Data Governance Litmus Test: Know goals behind KPI’s

This is the third blog post in a series of blog posts geared towards addressing “Why, What and How?” of getting executive sponsorship for data governance initiatives. In my last post Data Governance Litmus Test: Know thy KPIs I explored importance of knowing KPIs to be able to build link between data governance initiatives outcomes and the organizational strategy. In this post I’m going to explore why it is important to know specific goals of the KPIs which are monitored on periodic basis by executives towards fulfilling organizational strategy.

Data governance initiatives typically will span multiple organizations, key business processes, heterogeneous systems/applications and several people from different lines of businesses. Any time when one is dealing with such a complex composition of players and stakeholders, it is extremely crucial to be articulate about business goals and the impact of the actions on hand on the goals. Once people understand the magnitude of impact, and how they will be responsible for such an impact, getting their co-operation, alignment becomes relatively easy.

Once you understand the KPIs which are important organizationally, you need to drill down one level below to understand what specific goals are important? The process of understanding specific goals will undoubtedly reveal many contributing factors to the fulfillment of the overall goals.

For example:

If one of the major KPIs which executives are tracking is overall spend. At this stage it is important for the data governance initiative team to understand specific goals around this KPI. For example the specifics goals around this KPI could be:

1.     Chief procurement officer has been asked to reduce spend by 2% within four quarters

2.     2% reduction across the board represents $80 million savings.

3.     This savings alone would allow organization to improve its profitability by almost a penny per share. This ultimately will reflect positively in share price improvement and will benefit all the employees of the organization.

Once such details are known, establishing a dialogue with chief procurement officer and his/her key advisers might further reveal that

1.     Their focus is going to be in three specific areas (specific products/raw materials)

2.     Not having singular view of suppliers is a key concern. Because of this issue they are not able to negotiate consistent pricing contracts with the suppliers. They believe that streamlining contracts based on overall spend with suppliers; their subsidiaries will help them achieve more than 70% of their goal.

3.     Supplier contracts are not being returned consistently resulting in higher costs in terms of minimum business guarantees and price point guarantees.

Equipped with this information, it will be much easier for data governance team to highlight and link their efforts to overall goal of reducing spend. For example, with some of this information gathered, one can already pinpoint that teams which are working with suppliers/supplier development, contract negotiations, pricing etc…. are going to be critical to get on board data governance with this initiative. Also, it is clear from these nuggets of information that the overall spend, number of suppliers, number of materials/products being procured will be some of the key metrics and interrelationship between those metrics will be critical to link any ROI from initiatives to clean supplier data, build supplier MDM etc…

With this information data governance team now can not only communicate to their team members but also the executives, that X percent of duplicate data in supplier master would potentially represent Y dollars off excessive spend. Data governance team will be able to explain not only how this can be fixed but what is required to maintain this hygiene on an ongoing basis because of the impact it will have on overall excess spend.

In summary, it is really important to understand the goals behind “what?” of the organizational strategy. Other indirect benefits of this kind of exercise are

1.     Establish communication and contacts with the business stakeholders.

2.     Understand areas where you can focus upfront for the highest impact.

3.     Understand and learn the language which you could use to effectively communicate ROI of data governance back to the executives.

In my next post, I will explore who is behind putting together these KPIs for executive in the current situation. These people are ‘the most critical’ players in the Data Governance team at both execution and implementation levels as the initiatives are kicked off.

Previous posts on this or related topics:

Litmus Test for Data Governance Initiatives: What do you need to do to garner executive sponsorship?

Data Governance Litmus Test: Know thy KPIs

Suggested next posts:

Data Governance Litmus Test: How and who is putting together metrics/KPIs for executives?

Data Governance Litmus Test: Do You Have Access to the Artifacts Used by Executives?

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Data Governance Litmus Test: Know thy KPI’s

In last post about Data Governance Litmus Test, I outlined 10 questions which could be used as a litmus test to figure out, how you are doing in terms of garnering executive sponsorship for your data governance initiatives? In this post, I’m going to explore why it is important to know organizational KPI’s/initiatives before and during data governance initiatives.

KPI’s or metrics which are looked at by CXO’s are the clear-cut indicators of where the organizational focus is from the perspective of operational excellence. They also serve as an early indicator of overall organizational strategy. Knowing these KPI’s firsthand helps the teams involved in data governance initiatives in internalizing what is important for the organizational strategy? Also it helps with understanding where executive focus is within the organization?

Many times when I asked this question (which KPI’s are being tracked by executive management) to the teams working on data governance initiatives, I typically get standard answers. “Our executives are looking at sales, cost related KPI’s.” This is a clear indication that the team has not made significant effort in understanding the KPI’s, establishing communication channel with executive management and has not emphasized the need for understanding KPI’s by the data governance team.

While ultimately the goal of organization is to increase revenues, minimize the cost and maximize profitability, there are several steps and ways by which these goals are achieved. From marketing, procurement, finance to sales there are specific goals which are set as a part of achieving business plan and these goals are tracked by executive management team on a periodic basis. Many a times these goals will change from time to time to adjust for change in strategy as well as changes in the overall goals. Understanding the details of the KPI’s across different parts of the organization helps data governance teams to link their activities to specific KPI’s and results associated with those KPI’s.

The process of getting engaged with executive management and make a case to understand KPI’s in detail helps in multiple ways to the data governance initiative:

1.     It helps with establishing communication channel, credibility, relationship with executive management and their goals/mission.

2.     It gives the team visibility into very specific KPI’s which are important for organizational growth, growth of individual executives within the organization.

3.     It helps create the context to the data governance discussion, change management process across the entire organization. No one can dispute the need/requirement for the reporting and improving these KPI’s.

4.     Once you establish a communication channel/relationship with executives around these KPI’s, and if you are able to demonstrate the value you and the initiative which you are proposing(data governance) can add to the KPIs, executives will get in the habit of involving data governance team as and when either KPI’s change or there are issues with reporting KPI’s.

5.     The confidence and trust relationship which you can build through this exercise will make it easy to ask for executive sponsorship. Executives will be more than willing to support your initiatives as they see a clear line connecting data governance  initiatives with their KPI’s and progress.

The process of getting to know these KPI’s is important one. When understanding the KPI’s or collecting information about these KPI’s, it is important to collect significant details around KPI’s:

1.     Name of the KPIs

2.     How executives are defining these KPI’s, that is in executives mind how this KPI is measured and calculated

3.     Understand from executive perspective, which business processes impact/influence this KPI, which roles and possibly names of the people will have the most influence on the outcome of this KPI.

4.     Periodicity: how often is this KPI reported on?

5.     Establish clear linkage between this KPI and a specific organizational strategy ultimately rolling up into the vision leadership has created for the organization.

6.     It may be beneficial to understand how these KPI’s will help executives in achieving their personal goals

As always, devil is in details. If CFOs goal is to reduce DSO, then being able to understand from CFO’s perspective how DSO is impacted by collection processes, CRM processes is important. For all you know unclean addresses might be at the root of lack of ability to collect the payments (at least one of the reasons behind larger DSO number). If you followed recommendations above you will be able to tangibly demonstrate linkage between cleanliness issue and DSO and will be able to garner support from CFO on this issue on a ongoing basis.

At this stage I am not focusing on specific technology investments, but as you can see any technology solution which will allow you to capture strategy, KPI’s and link business processes to these artifacts will be a good solution to capture this information.

In my next post around the litmus test questions, I will explore the need for understanding the specific goals around these KPI’s.

Previous relevant posts:

Litmus Test for Data Governance Initiatives: What do you need to garner executive sponsorship?

Suggested reading next:

Data Governance Litmus Test: Know goals behind KPIs

Data Governance Litmus Test: How and who is putting together metrics/KPIs for executives?

Data Governance Litmus Test: Do You Have Access to the Artifacts Used by Executives?

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Litmus Test for Data Governance Initiatives: What do you need to do to garner executive sponsorship?

It was a long day in Cincinnati, we had full day of conference, demos and discussions around data governance/data quality topics. Some of my colleagues, friends in the industry decided to retire in a bowling alley. Over the bowling game and few beers we obviously resorted to talking about the same topic we have been discussing all throughout the day. After about couple of hours of discussion lane #7, and#8 and #9 came to same conclusion: one of the toughest parts of data governance initiatives is ongoing executive sponsorship and the need for demonstrating tangible ROI.

On my flight way back home I jotted down some thoughts around this topic and thought of creating a basic list of questions which could be used as a litmus test to validate, if all the right steps are taken to ensure ongoing executive sponsorship and tangible ROI proof points for data governance initiative.

Everybody who is involved in some sort of data governance initiative knows the criticality and the importance of having executive sponsorship for the overall success and viability of the data governance programs.

It is really important to have the right level of understanding about organizational goals and drivers. With the specific knowledge of organizational initiatives it is much easier to link data governance initiative to specific organizational goals/drivers. Creating this link between goals and data governance will help in creating the necessary ROI case for data governance as well as garner the executive sponsorship.

So here is the list of the 10 simple yet relevant questions which I am proposing every data governance team should use as a litmus test from time to time to validate, if they are going on the right track to ensure ongoing executive sponsorship and capacity to demonstrate tangible ROI to the organization.

1.       Every Monday morning CEO and his direct reports meet to review organizational KPI’s. Do you precisely know which metrics are being looked at on a weekly basis?

2.       Do you know what the goals are for those KPIs?

3.       Do you know how each of those metrics/KPIs is put together and by whom?

4.       Do you know which KPIs are not meeting their desired goals?

5.       Do you have sample presentation or a report which all of the executives look at, in the Monday morning meeting?

6.       Once you have an idea about the key metrics, people who put together those metrics for executives, do you know which systems are responsible for generating and managing raw data which is required for those metrics?

7.       Do you have an understanding of the quality, reliability, timeliness of the data which is being used to put together those metrics?

8.       Have you found issues with data quality, reliability, timeliness of the data or how the data is managed on ongoing basis?

9.       Have you shared you are findings of the quality and reliability of the raw data which is being used to put together weekly KPIs with the executives which are responsible for those KPIs?

10.   Have you reached any common understanding regarding the need to address data quality, reliability, timeliness or issues around how the data is being managed with the key executives whose KPI’s are being impacted because of the underlying issues associated with the data? And benefits of such actions/initiatives?

If you answered yes to all of the questions above, you are well on your way to generate tangible ROI, Garner executive sponsorship for your data governance initiatives. And you have very high chance of being successful at achieving all of your goals of data governance initiative.

On the other hand, if you did not answer yes to one or many of the questions above, it is time to go back to the whiteboard and understand how truly you have been able to justify the ROI? How realistic is that case? And do you truly have executive sponsorship and support to your data governance initiatives?

I would love to hear your thoughts around this topic, and in specific if you would add any more questions? Take away any of the above questions? Or simplify any of the questions?

In my opinion, how and when you ask these questions and take appropriate actions will differ based on where in the life cycle of the project you are. In future posts, I will discuss relevancy of this litmus test and other factors influencing your actions based on this litmus test for two scenarios:

1.       For teams who are just in the beginning phases of proposing Data governance program, but yet not started.

2.       Teams who are already working through the Data governance programs.

Suggested reading next:

Data Governance Litmus Test: Know thy KPIs

Data Governance Litmus Test: Know goals behind KPIs

Data Governance Litmus Test: How and who is putting together metrics/KPIs for executives?

Data Governance Litmus Test: Do You Have Access to the Artifacts Used by Executives?

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