Data Governance, So Mom Can Understand
I enjoy writing these letters to you, clarifying the abstract concepts and trends that dominate my work-life. I appreciate your interest in understanding my work. Many of my colleagues have children, spouses, parents, and other people in their lives who are unfamiliar with the mysterious world of data management, but who would love to understand our career choice.
Truthfully, even some folks with decades of data management experience prefer to brush data governance under the rug for two main reasons:
- It’s hard
- It has a history of false starts
You understand why data is important to organizations, as it helps them reduce costs and risk, improve processes and decisions, optimize customer experiences, and ultimately help grow the business. At its simplest, data governance can be defined as:
an internal business function chartered with the creation of policies, processes, and standards to optimize the value data can deliver to an organization.
You know how Finance and Human Resource (HR) organizations exist to protect and optimize business value derived from financial and people assets, respectively, Well, think of DG as a comparable business function that does the same thing for data assets. Unfortunately, while Finance and HR are universally accepted disciplines that all companies prioritize, data governance remains an emerging specialty.
Before explaining why so many organizations underinvest in DG, let me try to describe what it looks like by comparing it to something you do in your daily life: Manage personal finances.
You and dad make a great team! You’ve always been the family accountants – managing bank accounts, credit cards, budgets, and tax returns. Dad’s the finance guru, managing investments. You’ve both shared these responsibilities for decades, so you’ve nailed down the best practices for getting it done – and believe it or not, what you’re doing is data governance.
The core processes that make up a DG function are Discover, Define, Apply, and Measure & Monitor. These are the same ones you use to manage your finances – or your “Personal Finance Governance!” Allow me to explain:
- Discover: You determine the sources of your expenses (e.g., credit cards, loans, utilities) and income (e.g., salary, capital gains). You capture data, such as bank names, addresses, due dates, and account numbers. Dad also does a ton of discovery as he scours through Morningstar reports collecting tickers and performance data.
- Define: You define a ton of data standards. Using your Quicken software, you’ve defined a classification of categories for expense and income types (e.g., medical, utilities, tax, charities, salary dividends) so you can create consistent reports while working on your annual budget and taxes. This is similar to a large enterprise defining the chart of accounts in its Enterprise Resource Planning (ERP) systems. You also define repeatable processes to set up automatic payments and allocate income into different accounts.
- Apply: You and Dad figured out the rules and processes that you want to use to manage your finances, and this step simply implements those process for entering, updating, reconciling, synching with institutions, handling errors and exceptions, and reporting for budget and taxes.
- Measure and monitor: You wouldn’t bother with all of that upfront work if you weren’t using this information to help you monitor your spending and budget, run reports needed to file taxes, and monitor your investment performance.
Finally, you and Dad Collaborate well to split duties across banking and investing. You also work with your accountant, employers, tax agencies, banks, brokers, insurance companies, etc., to ensure fresh and accurate information is running through the process.
It’s amazing – you’re a DG expert, and didn’t even know it! But, you’ll admit that you and Dad are a bit obsessive about managing your finances. Way too many people in the world don’t manage their financial lives so well…and some get into trouble. They overdraw on their accounts, max out credit cards, and invite scrutiny by tax agencies or other regulators. This leads some to bankruptcy, as they are unable to govern the management of their finances appropriately.
Now back to my career in data governance, and what this all means to large businesses. Well, similar bad things can happen to organizations lacking DG. They waste money, get in trouble with regulators, make bad decisions, and upset their customers – any and all of which can put their entire business at risk.
You and dad are a household of two people who engage with 1-2 dozen third-party institutions. Now scale this to organizations with millions of employees, vendors, customers, regulators, and other stakeholders highly dependent on – or directly impacted by – the quality, availability, and security of data. The need to have clearly defined roles, responsibilities, processes, and standards becomes exponentially more important. With that scale and complexity, you can imagine why DG is so hard and why it has such a history of failure.
But there is good news. After many years of data management professionals evangelizing the need for formalized DG within organizations, a new senior executive role has emerged – the Chief Data Officer. While still a new and evolving role, this is the first time a C-level executive role has been defined that clearly accepts responsibility for enabling data governance throughout an organization.
So, the next time you have some of your friends over, you can tell them all about data governance. It’s especially useful if they’ve overstayed their welcome – this will get them out of your house in a hurry! 🙂
P.S. Yes, I did intentionally avoid using the Federal Government as a metaphor to explain Data Governance. I wanted you to read this without getting political!
P.P.S. No, I will not pick sides between you and Dad to decide who should be the Chief Data Officer of your house.