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The Case for Application-Managed Data Governance

by Rex Ahlstrom | insiderPROFILES

April 1, 2012

A top priority for companies that have recently performed a data migration is to ensure the quality of both the migrated data and newly entered data. This is the objective of data governance — to avoid costly, frustrating post-migration issues. This article makes the case for application-managed data governance.

For companies that have recently performed (or are planning to perform) a data migration, ensuring the quality of migrated and newly entered data through strong data governance should be a top priority. Consider the challenges one organization faced because of the absence of a strong data governance process. 

This company experienced a post-migration decline in data quality, which became intolerable a year after go-live. Despite having spent considerable effort defining a controlled master data entry process, the complexity of the company’s data requirements overwhelmed that manual process. Business users were supposed to enter master data requirements on a form and then submit that form to data-entry clerks in a separate organization — the center of excellence (COE). However, when the forms reached the COE, the clerks, who lacked business knowledge, had no way to validate the data’s quality or accuracy.

The data-entry process itself was also error-prone. For instance, some of the entries specified on the forms could not be entered into the SAP system because the data had not been checked against SAP configuration requirements. And even when the data entered passed SAP validation, information that would make the data usable or “business ready” was often still missing. The result was a lengthy, time-consuming process that created inaccurate master data and business interruptions. Even though the customer was a top-notch firm with high-quality operational standards, the process it was trying to manage manually was just too complex.

At the company’s request, BackOffice Associates applied a data governance solution to improve data quality and turnaround time. The impact of the engagement enabled the company to cut the number of global data stewards from six to one and reduce staffing by 85%, saving almost $750,000 annually.

Selecting a Data Governance Approach

The objective of data governance is to avoid the initial post-migration fate of the customer described above. This can be accomplished by reducing data-induced business process interruptions through increased data readiness, thereby minimizing data-error resolution times and increasing automation with advanced data governance technologies. Organizations should choose an approach to take control of data governance well before go-live. These approaches fall into two major categories — a manually managed process and an application-managed one.

A Manually Managed Process

Without any applications to manage master data governance, a company has a choice between granting widespread access to ERP transactions, enabling all business users to update master data themselves, or developing systems and procedures to use a separate COE to enter data. Companies that grant widespread access typically have poor data quality, with unpredictable data entry times and an overall inefficient process. Although no single person is likely to know all of the business information required to enable complex business decisions, granting universal access can equal a haphazard approach to data entry. And those who do have the knowledge and authority to access the ERP system to update the master data fields face an additional challenge: Some fields cannot be updated until other fields are saved in the system. In short, it is very difficult to coordinate a large, diverse group of business people updating the master data directly.

To address the lack of control caused by too many people entering master data directly into the system, many companies institute a COE made up of specialized personnel using entry forms designed to capture the necessary master data field values. Business users enter information on these forms, get them reviewed and approved, and then transmit them to the COE. In this forms-based system, it is important to understand who is responsible for data quality. Theoretically, the business should “own” the data and be responsible for ensuring that the form represents a properly authorized business decision and that the field values are correct. In many cases, though, business users do not have sufficient knowledge of the master data to do a good job of reviewing the request’s data content. In this case, a company should give the members of the COE an explicit review and approval role for the values.

An Application-Managed Governance Process

There are two forms of application-managed master data governance:

  • Passive Data Governance: Most organizations using passive data governance (PDG) applications start with a forms-based COE master data entry model. Without a COE, there is usually no central organization responsible for data quality and no one who can lead the implementation of the PDG system. With PDG, the implementation of a data quality system is much quicker and more efficient. The ultimate return on a PDG implementation is better business performance due to better master data quality, fewer business interruptions, and less wasted effort in reacting to problems on an emergency basis. Companies with a COE but without a master data quality system will benefit from BackOffice Associates’ library of over 6,000 callable data quality elements and 600 SAP-specific pre-configured reports, as well as the a purpose-built, master data quality reporting environment.
  • Active Data Governance: Active data governance (ADG) applications provide controls and efficiency for the process of managing master data (see sidebar above). They have a substantial impact on how a company’s data governance should be organized. Many of the challenges involved in implementing a COE forms-based system are addressed in the ADG system itself.

A Better Process for Business Users and the COE

The implementation of an ADG application, or a hybrid ADG and SAP Master Data Governance environment, provides substantial workforce efficiencies enjoyed by both the business users and the COE. This method removes the redundancies of re-keying data and requires no manual effort to move, track, or steward the master data forms process. With these efficiencies, most companies that implement ADG are able to reduce the workforce within the COE by 50% or more, depending on the scope of the ADG program.

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Rex Ahlstrom

Rex Ahlstrom is Chief Strategy Officer of BackOffice Associates, LLC. Mr. Ahlstrom formerly served as Vice President of Operations at SAP following SAP’s purchase of his company SOALogix. Mr. Ahlstrom has over 22 years of experience across a broad range of technology-focused industries including enterprise software, healthcare, and aerospace and defense. He holds a master’s degree in electrical engineering from The Johns Hopkins University, a bachelor’s degree in electrical engineering from Drexel University, and is a national and international lecturer and presenter.

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