So many of us have been spoiled by Google. With just a few keystrokes, a powerful search engine can find just about any information on the Internet. But how about locating critical information about your own business? That’s not always quite as easy. In fact, it may feel more like looking for a needle in a haystack.  This can be extremely frustrating for finance professionals. Finance is increasingly seen as the steward of all sorts of information – not just accounting data - in many organizations. Often, it is the finance department that drives information delivery and is responsible for its timeliness, accuracy and quality. Of course, the folks in the Technology department help, but we believe it is the CFO who puts the final stamp of approval on much of the information that is needed to run the business.
Information is a critically important and hidden asset that too many organizations ignore, and there is now simply more of it than ever before to track. Information volumes worldwide are expected to double roughly every six to 12 months and it is projected that by 2010, global data volume will double every 11 hours.1 And even within organizations, where data volume may not grow as quickly, trends driving the acceleration of data volume include: - Sarbanes Oxley, Basel II and other regulatory frameworks
- computer-aided design and manufacturing systems
- electronic transactions systems
- the large data sets required to support increased use of modeling (especially in the financial services industry)
- the digitization of vast new quantities of information such as medical and human resource records
- insistence by regulators on data retention
- group e-mails with large attachments (including audio and video)
Unfortunately, it is apparent to us that the growth of data far outpaces our ability to harness it. Within organizations, the quality and accessibility of information is often less than adequate and vital market data and operational metrics are not always available at the touch of a button. These are not merely inconveniences – they can be extremely costly. Take productivity. We looked at one global corporation that had a reporting staff of more than 300 people, 114 different databases and 24 reporting tools. The short-term solution – dumping information into a vast reservoir of cheap storage space – made it more difficult to retrieve the information. It took a staggering amount of “human middleware” to reconcile and aggregate data scattered across the globe. Worst of all, nobody could come up with the same answer to the same question – even as the company’s networks were clogged by users fruitlessly searching for information. Similar problems arise in inventory management. Consider the case of a manufacturing company that made about 100,000 different products. Upon closer assessment, it was found that they actually had 5 million product definitions spread across 90 systems. The result was mislabeled products, misstated inventory levels and an inefficient order management process. A lack of reliable data can also make it hard to negotiate with suppliers. If you’re not even sure exactly how much your company is buying – in aggregate – from a particular vendor, how can you demand better pricing terms? These problems add up – and they can have a damaging affect on shareholder value. Being forced to restate results or missing earnings estimates because of poor information can knock millions of dollars off your market value. And not being able to explain why discrepancies arise creates other problems in terms of transparency and credibility in the eyes of shareholders. Information “quality” involves a lot more than just accuracy. It’s also about timeliness, predictability, and transparency. If you’re coming up short on any of those elements, chances are you are putting your organization at risk – both operationally and in the financial markets. Turning knowledge into power is a huge initiative for any organization to tackle. Part of the problem is that it usually doesn’t fall neatly into any department’s P&L – it’s often spread across the entire organization, and the responsibility for managing information usually falls upon different departments and divisions. Multiple definitions of simple terms like “product”, “employee”, “cost center” also blur the lines. When there are no clear definitions, there is essentially no information. Quite often, the tipping point comes at the top. The CEO or CFO comes in and wants information. It’s not available. Or they get multiple answers from different people. Or they have to wait too long. Or it’s just plain wrong. That’s the moment when the process usually gets started. But you don’t need to wait for disaster to strike first. You can get started by conducting a business case to understand how you are leveraging your information and whether you could do it better. Look at how your organization is defining information and how the important data gets to you – or why it’s getting lost in the shuffle. Cut down on the mountains of retained data by prioritizing your data retention – figuring out what information is ephemeral and what needs to accurately tagged and quickly retrieved. It still won’t be as easy as using Google, but if you can take steps to start improving the quality of information in your organization you’ll be much better off. 1 “The Toxic Terabyte,” IBM Global Technology Services, July 2006 This publication contains general information only and Deloitte Consulting LLP is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte Consulting LLP, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication. Written in association with the Economist Intelligence Unit (EIU)
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