IBM's Top Five Predictions for Data Governance
07/08/2008
The IBM (NYSE: IBM) Data Governance Council today predicted five key information challenges that will reshape corporate behavior and the market's ability to trust information during the next four years.
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The global Council recently met to discuss how businesses will handle the enormous amount and complexity of information generated by organizations and financial markets. Their findings included the prediction of five imminent, information-related issues:
- Data governance will become a regulatory requirement in an increasing number of countries and organizations. In some countries, organizations will have to demonstrate data governance practices to regulators as part of regular audits. This will likely affect the banking and financial services industries first, and will emerge as a growing trend worldwide.
- The value of data will be treated as an asset on the balance sheet and reported by the Chief Financial Officer while the quality of data will become a technical reporting metric and key IT performance indicator. New accounting and reporting practices will emerge for measuring and assessing the value of data to help organizations demonstrate how data quality fuels business performance.
- Calculating risk will be used more pervasively across enterprises for small and large decision-making and will be increasingly automated by information technology. Today in most organizations, risk calculation is done by a select group of individuals using complicated processes. In the future, risk calculation will be automated providing greater transparency to more easily examine past exposure, forecast direct and indirect risk, and set aside capital to self-insure and cover risk.
- The role of the Chief Information Officer (CIO) will change making this corporate officer responsible for reporting on data quality and risk to the Board of Directors. The CIO will have the mandate to govern the use of information and report on the quality of the information provided to shareholders.
- Individual employees will be required to take more responsibility for recognizing problems and participating in the governance process to facilitate greater operational transparency and the identification of risk. They will be aided by new categories of operational software that will demonstrate common data governance problems and allow employees to self-govern; sponsor and vote on new policies; provide feedback on existing ones and participate in dynamic data governance.
Data has become the new currency in today's information economy, but many businesses make the wrong decisions by not using the right information. "There is no one-size-fits-all approach to data governance," said Richard Livesley, head of information governance and quality, BMO Financial Group. "Every company must configure their own data governance program based on their individual needs. Likewise, there are different levels of data governance maturity and different ways of attaining it. In just a few years, data governance will become a key benchmark as boards of directors recognize their fiduciary responsibility to enhance and protect data, and markets measure business performance by looking at data value and risk on the balance sheet."
The IBM Data Governance Council is a group of 50 global companies, including Abbott Labs, American Express, Bank of America, Bank of Tokyo-Mitsubishi UFJ, Ltd, Bank of Montreal, Bell Canada, BMO Financial Group, Citibank, Deutsche Bank, Discover Financial, Kasikornbank, MasterCard, Nordea Bank, Wachovia, Washington Mutual and the World Bank, among others, that have pioneered best practices around risk assessment and data governance to help the business world take a more disciplined approach to how companies handle data.
According to the Council, investors and consumers alike will benefit as data governance emerges as a required discipline for organizations, giving rise to greater trust, better transparency and reduced risk. Data governance today is at a crossroads, creating the opportunity for a marked change over the next four years as data quality evolves into a key performance indicator for businesses worldwide.
To meet growing market needs, the Council plans to build an Information Governance Framework based on their existing Data Governance Maturity Model that will define standards and best practices. This new framework will provide guidance for organizations to execute data governance at a granular level with defined roles, tasks, activities and a broad set of data governance procedures to make data governance a part of business operations.
"Organizations today understand that data governance is a strategic imperative but they need help making it work," said Steve Adler, chairman of the Council. "Upcoming work by the Council will help organizations better understand governance, how it will benefit the bottom line and be reported to the markets, as well as the desired end result for each business. This is an important contribution the Data Governance Council can make in the marketplace and we invite others to participate as we build standards that define the next level of maturity for this important discipline."
Data governance helps organizations govern appropriate use of and access to critical information such as customer information, financial details and unstructured content, measuring and reporting information quality and risk to enhance value and mitigate exposures. IBM’s work in this area supports and furthers the company’s Information on Demand strategy, announced two years ago, that has delivered results through consistent earnings growth, hundreds of new customer wins, strategic acquisitions and industry-first software offerings.
For more information on the Data Governance Council, go to:
http://www-306.ibm.com/software/tivoli/governance/servicemanagement/data-governance.html
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