A recent study has revealed that despite many years and dollars invested in IT, Canadian firms are still burdened with business data that is inaccurate and unreliable.
And this predicament may be preventing organizations from making strategic business decisions, according to a joint report released by CFO Research Services and Deloitte Consulting LLP entitled, IQ (Information Quality) Matters.
“Information quality is one of the most critical business issues facing companies today,” said Gordon Shields, a partner at Deloitte in Toronto. Business decision-makers need timely, accurate information to effectively develop strategy and manage risk, he said.
Thirty-four Canadian respondents were included in the Deloitte survey of 385 senior finance and IT executives in North America, Europe and China. The research sought to explore the quality of management information and its effectiveness in meeting business goals.
Quality of operational and financial information used for forward-looking planning and strategy turned out to be the most significant problem area for 71 per cent of Canadian respondents interviewed, according to the study. And this is an issue that’s shared by respondents worldwide, with 85 per cent citing the same problem.
In addition, 85 per cent of Canadian executives felt they were “buried in too much information,” and 82 per cent said they are getting “multiple versions of the truth” through conflicting reports from different business units.
Both of these factors limit their ability to make well-informed business decisions, read the report.
“[Business decision-makers] are getting reports that are timely and look accurate, but when they compare them against somebody else’s report, perhaps from another business unit, (they get) the same information (but) with different results,” explained Shields.
The study also indicated that despite increasing regulatory requirements for financial disclosure and transparency, sixty-five per cent of Canadian companies still feel they “could do a better job” of ensuring that their financial information accurately reflects the performance of their business.
Toronto-based Rogers Communications’ decision to roll out an enterprise resource planning (ERP) system last year was driven by its objective to improve data accuracy and gain more timely access to information, one Rogers executive said. Rogers was one of the organizations interviewed by Deloitte for the study.
“We have had many different sources of data in the past and they didn’t always reconcile,” said Dave Fitzsimmons, Rogers’ vice-president for IT. He said one of the main goals for its ERP implementation is to provide management with the “single version of the truth” that’s critical in informed decision-making.
Technology, however, is only one of the major issues that companies need to deal with when addressing information quality within the organization, said Shields. While technology addresses vital integration issues across applications, governance and processes also affect information quality, he added.
Putting in place a governance framework provides companies with the proper roadmap that defines the direction towards which they want to take the business, said Shields.
For instance, he explained, large organizations typically have various business units that have their own set of functions and objectives. Business unit managers normally have the authority to procure systems that serve the purpose of their respective units, but may not necessarily be consistent with the needs of the enterprise as a whole, said the Deloitte executive.
“Without governance, (particularly) in larger organizations where you distribute authority to buy technology, [companies] often end up with systems in the different business units that are either duplicative or incompatible with where the organization is trying to get to,” Shields said.
Process automation is another issue that contributes to the level of information quality, according to Shields. Despite increased popularity and awareness around workflow automation, many organizations today still rely on manual interfaces that leave much room for human errors and delays in getting much-needed information, he said.
But the good news, according to Deloitte, is that over 90 per cent of Canadian companies surveyed have realized the importance of information quality and are either undertaking or planning to undertake measures to improve information quality within the next two years.
“Canadian finance and IT executives are also working together more closely to ensure that technology, business processes and financial and operating information meet the requirements of internal and external stakeholders,” Deloitte said.
In addition to fostering greater collaboration between finance and IT managers, firms should also work towards aligning IT initiatives with the business strategy, said Shields. “Have a framework that allows you to ensure that information management [efforts] are focused on what’s going to make the biggest impact in the organization,” he said.
Companies should also establish an enterprise-wide integration plan that puts emphasis on defining the technology standard to be used in achieving integration across all business units, said Shields. “Set some standards that you expect [all business units] to adhere to as they move forward so that you can achieve integration over time.”
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