Every group or department in your private equity organization is going to need their own view of your data. For example, if they are looking at year-end sales, the focus will be on all the business your sales team closed in the previous year. The group controller is going to have different line-of-business needs, and will be looking at all closed business that has been booked to the ledger. A portfolio company CEO will get a different answer to a query involving those year-end sales figures depending upon who he or she is asking. The private equity managing partner might like to look at each individual portfolio company or their entire portfolio rolled up to benchmark metrics. Establishing a common set of data parameters that your whole organization follows will not be simple, but consistent data governance will have a huge beneficial aspect to your organization.
What is Data Governance?
The Data Governance Institute defines data governance as a system of decision rights and accountabilities for information-related processes, executed according to agreed-upon models which describe who can take what actions with what information, and when, under what circumstances, using what methods.
Why is Managing Control Over Data Availability Crucial to Data Governance?
Managed control over your data availability leads to consistency in its governance, which is crucial to its usability, integrity, and security, supporting the growth and flexibility of your enterprise.
- Establishing a governing body or council with a defined set of mandates, goals, and processes will help to ensure that consistency is maintained.
- Automating your processes and enforcing the procedures that have been established will support consistency.
- Consistency in the data shared across departments, such as customer or part numbers, or vendor and employee IDs, will remove duplicates and standardize the data, reducing the amount of incorrect data entering your core enterprise systems. This will also greatly lessen the amount of chaos and confusion that can come from inconsistent data and information shared within a company.
Consistent data governance will allow your departmental management to make informed operational decisions, while strategic decisions that are made by the corporate management will be based on information that can be trusted as being a clear and correct snapshot of the operation. One version of the truth will benefit your entire enterprise.
What are the Benefits of Consistent Data Governance?
A few of the benefits of consistent data governance are:
- Less time spent on report reconciliation and inconsistent performance results.
- Less data entry errors due to data being manually entered into multiple systems
- A consistent set of definitions for key performance indicators across your enterprise
- Data being distributed across your organization consistently
- Better management of key corporate master data, such as adds/deletes/changes
- Eradication of bottlenecks in your change management process that can delay the approval of adds/deletes/changes
- It will ensure accurate procedures with relation to regulation and compliance activities and increase the transparency required in these areas.
- The value of your data will increase, and resolution of past and current data issues will be supported.
- The costs that can be associated with other areas of data management will decrease and the overall revenue of your enterprise will increase.
Why Do You Need a Good Policy for Data Governance?
Your business will need a strong policy for your data governance so that as training and education practices around the management of your data assets is implemented, direction and compliance within the organization is clear and consistent. A good data governance policy will help maintain effective processes when it comes to managing all the information of your business.
As you analyze all the internal and external factors that can affect your business objectives, a data strong and effective governance policy can be formulated which will determine the implementation of your strategy when it comes to handling your data and will help your enterprise gain better control over all your data assets, including methods, behaviors and technologies that surround the proper management of data.
A strong data governance policy considers your goals. Establish goals and performance metrics for each area listed here:
- Define key roles throughout your business that are related to data. For every system, choose stewards to manage that data and focus on quality; the owners who will make decisions and define quality standards, and the IT team who will provide technical support and monitor all compliances.
- Document and inventory all your sources for data and review the inventory regularly to ensure it is up to date.
- The purposes for which you collect data should be identified and communicated to your team and clients and reviewed regularly.
- Policies should be in place that define how your records will be created, maintained, and disposed of.
- Quality and access. Appropriate staff members should be assigned the responsibility for data quality and to conduct regular audits while all permissions and access should be clearly defined.
- Data security policies need to be defined with respect to access and sharing of data. Include a risk management section that outlines risk and probabilities.
You want to know that the formal management of all the data assets within your organization is efficient and cost-effective and is bringing the most return on your investment possible. A well-thought out policy will do just that by ensuring that all your team members know who can take which actions, what methods are to be used, and under what circumstances, reducing wasted time due to unclear direction or incomplete sets of information available.
How your policies define your business will influence your ability to manage it, keeping everyone focused and in sync, striving towards the same goals.
If you are looking for assistance in data analytics, give us here at LBMC Data Insights a call and set up an appointment today!