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Many major companies are making crucial business decisions based on flawed data, according
to a new study from Gartner Inc.
More than 25 percent of critical data within Fortune 1,000 companies is incomplete and
inaccurate, say analysts from Gartner, a major industry research firm based in Stamford,
Conn. Although many executives aren’t even aware that they’re working with flawed data, the
ones that do often reach for the wrong technology to fix the situation, reports Ted
Friedman, principal analyst for Gartner.
”Most enterprises don’t fathom the magnitude of the impact that data quality problems can
have,” says Friedman. ” These problems cause wasted labor and lost productivity that
directly affect profitability.”
Friedman also notes that executives are mistaken when they look for a quick fix. They look
to technology to resolve data quality problems, without focusing on the human and business
side of the process first.
Looking at the data, where it’s coming from, who is gathering it and then how it’s being
stored and analyzed is key, according to Gordon Haff, a senior analyst with Illuminata, a
Nashua, N.H.-based analyst firm.
”It’s important that before a business worries about how many terabytes of storage they
need that they figure out what kind of data and how much data is going to be useful to
their business,” says Haff. ”Not everybody is going to benefit from a Wal-Mart level data
warehouse or a an Amazon.com level CRM system. It needs to be appropriate to the scale and
the type of business.”
Don’t misunderstand. Haff says the technology will be critical. But cool tools will do no
good if the data is inaccurate, incomplete or inappropriate going in.
”There’s applications and hardware available out there,” he adds. ”And they’re not
perfect, but there is fundamental technology available to put very efficient customer
relationship management or supply chain management systems out there. But before anybody
does that it would, be a good idea to assess the business needs. It’s an upper-level
management question and not just an IT management question.”
But flawed data isn’t a new problem.
Haff says businesses have been dealing with problem information as long as people have been
in business. It’s just that today, businesses are much larger, span countries and
continents and are capable of collecting mountains and mountains of information — flaws
and all.
Executives are making decisions about expansions, sales, marketing plans and even layoffs
based on market share information, who the biggest competitors are, where products are
selling the best, where they’re not selling and how much money their customers have to
spend.
If the information is off, so are the decisions.
”Executives should be able to have a better handle at least on the cut-and-dry facts on
their own business,” says Haff. ”There was a time when many businesses would have had
trouble even knowing how many widgets they had sold in the previous quarter. with today’s
systems, there’s fewer and fewer reasons why that data shouldn’t be readily available and
quite accurate.”
But the data being collected quickly becomes more complex than that.
Business partners need to be taken into account. Corporate divisions are being added and
subtracted. New products are being developed and others are being taken off the shelves.
Numbers in London may be tabulated differently than they are in Chicago. There’s a lot of
figuring to do. And there are countless numbers to keep track of.
Haff says the best thing to do when it comes to managing this data is for IT to sit down
with business executives and figure out exactly what data is important. From there they can
figure out where it needs to be stored and how it needs to be analyzed. Once the process is
in place, the technology can be chosen and installed.
”What’s causing the flaws in the data is not a computer inaccurately calculating that
data,” says Haff. ”If anything, it’s a business process problem. It’s typically going to
be more an issue of what data is being collected and how it’s being collected, as opposed
to it being incorrectly processed once it’s in the system.”
The only way to deal with that, according to Haff, is for IT and the business suits to work
on it together.
