critical to companies when cash is needed to expand geographies, fund operations or invest in new businesses.

How do these affect business performance?

Combined, these two streams have a profound impact on the time it takes to convert customer orders into cash the Order to Cash process. And ultimately, the efficiency of execution in that process is largely reflected in the DSO performance indicator. Any interruptions to either of the two cycles that drive the process do to faulty data or stalled process steps, and interventions, usually manual, are required to put things back on track. Hours or days are lost, and DSO suffers. Heres where data governance comes in to play. Accurate, accessible data can significantly speed the Order to Cash process. But think about the following common scenarios: Product code is entered incorrectly. Either the wrong product is sent, or someone needs to reconcile the invalid code. Wrong warehouse is notified because of a recent change in inventory management systems. Shipping address entered in for the billing address, resulting in the invoice being sent to the wrong location. Each of these data-related problems leads to wasted time, manual intervention and an increase in the Order to Cash process. Data governance, executed well, can ensure that the business information part of the business performance equation is available, accessible, and accurate.

Data Governance, executed well, can ensure that the business information part of the business performance equation is available, accessible, and accurate.

Data governance is a march to maturity

Intuitively, it is simple enough to equate information accuracy, availability and accessibility to better business outcomes. The best business processes and analytics are only as good as the information foundation fueling them, and ensuring that foundations contribution is a tangible benefit of a data governance program.

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Section IV: Conclusion and Recommendations

Like any important business capability, data governance requires organization, processes, and technology to be successful. And adoption does not happen overnight. Kalidos maturity stages: Application-Centric, Enterprise Repository- Centric, Policy-Centric, and Fully Governed, map to the evolution of how organizations treat data assets. At the same time, is the Kalido Data Governance Maturity Model is prescriptive in that it provides milestones for organization, process and technology which need to be aligned to advance to a more mature stage. Kalidos maturity model for data governance characterizes four stages of maturity, and ranks companies overall, as well as across Organizational, Process and Technology areas. As with most models, the stages generally require foundation elements from a previous stage and achieving the highest levels of maturity is a pragmatic evolution through each stage. The four stages of focus for data governance are:

Figure 15: K alido data governance maturity model and stages

By comparing the four key themes and the results of the survey against industry best practices for data governance, we can identify core recommendations valuable to anyone seeking to improve business performance through data governance. These recommendations are valid no matter where you are on the maturity scale.
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Data governance improves information that fuels business process performance gains
Takeaway: As companies drive continuous improvement programs across supply chain, manufacturing, finance and other core functions, the interplay between business information and business process is a critical enabler. Our survey highlights a key roadblock many companies will face as they address one side of the equation, business process, but leave the other side, information, underdeveloped. Recommendation: Assume that each improvement to a business process requires a review and possible modification to data sources fueling that process. Create a team that includes the process owner, a data steward, business analyst and technical analyst to review the cause and effect relationship between business process and information. Make adjustments to how data will be authored, consumed and managed based on assessments by that team. Treat business process improvement and business information improvement as continuous companion efforts. Establish monitoring, measurement and management criteria as the bridge between business and IT that enables them to collectively identify data that might negatively affect KPIs and prevent it from entering a business process until it is brought up to compliance.

Create a team that includes the process owner, a data steward, business analyst and technical analyst to review the cause and effect relationship between business process and information.

Aligning data and business metrics creates a business case for a data governance program
Takeaway: Even though respondents recognize the value of data as an asset, an overwhelming majority have failed to sustainably engage the business in quantifying the value of data governance initiatives, undermining the potential to justify investments that would improve the data fueling its business processes and analytics. Recommendation: Create a team to identify the cross-functional processes that are most critical to delivery of the business strategy. Pragmatically examine the cause and effect relationship between data accuracy, availability and accessibility and each process. Identify negative effects of faulty data inputs to cycle time, number of iterations, manual intervention costs or other metrics applied by the business at each process step. Use these relationships between data and business metrics to contrast costs and benefits or tactical expense versus strategic advantages and provide a quantifiable basis for tradeoffs-driven decisions on how best to move forward.

Collaboration between data consumers, data providers and IT is indicative of mature governance
Takeaway: Business performance is equal parts business process and business information. In the absence of tools or processes that formalize a structure for collaboration between the business and IT, raising the performance of each becomes an unstructured effort of individuals building informal networks and ad
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Kalido White Paper: The State of Data Governance Maturity 2011

Recognition of data as an asset is in place and gaining steam, presenting management with the opportunity to drive behavioral transformation.

hoc partnerships as issues arise. Data from our survey would indicate that companies are underinvesting in tools the business can use and collaboration structures that can provide oversight and execution in aligning business and IT energy to improve the contribution of trusted information to business performance. Recommendation: Treat information improvement as a continuous, collaborative activity and seek to establish a collaborative culture around it by: 1. Setting shared metrics for IT and business process owners as rally points and incentives for sustainable and collaborative continuous improvement efforts. 2. Empowering the stakeholders by providing tools they can use to monitor, measure and manage information as a team. 3. Establishing incentives and rewards for collaborative behavior. 4. Encouraging, enabling and rewarding a culture of collaboration within the broader organization.

Sustainable governance emerges when policies shape organization behavior

Takeaway: While there are significant requirement-to-execution gaps, basic structural, process and technology components are in place that give management the foundation on which to formalize and launch governance efforts aimed at continuously improving the data asset. Recognition of data as an asset is in place and gaining steam, presenting management with the opportunity to drive behavioral transformation. Recommendation: Declare business information an enterprise asset and put structure in place to manage it over time. Establish a C-level initiative to incorporate business information into continuous improvement efforts, aligning metrics for improvements with milestones in the business strategy and operations roadmaps. Start small, focus business-led core teams who look at the end-to-end relationships between data and target business processes, and establish policies for data that are aligned with business needs under the umbrella of the overall business strategy. Establish an improvement roadmap, and measure progress using as-is and target metrics with the objective of preventing sub-optimal data from entering business processes. Ultimately, drive for a formal, cross-functional council or board that is empowered to set a corporate data objective, and working groups to create, implement and manage policies for the creation and consumption of all enterprise business information.

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Kalido White Paper: The State of Data Governance Maturity 2011

Conclusion
Ultimately, the path to data governance maturity is long, but it doesnt have to be bumpy. Our survey work and experience in working with clients across industries finds most to be in the lower stages of maturity and only a few who are fully exploiting the benefits of a cohesive data governance program. While our survey results indicate that organizations whose data governance programs are led solely by IT (with no business involvement) score only slightly higher on the maturity scale than organizations who have no program in place at all (94% in the lowest two tiers of maturity compared with 97%), we find that organizations with a combined IT/Business team scored significantly better (only 79% in the lowest two tiers), and those claiming a data governance program with dedicated responsibility were the only ones to score in the highest tier (70% in the lowest two tiers). The takeaway? Organizational focus and business involvement has a substantial impact on success. Our experience shows that taking the Data Governance Maturity Assessment can help you identify where and how you need to focus your efforts to increase success and when you can rely on technology to ease your transition to the next stage.

Data governance programs led solely by IT (with no business involvement) score only slightly higher on the maturity scale than organizations who have no program in place at all.

About Kalido Data Governance Director

Kalido Data Governance Director operationalizes data governance programs through data policy management. Data governance initiatives require a framework for gaining control over how data is deployed. Kalido Data Governance Director enables organizations to dramatically increase the success of their data governance programs by managing data policies, operationalizing data governance processes and measuring and improving data policy compliance.

About Kalido
Kalido is the leading provider of business-driven data governance software. Kalido enables companies to manage data as a shared enterprise asset by supporting the business process of data management. Kalido software has been deployed at more than 300 locations in over 100 countries, including 20 percent of the worlds most profitable companies as determined by Fortune Magazine. More information about Kalido can be found at: http://www.kalido.com.

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Kalido White Paper: The State of Data Governance Maturity 2011

About the Respondents

Source: Kalido

Source: Kalido

Figure 16: Respondents by geography

Figure 17: Respondents by company size

Source: Kalido

Source: Kalido

Figure 18: Respondents by industry

Figure 19: Respondents by Primary job function

Figure 20: Respondents by data governance program initiative

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Contact Information US Tel: +1 781 202 3200 Eur Tel: +44 (0)845 224 1236 Email: info@kalido.com or visit our website at www.kalido.com

Copyright 2011 Kalido. All rights reserved. Kalido, the Kalido logo and Kalidos product names are trademarks of Kalido. References to other companies and their products use trademarks owned by the respective companies and are for reference purpose only.

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