A recent study, conducted by the Institute for Corporate Productivity (ICP), analyzed the relationship between having ‘data councils’ and how well a company and its data management system perform. The study found that while data councils do not cause performance to improve in and of themselves, higher-performing companies are more likely to use them than not.
For the purposes of the study, data council is defined as a group of people from various segments of an organization that meet occasionally to discuss company data policy. Such groups are temporary, by contrast, to data governance units that oversee data policy for the long term. These councils develop data policy, especially as it relates to business rules, and standardizes definitions, conventions and practices.
The study found that a data council was the only method of oversight that correlated to improved market performance. Since only 24 percent of high-performance organizations said they use data councils, their presence does not necessarily help or impede performance.
That’s not to say that data governance has nothing to do with performance. A high-performing company was three times more likely to have a data council and twice as likely to have data governance office as lower-performing counterparts.
Data governance in general, creates an environment where producing quality data is of utmost importance. Since this data can form the basis of decision-making, it follows that bad data could lead to poor decisions.
Magnitude Software’s Mike Wheeler provided a great example in the Kalido Conversations blog of how bad data can hurt the bottom line. If a company had a Key Performance Indicator (KPI) that included the number of days sales were outstanding, a data entry error on a billing address would delay the collection process at that site and have a harmful effect on the number of days sales were outstanding. This would then harm the KPI and any financial numbers tied to it.
It is critical that that data policies are tied to business rules and that these policies have a direct effect on the KPIs and the bottom line. While data councils and data governance are no guarantee a company using them will perform well, many successful companies do use them. They should be a part of a better system that allows companies to accurately track themselves and make good business decisions on the information.
Edited by Alisen Downey