In-Depth
Information Governance: Big Data and the Road Ahead
In 2011, enterprises were aligning their information governance practices across functions. In 2012, Big Data information policy will become mission critical.
By Sunil Soares, Director of Information Governance, IBM
Information governance is the formulation of policy to optimize, secure, and leverage information. With the proliferation of data, organizations have struggled to align business and IT functions with the increase in the volume, variety, and velocity of information.
In 2011, industries saw significant collaboration across departments and three significant trends emerging. This progress has led to some interesting predictions for 2012. Here is a look into the past as well as the future.
2011 Trend #1: Organizations appointed information governance leaders
A search on “information governance” or “data governance” on a social networking tool such as LinkedIn will produce thousands of hits for individuals with information governance or data governance in their title. There is an increasing trend for these leaders to be 100 percent dedicated to information governance within their respective organizations.
2011 Trend #2: The business assumed greater ownership for information governance
Information governance is increasingly becoming the province of the business which needs to set policy around data. Risk management in banks, merchandising in retailers, and, indeed, marketing and finance all have a stake in information governance. The CFO at a multinational industrial company was receiving inconsistent answers from different parts of the organization to a simple question, “What were our sales in the Middle East last month?”
The reason for the difference was that Bangladesh rolled up inconsistently under different geographies across different divisions. One division rolled up Bangladesh under the Middle East while another division included it within Asia Pacific. The finance team sponsored an information governance program by instituting a standard country roll-up across the enterprise to ensure consistency in financial reporting.
2011 Trend #3: Organizations placed a heightened emphasis on the measurability of information governance
Metrics are also a great way to provide a sense of focus for the information governance program. As the saying goes, “You only do what you measure.” A health insurer found it hard to measure the profitability of its top doctors and hospitals due to the number of duplicate records. The information governance program measured the number of provider records without key identification information such as Social Security number, Medicare number, and Drug Enforcement Administration number.
In certain states, retail store clerks collect customer phone numbers at the point of sale. Marketing uses these phone numbers to integrate the SKUs from the customer invoice to their overall profile within the marketing data warehouse, even if the customer pays cash. Because phone numbers are important, marketing might validate this information with external providers. The information governance metric might be the percentage of customer phone numbers that have been externally validated within the previous six months.
2012 Trends
2012 Prediction #1: Big Data governance will become increasingly critical
Big Data is a platform for bringing together enormous volumes of data, from any source, at any velocity, to generate breakthrough insights. Companies are starting to recognize the importance of establishing the appropriate governance over their Big Data initiatives. Oil and gas companies have Big Data initiatives to analyze geospatial and seismic data to discover new energy reserves and to extend the life of existing reservoirs.
However, oil and gas companies need to ensure that this data is of the appropriate quality. For example, an oil company bought the same seismic data twice from an external vendor because of inconsistent naming conventions in its internal repositories.
2012 Prediction #2: Organizations will require a business case for information governance
It costs money to hire data stewards, deploy metadata tools, and require that senior management spend time in meetings. As a result, organizations need to establish the business case for information governance. The table below details sample business benefits associated with an improvement in the quality of dates of birth at a retail bank.
|
A. Number of customers in the retail bank |
10,000,000 |
| B. Estimated percentage of customer records with inaccurate dates of birth |
5% |
|
C. Estimate number of retail banking customers with inaccurate dates of birth (AxB) |
500,000 |
|
D. Annual percentage of customers who call the bank with a request to buy another product |
10% |
|
E. Average dropout rate associated with customers who have to visit a branch to correct inaccurate dates of birth before the bank can sell them an additional product |
50% |
|
F. Estimated number of annual cross-sell opportunities that are lost because of dropouts from inaccurate dates of birth (CxDxE) |
25,000 |
|
G. Average value of product that is cross-sold to existing customers |
$20,000 |
|
H. Average operating margin on products that are cross-sold to existing customers |
0.5% |
|
I. Potential increase in annual operating margin by improving the quality of dates of birth for existing retail banking customers (FxGxH) |
$2,500,000 |
2012 Prediction #3: Information governance programs will start with a focus on critical data elements
As a direct result of the focus on financial benefits, organizations are increasingly recognizing the importance of focusing their governance efforts on a handful of critical data elements. For example, gender is a critical data element that drives business decisions at insurers. A European insurer decided to conduct a broader investigation against a reference file of typical names and the associated gender. The investigation discovered several thousand incorrect entries in both directions (males classified as females and females classified as males).
Although the insurer did not believe that there was any fraud involved, they did realize that premiums had been charged incorrectly over many years for these customers. The insurer informed the regulator who determined that all overpayments by customers had to be refunded, but any underpayments had to be written off. However, the regulator allowed the insurer to write to these customers, inform them of the error, and change future premiums. This situation cost the insurer 4 million Euros. Because of these findings, the insurer changed its new business system to validate names against the reference file mentioned above, and exceptions were highlighted for further investigation.
Final Thoughts
With Big Data and executive recognition of the importance for information governance, these are truly exciting times as information governance becomes a profession in its own right that draws from best practices across business and IT.
Sunil Soares is the director of information governance at IBM, where he helps clients establish programs that focus on business value that is tailored by industry and job function. Sunil is the author of the book Selling Information Governance to the Business. You can contact the author at soaressunil@gmail.com