“Master data drives global reporting.” Ruben Panizza, Global IT Director at Colgate-Palmolive, sums up a major IT focus for the consumer giant over the past five years — using just five words. Without consistent data across all business units and systems, global reporting becomes a challenge instead of a competitive differentiator. Because Colgate had been collecting its data in regional ERP systems with their own governance models, business executives knew the company needed a centralized governance process and enterprise information management (EIM) solution set in place before it could fully leverage global reporting and analytics across the organization and enable future global process standardization.
In 2006, the executive team pegged data governance with master data management (MDM) as a top priority for the company and dedicated the required resources to the project, including a program lead and several domain leads. Jian Ming Se, Global IT Associate Director and the MDM/GDS program lead at Colgate, says that the company’s executives knew its vision of global integration driving global reporting depended heavily on its MDM and governance work.
“We knew that providing accurate and more predictive analytics would make the company more competitive,” Se says. “And we knew the backbone of our reporting strategy would be master data management.”
“If we want to leverage our global procurement or the spending with the same vendor across the enterprise, we need to know what business we’re doing with the vendor globally.”
— Ruben Panizza, Global IT Director,
Where to Begin
As a longtime SAP customer, Colgate had implemented various regional SAP ERP systems and each was producing and collecting its own data. Because the regional management teams had the flexibility to adapt to local needs — creating division-centric rules and standards — rolling up all the data into a single global report was a challenge. The standards and conventions used for the data in Latin America were similar to but not the same as those in Europe, for example. Some divisions had even built their own data governance tools in Lotus Notes, but that process involved users manually reentering data from SAP ERP into a Notes database, which was time-consuming and increased the risk for data-entry errors.
As its business continued to deepen its global presence, Colgate understood that the success of its future reporting and analytics efforts hinged on the company implementing a single global data governance strategy. “For example, to execute cross-border sourcing, we needed to be using matching stock-keeping units (SKUs) and data attributes,” says Panizza. “We needed to have the same data visible in all regions.”
With the MDM program staffed with a team of about 20 full- and part-time IT employees, the project was ready to commence, and the first step was to select the data to pilot with the new governance strategy.
“We can make changes much more easily when the master data is consistent throughout. We also achieved the desired efficiency and effectiveness in our operations. For example, creating a new cost center now takes less than 30 minutes instead of
— Jian Ming Se, Global IT Associate Director,
Vendor Data First
Colgate chose to centrally govern its vendor data first before any other data type for two reasons:
- There was a strong business case built around sourcing. Colgate wanted to eliminate any cases where the same vendor had different numbers or names in the company’s various ERP systems. “If we want to leverage our global procurement or the spending with the same vendor across the enterprise, we need to know what business we’re doing with the vendor globally,” says Panizza.
- Vendor data is slightly less complex than some other areas. “Typically, vendors might have as few as 100 attributes, whereas materials data might have 600 attributes,” says Panizza.
When it came time to select the IT solution for the project, Colgate chose SAP NetWeaver Master Data Management (SAP NetWeaver MDM) — the SAP solution for MDM that was available in 2008 — but it wasn’t exactly what the business was looking for. “The important part for us was to define and implement global data governance standards,” says Panizza. “We needed an MDM tool that was both a data repository and also had a strong governance component to it.”
Colgate continued to work with SAP in its quest for an end-state tool and learned more about SAP’s roadmap for its EIM suite. Specifically, Colgate was intrigued by a new solution called SAP Master Data Governance. Not only was this application highly integrated with the existing SAP solutions — which was a top priority for the regionalized Colgate — but also offered the governance component that Colgate was seeking.
“We liked the EIM suite of software from SAP as a whole because we felt we could expand our capabilities to support our information governance program as it grows,” says Se. “And that, along with its integration capabilities, would let us leverage our SAP investment more.”
In 2011, Colgate globally implemented SAP Master Data Governance for financial data covering cost centers, and the business is on track to implement SAP Master Data Governance for material data in 2012.
Next Step: Quality Assurance
With a data governance solution in place, Colgate’s next step was to expand the project focus to cover data quality. A data governance strategy is only effective if the quality of the data being produced meets the company’s goals. And Colgate understood that they needed a separate, but connected solution to measure and monitor the data quality.
“Once the governance was in place, we felt it was the right time to expand our program effort and have a process to determine if our standards are improving and sustaining our data quality — and we need the right solutions for that,” says Se.
Again, Colgate looked at the SAP offerings and decided that SAP Information Steward was the right solution due to its integration and reporting capabilities. Because it was a new tool, Colgate decided to pilot the solution to use selective master data from SAP Advanced Planning & Optimization (SAP APO).
When the first batch of SAP APO master data was run through SAP Information Steward, the results showed a 69% match between the rules that were set up and the resulting quality of the data. “Our goal was 95%,” says Se. “But because the solution highlighted the specific master data that was not being maintained up to certain quality levels, we were able to focus on those areas and increase the quality level to achieve our goal. Since then, data quality has improved to the current 97% level, which exceeded the goal for the pilot.”
The Downstream Benefits
Colgate has completed its data governance and quality work on vendor data globally. Currently, it is working on the governance models for financial data covering the G/L account for general ledger and has completed development work for its materials master data as well.
Now, with its master data more consistent across business units and ERP systems, Colgate is already seeing benefits in its reporting and business processes. For example, the process of gathering the necessary data for global financial reporting and closing is more efficient and accurate.
“This master data initiative has allowed us to be more agile and react more quickly to global trends and business requirements,” says Se. “If one or a cluster of business units in one region has to be consolidated into a different region, for instance, we can make those changes more easily when the master data is consistent throughout. Further, we also achieved the desired efficiency and effectiveness in our operations. For example, creating a new cost center now takes less than 30 minutes instead of several days.”
Panizza adds, “When we combine the integrated data with improved processes, that is when we see the real benefits.”
Keys to EIM Success
In looking back at Colgate’s data governance strategy, Se says that the two keys to success for its EIM initiative were executive support and change management. For Colgate, executive support came easily, because it was the company’s management team driving the master data governance efforts.
For the change management, Colgate implemented an extensive communication strategy to spread the word about the changes. “Even before we embarked on training, we had a clear change management process in place to communicate the program’s goals, timelines, and business drivers to the stakeholders,” says Se. “Change management requires someone who understands the existing processes to effectively communicate and explain the new processes so the end users understand the reasons for the business change. Ultimately, it’s the business that owns the data with its defined rules and governance, and IT supports this effort with a robust yet flexible governance tool to achieve this goal.”