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Including Enterprise Data Management in Cost of Doing Business

Including Enterprise Data Management in Cost of Doing Business

Enterprise data management often suffers from a lack of funding and organizational support.  There is a solution.

As organizations examine the need for enterprise data management (EDM) most struggle with many challenges: what is EDM, are all the components necessary for this organization to have a successful enterprise approach to managing data, what is the current state of each component and what is the next desired state, what is the optimal plan for proceeding from one state to the next, etc….  All of these challenges are important and are the focus of a plethora of articles, presentations, books, blogs, and discussions.  However, there is one issue that does not get enough visibility: how to pay for enterprise data management.

It would not be fair to say that EDM costs do not receive any attention from practitioners or management, since so much time is consumed by financial planning and budget processes.  Some companies spend months figuring and re-figuring costs for each department, each project, and each resource.  However, the current approach to financing an EDM initiative is significantly flawed since it directs all the attention to possible projects for the various EDM components, and it pays no attention to the fact that EDM is a foundational function and should be funded like other foundational components (HR, accounting/finance, marketing, etc.)

Data Management Project Approach

Most organizations address data management as a series of projects, seeing them as relatively independent efforts that must compete for funds and resources during each budget planning process.  This approach shows a lack of strategic attention to data and its management, either in the business strategy or the information technology strategy.  In this approach, a data quality profiling project would compete with a “project” to develop the EDM program, when strategically it would make sense to implement the EDM program as part of the organizational structure – not competing with any tactical projects.  In this example, the data quality project would become an effort under the EDM program and would be funded accordingly.

Having a business strategy and an information technology strategy that recognize the value of data and information to the organization – and demonstrate that value through the development of an enterprise data management practice – would be an enabling factor for success.  Establishing and sustaining these strategies can create the foundation for recognizing the need for programs that incorporate long-term goals into the organizational culture and its operation, such as acknowledging the value of data and information as business assets that can provide continuing value to the organization.

Enterprise Data Management as Part of Cost of Doing Business

If organizations were to understand the value of data and information to the organization’s functionality, some experts in business economics and in data management believe the results would initiate a move to enterprise data management (EDM) as part of their cost of doing business, similar to functions such as accounting/finance, human resources, etc.  All the activities, costs, and benefits associated with each function are shared across the organization and the charges for each function are managed as part of the “cost of doing business”.  Companies do not dispute the need for accounting or HR or marketing, and they should not argue with the need for EDM, since EDM manages the assets of data and information for the entire organization.

Including EDM as part of the “cost of doing business” requires a change in the usual funding model at the strategic level.  This would be accomplished by developing a new business unit called an Enterprise Data Management Program Office.  This unit would include the EDM program administration, the development, and implementation of a data governance program, the management of business metadata, and the development of a data quality program.  Additionally, the program office would coordinate the data management-specific processes of operations such as master data management, data warehousing, and business intelligence, and enterprise data architecture since the procedures and technical management of these disciplines may reside outside of the EDM area.

In the program office, the EDM activities would be combined into one unit as a managed operation similar to accounting/finance, human resources, marketing, and sales, etc.  The departmental cost of the EDM program office would be borne by the organization, and the unit would be allocated a budget managed by the department’s leadership.  This department could be the funding source for EDM-based projects, such as launching new data stewardship teams, implementing data standards through metadata management, profiling data sets for data quality, rationalizing master data, etc.  Each EDM foundational discipline would have its dedicated team within the program office.

As an alternative, the costs of the EDM foundational program unit could be spread throughout the company, similar to the allocation of project management in many organizations, where every project is charged for the use of the project management office.  Each existing business unit could be charged an additional percentage for the use of enterprise data management foundations, exempting only the technology infrastructure areas that do receive any benefits from EDM.   During the project planning process, each business unit would be asked to estimate its use of EDM (data governance and stewardship, data quality management, metadata management, etc.) for the coming year and that percentage would be applied to the department’s projected annual spending figure.  The total value of funds allocated for EDM from all the business units’ estimates would support the enterprise data management program (and its direct functions such as data governance, data quality, and metadata management) for the coming year.  Using this approach, however, would mean there would be no direct source of funds for EDM-based projects, and each project would have to go through the project planning process independently.  Organizations that have adopted this approach have discovered their EDM programs can suffer from continuing sustained funding challenges, like those organizations that do not have any standard approach to funding data management-related projects.

Conclusion

One of the biggest challenges in securing acceptance for EDM in an organization is gaining recognition of its value, and the value of its foundational components (program administration, data governance, metadata management, etc.).  Including EDM in the company’s “cost of doing business” either as a business unit or as a percentage charge across the organization may provide needed support to achieve acceptance and sustained visibility for enterprise data management and its major activities.

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Anne Marie Smith, Ph.D.

Anne Marie Smith, Ph.D. is an internationally recognized expert in the fields of enterprise data management, data governance, data strategy, enterprise data architecture and data warehousing. Dr. Smith is a consultant and educator with over 30 years' experience. Author of numerous articles and Fellow of the Insurance Data Management Association (FIDM), and a Fellow of the Institute for Information Management (IIM), Dr. Smith is also a well-known speaker in her areas of expertise at conferences and symposia.

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