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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