A Cautionary Tale Of Data Governance

Data Governance

Do you think that master data management is boring and never gets the attention of your senior management? Is data governance a tedious “IT thing” that your executives choose to ignore? Are you struggling to make a business case for data quality, data stewardship and a corporate recognition of your data asset?

It is an acknowledged phenomenon that it’s many times harder to sell a potential improvement than to allay a potential risk. Here is an apocryphal tale of a hypothetical global product organisation that highlights the potential risk, and consequential cost, of ignoring master data management in this interconnected, automated, global marketplace in which we all operate.

When launching a new product into the market global multi-billion-dollar organisations invest in research and development to formulate a new product; market research to assess potential consumer interest; clinical trials to prove the efficacy and safety of the new product; marketing and advertising to inform potential consumers of the new product’s benefits; trade promotion plans with retail customers who would create space for the new product and ensure it a prominent place in-store; and education for employees on the importance and impact of the new product.

This investment can easily add up to tens of millions of pounds to identify, research, create, brand, manufacture, distribute, advertise and promote the product to a global audience.

And as with any investment, there is a certain amount of risk involved – there is always a possibility of manufacturing defects, weak demand, competitive counter-measures – but these risks are commonly understood by executives and therefore sophisticated processes and systems are developed to reduce and manage them.

However errors can still occur. For example, these aforementioned all-encompassing business systems, designed to reduce and manage risk, will likely require each product – when approved for market launch – to be allocated a product code, a 13-digit Global Trade Identification Number.

And if the data entry clerk responsible for creating the definition of the product in the business system does not know the correct GTIN to use, but can’t create a product record without one, they may use their own initiative and use a GTIN for a product no longer in production – according to the business system- as a placeholder until the real GTIN could be supplied later.

The system can validate that a 13-digit number had been entered, but not whether the code is valid and active. Such information can be checked manually, but the version of the business system in place may not always support such checks. So what happens if the out-of-production GTIN had previously been assigned to a product which contained a problem ingredient?

It would result in a hasty product recall with potential catastrophic damage to the new product. Not to mention the huge financial cost of scrapping all of the products, cancelling advertising, failing to meet trade promotion commitments with retailers leading to extensive commercial penalties. This can easily add up to in excess of £10m. Then there is equally damaging impact on the organisation’s reputation as the reuse of a GTIN could be symptomatic to customers of broader problems.

It could take more than a year for the fallout from this sort of debacle to dissipate. Of course if this sort of incident occurred an organisation would review the GTIN mistake and undoubtedly the IT system would be upgraded to include GTIN checks. But if the organisation in discussion still saw data quality as an IT issue, still believed that the systems would substitute for data governance, and still treated data as “an IT thing” the full extent of the problem would surely not resolved.

Of course, such an incident could only be a fictional parable. No real business would make such a mistake, and certainly not yours! But can you be sure?

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Guy Cuthbert

Guy Cuthbert is the founder of Atheon Analytics, initially as Atheon Ltd, in 2005. Guy's background is in Information Technology, initially in a range of technical roles before taking more commercial positions as CTO and CEO roles in software development and early cloud-based businesses. Guy holds a BSc (Hons) in Computer Science from Manchester University and has been a member of the Institute of Directors since 1998.