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ROI of Data Quality by JerrySmith16


									                                                                  The ROI of Data Quality
                                                                  Six Business Cases for
                                                                  a Data Quality Solution

                                                                  Do you have the numbers on data quality?
                                                                  This document provides them in specific
                                                                  examples of bottom-line benefits from better
                                                                  data quality.

Trillium Software™, 25 Linnell Circle, Billerica, MA 01821 • 978-436-8900 • •
The ROI of Data Quality: Six Business Cases for a Data Quality Solution

       Does your data really support better business decisions?

       Business and technical managers are having a hard time presenting a
       viable cost justification for implementing data quality in their
       organizations. This is despite a variety of industry studies and polls
       that attest the importance of data quality for successful data
       warehousing and other business initiatives.

       The problem lies in a disconnect between the individuals that actually
       see data quality problems and decision makers that need to
       understand the bottom-line impact of data quality in their companies.
       This paper bridges the gap between those data users and data
       managers, presenting six specific business cases for implementing an
       enterprise-wide data quality solution.

       From accounts/receivables to call centers to marketing and sales
       departments and beyond, the cases cited in this document encompass
       both bottom-line arguments and real-world examples for data quality.
       They include examples of the risks of bad data as well as the benefits
       of a well-designed, enterprise-wide data quality solution.

                                                                                page 1 of 22
                                   The Bird’s-Eye View of
                                   Enterprise-Wide Data Quality
  MAKING EWDQ FLY                  Your business will lose revenue and reduce operating efficiencies if it
                                   doesn’t pay attention to data quality. This is the consensus among
Implementing an EWDQ solution      more than 600 CIOs and IT directors polled about data
requires technical, business and   management According to the same survey, IT executives have
                                   become more experienced at implementing CRM and data
political aptitudes. To achieve
                                   warehousing systems. They have realizedoften through
EWDQ, data managers must be        failurethat high enterprise-wide data quality (EWDQ) is one of the
willing to invest in, evangelize   most important criteria for project success.
and gain C-level support for
                                   EWDQ unifies disparate pieces of information about any entity in the
EWDQ initiatives. In addition,
                                   business sphere to enable a complete customer view. From
they must choose or design a       customers to supply chains to products to physical warehouses, and
solution that is appropriate for   beyond, each far-flung business entity contributes to the bottom line.
the exciting IT/IS environment.    EWDQ lets businesses realize and act upon the most accurate and
                                   complete information about all business entities, despite disparate
                                   systems, varying data formats and international data sources.
                   (CONT’D P.4)
                                   Functionally, EWDQ is more than name and address verification or
                                   record deduplication. It is a complete system for defining and
                                   enforcing global business rules for customer- and business-data
                                   quality. EWDQ processes are the foundation of the business’s ability
                                   to reconcile global data with existing data processes and
                                   infrastructures, ensuring complete customer knowledge and data
                                   transparency throughout the enterprise.

                                   The inclusion of global (e.g., multinational or non-English) data in
                                   EWDQ is critical, since international businesses are especially
                                   sensitive to the data quality component of enterprise data
                                   management. Driven by market forces and the quest for additional
                                   revenue, businesses selling into international markets can incur
                                   enterprise data overload. As international sales, accounting, call
                                   centers, and support teams contribute to the data warehouse, new
                                   information content and formats often outstrip existing data
                                   management capabilities. The result is massive amounts of
                                   unchecked—even unusable—stored data.

                                   EWDQ averts data overload by empowering companies to identify,
                                   standardize, verify and enhance data from business-wide sources
                                   and to link records based on data elements. The result is an
                                   accurate, complete and relevant view of business entities that is
                                   consistently available across all business and customer touchpoints.

                                   If you accept the notion that data has value, it follows that EWDQ
                                   builds business value in two ways. It allows all business units to
                                   optimally use diverse information collected through disparate
                                   channels, and it provides each customer touchpoint a unified,
                                   accurate customer view. As a result, businesses can:

                                       •   Increase the efficiencies of CRM applications with higher-
                                           quality data input

    page 2 of 22
     The ROI of Data Quality: Six Business Cases for a Data Quality Solution

 MAKING EWDQ FLY:                          •   Improve customer service with more complete, accurate and
      THREE                                    relevant customer records at customer touchpoints
                                           •   Improve brand penetration by enabling stronger identification
Functionally, companies must                   of cross-sale opportunities
make tough technical choices
                                           •   Lower overhead costs through more incisive fraud detection
about how data quality processes
                                               and higher employee productivity
should handle the enterprise’s
data diversity and how they can            •   Boost the value of existing technical assets, leveraging local
easily expand across platforms                 systems for enterprise-wide benefit and improving the
                                               efficiency of system functionality
and worldwide locations.

                                           •   Support effective tactical and strategic decision making
Technically, companies must                    through more accurate analytics
look for solutions that can meet
their needs in both the short and          •   Increase revenues through knowledge that could not
                                               otherwise be realized
long terms. Compatibility with
internal architectures and other       Given that many researchers believe that the amount of data
IT investments, synchronicity          entering an organization will expand a hundredfold over the next five
with existing IS skill sets,           years, Fortune 1000 companies must increasingly depend on EWDQ
                                       processes to maintain high velocity, active customer operational
scalability and flexibility are just
                                       environments with cost-effective data quality management.
a few of the criteria for choosing
an EWDQ solution.                      Implementing an EWDQ solution requires technical, business and
                                       political aptitudes. To achieve EWDQ, data managers must be willing
                                       to invest in, evangelize and gain C-level support for EWDQ
Politically, there is often
                                       initiatives. In addition, they must choose or design a solution that is
resistance to new business rules       appropriate for the exiting IT/IS environment.
that are necessary to achieve
EWDQ; so, there must be buy-in             •   Functionally, companies must make tough technical choices
                                               about how data quality processes should handle the
to the priority of clean data
                                               enterprise’s data diversity and how they can easily expand
across the entire company. Smart               across platforms and worldwide locations.
technology managers initially
incorporate data quality into              •   Technically, companies must look for solutions that can meet
small projects that they know are
                                               their needs in both the short and long terms. Compatibility
                                               with internal architectures and other IT investments,
likely to succeed, earning                     synchronicity with existing IS skill sets, scalability and
momentum they can apply to                     flexibility are just a few of the criteria for choosing an EWDQ
their EWDQ efforts.                            solution.

                                           •   Politically, there is often resistance to new business rules
                                               that are necessary to achieve EWDQ; so, there must be buy-
                                               in to the priority of clean data across the entire company.
                                               Smart CXOs initially incorporate data quality into small
                                               projects that they know are likely to succeed, earning
                                               momentum they can apply to their EWDQ efforts.

                                                                                                  page 3 of 22
    MORE INFORMATION                  Finding the Numbers for EWDQ
For an in-depth look at the steps
                                      Even if arguments for the value of EWDQ seem logical, many
companies must take to for            companies have a hard time justifying the cost of an EWDQ solution.
EWDQ, please read the white           According to industry analyst Gartner, Inc., about half of enterprises
paper, “Achieving Enterprise-         with a CRM strategy are unaware of data quality problems. The
                                      remainder, however, recognizes data quality problems but doesn’t
Wide Data Quality.”                                                 2
                                      see the value of fixing them.

The Trillium Software white           This article answers the value question. Through concrete examples
paper “Ten Critical Success           for a cross-section of business units, it provides real numbers for
Factors of Enterprise-Wide Data       benefits forged by successful EWDQ. Specifically, it examines
                                      inefficiencies that can creep into accounting, support, fraud
Quality” further explores
                                      detection, compliance, marketing and call center efforts. It also
organizational criteria for           discusses data quality’s impact on customer satisfaction, the creative
effective data quality initiatives.   process and "value-added" work, processing revenue and the actual
                                      financial performance of the company.
Both papers are available at
                                      The first step in assessing EWDQ potential is evaluating how      enterprise data impacts your bottom line. Find areas where data use
.                                     can be given dollar values. This could be the value of direct mail
                                      pieces lost due to mis-addressing, the value of debts unrecovered
                                      because of misdirected bills, the cost of additional time spent on
                                      customer support calls due to incomplete customer records, and so

                                      This article doesn’t propose to explore every use and impact of data;
                                      instead, it presents a few representative cases from diverse
                                      departments across the enterprise. In each case a simple ROI
                                      formula provides a template with which you can calculate your own
                                      EWDQ ROI. With your real-world numbers, these equations will help
                                      justify a unified customer view within your own organization.

    page 4 of 22
The ROI of Data Quality: Six Business Cases for a Data Quality Solution

                            Case 1. More Accurate Accounts/Receivables

                            Attention to data quality in your billing system profoundly effects the
                            collection and reporting of revenue. The more incorrect data and
                            other billing errors in your database, the longer it takes to collect
                            revenue. It is easy for an accounting department to get bogged down
                            in billing disputes that erode customer satisfaction. EWDQ helps
                            avert this situation and protects the bottom line from inaccurate
                            billing that might mask the real financial picture. Moreover, EWDQ
                            prevents unnecessary referral of accounts to collection agencies
                            because of incorrect data.

                            Imagine a fictitious company, Widget, Inc., in which the accounts-
                            receivable department attributes $250,000 in debt one month to non-
                            payment. How much of the missing receivables is due to slow
                            payment remittance and how much is due to data quality?

                            Widget knows through experience that about 20 percent of records in
                            a given database reflect changes in address data each year.
                            Customer moves, mergers and acquisitions can wreak havoc on
                            customer data: some business customers might be acquired, for
                            example, and request billing through another party. With this
                            information, it is easy to compare the capital impact of data quality
                            on Widget’s accounting department.

                            With no data quality system in place, Widget would send its
                            $250,000 in bad debt to a collection agency. This might yield about
                            25 percent of the debt, or $62,500.

                            With an EWDQ implementation, Widget could consistently track
                            billing redirects and address changes across all customer accounts,
                            allowing it to collect $100,000 of the debt before sending the balance
                            to its collection agency. Yielding the same 25%, the agency would
                            return an additional $37,500.

                            Comparing total debt recovery between the two scenarios, the
                            bottom-line impact is clear. The EWDQ implementation would allow
                            Widget to collect more than double the amount it could recover
                            through the collection agency alone.

                            Accounts/Receivables ROI Calculation

                             EWDQ         EWDQ
                        $    100MM        100MM      Value of debt from non-paying customers
                                                     Value of payments recovered through accurate
                        $    0MM          40MM       customer identification
                        $    100MM        60MM       Delinquent, forwarded to collection agency
                             25%          25%        Percentage recovered by collection agency
                                                     Value recovered by collection agency
                        $    25MM         15MM       (delinquent total x percentage recovered)

                                                     Total recovered per $100MM
                                                     (Payment recovered through customer ID + value
                        $    25MM         55MM       recovered by collection agency)

                                                                                           page 5 of 22
               Debt Collection with and without a Data Quality Solution

               There are other liabilities to consider when estimating the impact of
               EWDQ on billing. For example:

                   •   In corporate divisions with single customer billing records,
                       inaccurate billing can be a false indicator of actual revenue.
                       Since companies tend to over bill—rather than under bill—
                       earnings reconciled after customer complaints, actual final
                       revenues might come as a shock to stockholders. In addition
                       to receivables ROI, the ROI of EWDQ can also be found in
                       avoiding negative stockholder reaction to earnings falling
                       short of estimates and the value of customers lost due to
                       erroneous billing.

                   •   When customers find or suspect billing errors, their decision
                       process is affected. Even when poor billing accuracy doesn’t
                       cause customer loss, it can erode customer loyalty and
                       confidence in your business. Something as apparently minor
                       as two bills with slightly different addresses—instead of one
                       consolidated bill—can reduce customer retention and yield.

                   •   The effect of unreliable data can reach across the enterprise,
                       impacting diverse departments. Although the tangible impact
                       can be subtle, the speed of customer service in handling
                       customer calls, marketing response rates and the
                       effectiveness or even frequency of sales efforts all provide
                       returns directly related to the quality of data in support

               Inconsistencies, omissions and inaccuracies in customer information
               destroy its reliability and undermine existing systems, technologies
               and processes. EWDQ relieves these systemic stresses, enabling
               more efficient processes, reducing time and energy dedicated to
               poor data quality effects such as unnecessary billing disputes and
               supporting greater customer satisfaction.

page 6 of 22
The ROI of Data Quality: Six Business Cases for a Data Quality Solution

                             Case 2. Better Customer Service

                             A good customer experience for both company and customer is one
                             that takes place smoothly, accurately and—most importantly—
                             quickly. In a recent article, Siebel estimates that the cost of a single
                             customer service call can range from $300 to $350, based on call
                             duration, company infrastructure, training costs, peak times,
                             downtime, personnel and facilities needed to handle the call. Better
                             EWDQ lets you achieve more revenue per representative with:

                                 •    Faster response times for customer requests, since
                                      customer service representatives can more quickly find
                                      correct customer information. Representatives spend less
                                      time correcting records.

                                 •    Reduced costs of buying the product, since a complete
                                      customer profile is available to representatives. Reps can
                                      handle more calls, allowing management to staff fewer
                                      people in the call center.

                                 •    More responsive technical support staff that can access
                                      customer’s histories and the histories of other customers
                                      with the same product.

                                 •    Better understanding of buying patterns that allows
                                      representatives to better manage the sales process and
                                      ensure high conversion ratios.

                                 •    Stronger capabilities for up-sell and cross-sell. Business
                                      intelligence applications armed with more accurate data can
                                      accurately indicate customer profiles that are historically
                                      receptive to similar sales efforts.

                             Call Center ROI Calculation

                               NO EWDQ           EWDQ
                        $            0.50            0.50 Cost per second per agent in a call center
                      Sec                 2               0 Seconds per call required to complete
                                                             a customer record
                        $              1.00               - Cost per call to complete a customer record
                                                            (= cost per second x seconds per call)
                     Calls               15              15 Calls per hour per agent
                        $             15.00               - Cost per hour per agent for completing customer
                                                            records (= cost per call x calls per hour)
                        $         31,200.00               - Cost per year per agent for completing customer
                                                            records* (= cost per hour per agent x 40 x 52)
                    Agents             100              100 Agents in call center
                        $      3,120,000.00               - Total costs per year in call center
                                                            (cost per year x agents)

                        $                  0     3,120,000.00 Total savings per year from EWDQ
                             *Based on a 40hr/week and 52 weeks/year (average)

                                                                                                  page 7 of 22
               Every second you shave off of call center interactions saves you
               money. Over the course of a single year, even a two-second time
               saving per phone call could add hundreds of thousands of dollars to
               the bottom line.

               EWDQ provides the time savings that translates into cost savings.
               Moreover, it ensures the complete customer view that opens the
               door to broader sales opportunities and higher customer satisfaction.
               As companies turn over to call centers more ownership of self-
               service processes such as online interactions, the dollar value of
               interacting efficiently and effectively will also grow.

page 8 of 22
The ROI of Data Quality: Six Business Cases for a Data Quality Solution

                            Case 3. Deeper Brand Penetration

                            The goal of your investment in developing a respected recognized
                            brand is to drive customers to your points of sale (POS). It would be
                            a shame if you failed to recognize a loyal, profitable customer at a
                            given point of sale. Relationships that have lasted for years can be
                            lost in a matter of seconds when call centers, Web applications and
                            POS representatives fail to identify and understand the relationship
                            with an existing customer or fail to respond appropriately to the total
                            value of the customer across all accounts.

                            Consider just a small slice of customer service, marketing to existing
                            customers. Clean data and proper analysis can let you increase your
                            yield tenfold. Here’s another example from Widget, Inc.:
                            The company is considering a direct mailing to its entire customer
                            base to announce a new product offering. Since Widget doesn’t have
                            EWDQ, its database is full of duplicate records. It also contains some
                            duplicate mailings to different members of the same household.
                            Skimming the records, a marketing executive can see that Frank
                            Johnson, his wife, Frieda, and his son, Frank Jr., are all listed as
                            separate customers at their address on Main Street. Because of
                            these duplications, the planned marketing program is likely to be a
                            failure, relative to its cost. The additional expense of sending
                            redundant mail pieces to individuals and households will approach
                            and perhaps even overtake any profit potential.

                            An EWDQ solution would allow Widget to deduplicate individual
                            customer records. Moreover, it would link the records within the
                            database into households. This would allow Widget to send just one
                            mail piece to the Johnsons and other households in their database.
                            Widget would still get its message across, cut its costs per response
                            and increase its total profit on marketing campaigns.

                            Marketing ROI Calculation

                             NO EWDQ        EWDQ
                        $          3.34          3.34 Production cost per piece, including mailing costs
                               100,000       100,000 Pieces mailed per campaign
                              3,340,000     3,340,000 Cost per campaign (cost/piece x pieces mailed)
                       %           1.02             0 Data duplication ratio
                               980.392       100,000 Customers actually contacted/year
                                                     (= pieces mailed / duplication ratio)
                       %           1.96            2 Effective response rate (duplication x average 2% response rate)
                                19,215         20,000 Expected responses (rate x customers contacted)
                        $          200            200 Profit per product sold per response
                        $     3,843,000     4,000,000 Total sales resulting from mailing (response x products sold)
                        $      503,000       660,000 Total profit from mailing (sales – cost per campaign)
                                     3              3 Campaigns per year
                        $     1,509,000     1,980,000 Total annual profit from mailings (total profit x campaigns)

                        $            0       471,000 Total additional profit from EWDQ

                                                                                                page 9 of 22
                The result is a cost/benefit analysis for direct mailing that makes
                sense. Lower mailing costs with a similar yield allows Widget to profit
                from the marketing program that would otherwise represent a loss.

                Better attention to EWDQ also makes direct mail a winning scenario
                for your customer. When you inundate customers with fewer
                duplicate offers, your customers feel that you’re paying attention to
                them as individuals. Better address accuracy also helps ensure that
                targeted messaging reaches the right person at the right time.

                Yet another benefit of the complete customer views afforded by
                EWDQ is support for more accurate business and customer
                intelligence. Again, consider Widget and the Johnsons. Frank
                Johnson orders a super widget, which Widget records as revenue.
                Frieda doesn’t like the shape of the widget, however, and returns it to
                the company, which Widget records as an expense. On the whole,
                Widget loses money on the sale because of processing overhead.

                Customer and Household Recognition with and without EWDQ

page 10 of 22
The ROI of Data Quality: Six Business Cases for a Data Quality Solution

                          Still, Widget sees Frank as a very good customer, because his
                          record doesn’t reflect the returned item and nothing in the database
                          ties him to Frieda. Widget would continue marketing to Frank. Based
                          on its erroneous understanding of his transaction history, it might
                          even offer him discounts and promotions based on his perceived
                          profitability. All of it would add up to more lost money for Widget, less
                          profitable marketing programs as a whole and less effective branding

                          With EWDQ, widget could reconcile Frank and his household’s
                          interactions, building a complete understanding of the Johnsons’
                          relationship to the business. Only with such an understanding could
                          Widget respond appropriately to the Johnsons’ total business value.

                                                                                     page 11 of 22
                    Case 4. More Unity in Complex Organizations

                    Market leaders like Microsoft and 3M point to huge annual
                    operational cost savings due to the efficiency of their data quality
                    solution. Cost reduction is a major driver in the efforts of business to
                    better understand customers.

                    For example, because large companies can be so highly diversified
                    and operate in so many locations, they can have multiple sources of
                    trading partner data. In these cases, most large organizations have
                    significant data redundancy, inaccuracy and inconsistency, because
                    different business units serving the same customer often have
                    diverse ways of spelling or representing customer data.

                    In large organizations, resolving these issues to create high data
                    quality is critical to meeting customer service expectations. The data
                    quality process starts with creating accurate customer names and
                    addresses. This can be a complex process, but it is critical. In some
                    regions of the world, for example, customers might reject entire
                    shipments at the point of entry, if the shipment’s invoice is incorrect.
                    The result is extra work, lost time, additional shipping expenses and
                    lower productivity—all expensive side effects of poor data quality.

                    EWDQ and a data warehouse provide opportunities to make data
                    more universally accessible and to cleanse data for uniform
                    representation across business units. The data warehouse allows
                    cleansed data to be distributed to legacy and other operational and
                    customer-facing systems with mission-critical functionality.

                    EWDQ can be extremely beneficial in multi-divisional corporations.
                    For example, corporations with no way to monitor customer activity
                    across touchpoints may face the unfortunate scenario of sales
                    divisions bidding against each other for business, lowering profits
                    and threatening customer confidence. EWDQ ensures the
                    organization can understand how it is interacting with a customer, no
                    matter how complex, distributed and various the interactions.

                    Diverse Organization ROI Calculation

                      NO EWDQ        EWDQ
                          5.5 MM      5.5 MM Total units sold to customer/division
                $               5          5 Price per unit bid by Division 1
                $            4.50          5 Price per unit bid by Division 2
                $         27.5 MM    27.5 MM Total sales for Division 1
                $        24.75 MM    27.5 MM Total sales for Division 2
                $         52.5 MM     55 MM Total sales per organization

                $           0 MM      2.5 MM Total additional profit from EWDQ

page 12 of 22
The ROI of Data Quality: Six Business Cases for a Data Quality Solution

                          Another impact of EWDQ is on the sales force. A sales force is likely
                          to lose confidence in a prospect database with more than 10 or 20
                          percent invalid addresses. Sales representatives that use unreliable
                          databases become less productive as they chase more poor leads.
                          As a result, they might seek out database alternatives that further
                          fracture and distort customer views.

                          In the physical warehouse, poor knowledge of customer buying
                          patterns can lead to inappropriate inventory levels that make costs
                          soar and contribute to earnings losses. It is difficult to track product
                          sales if part identification isn’t standardized. What appears as a KMX
                          –123, KMX123, and K123MX in the French sales database, may
                          appear as WIDGET-Pro and Widg. Pro in the U.S. database. If the
                          corporation tracks inventory using only one or two of the identifiers, it
                          might severely mis-estimate real inventory. Without EWDQ, it might
                          be easier, more cost efficient and more reliable to ask a given
                          customer what it is buying, instead of piecing together disparate
                          information from a fragmented database system with poor quality
                          data—although both are expensive and unattractive options.

                                                                                      page 13 of 22
                    Case 5. More Acute Fraud Detection

                    The banking industry knows the importance of fraud detection in
                    controlling operating costs. Matching your customer and prospect list
                    against a list of “bad guys” and their aliases is a key step in
                    protecting your organization against fraud.

                    Many fraudulent schemes involve criminals maintaining several
                    accounts with a single organization. Criminals create and maintain
                    multiple accounts by using multiple name aliases or other identity
                    variations. With EWDQ, you can more easily spot and react to
                    relationships between records and accounts by the same individual
                    in multiple divisions that might indicate fraudulent activity.

                    Here’s an example from Widget, Inc. Bob Smith registers for an
                    account using the following information:

                       Bob Smith
                       5518 12th St.
                       Lubbock, TX 79416
                       (806) 797-1105

                    Within a year, Bob defaults on $10,000 in payments. Soon thereafter
                    he attempts to open a new account as:

                       Robert K. Smith
                       5518 12th St. Apt. 1
                       Lubbock, Tx 79416
                       (806) 797-0055

                    In many databases, even the minor variations in name and address
                    information would allow Bob to again become Widget’s customer.
                    Widget might say their prices are practically a steal, but in Bob’s
                    case, the lack of EWDQ ensures that they really are.

                    Fraud Detection ROI Calculation

                    NO EWDQ       EWDQ
                       10,000      10,000 Total balance in customer account #001
                $      (10,000)         1 Total default on customer account #001
                $        (500)      (500) Collection cost for customer account #001
                $       10,000       N/A Total balance in customer account #002
                $      (10,000)      N/A Total default on customer account #002
                $          500       N/A Collection cost for customer account #002
                $       25,000    15,000 Total debt per customer

                $            0    10,000 Total savings from EWDQ

page 14 of 22
The ROI of Data Quality: Six Business Cases for a Data Quality Solution

                          Reconciling Complex Name Forms within the Database

                          Federal agencies such as the Treasury Department issue a list of
                          suspected criminals (such as the Specially Designated Nationals and
                          Blocked Persons list from the Office of Foreign Assets Control,
                 that companies can and might be
                          required to match against their customer databases. Only a robust
                          data quality tool can match complex name forms that overwhelm
                          simple searches (see diagram, above). Moreover, only in an
                          organization with EWDQ can ensure that the matching process
                          includes all customer records.

                          There is no limit to the vulnerability of your organization when it
                          comes to fraud. Consider the effect that an unsavory character may
                          have on your insurance rates, credibility and liability. EWDQ is an
                          effective weapon against fraud, increasing your ability to identify
                          criminals and criminal behavior.

                                                                                  page 15 of 22
                Case 6. Increase Strategic Impact:

                Productivity – Business intelligence (BI) systems help instill
                knowledge of your business and sales processes. Raw customer
                and business data can be unreliable, however, and additional checks
                and balances are necessary to insure accurate analysis. EWDQ lets
                you rely more on BI reports without chasing down missing
                information or reviewing paper-based records.

                But how accurate is accurate enough? If your company isn’t thinking
                about data quality, it could be undermining profitable opportunities
                and repelling loyal customerseven if data is 90 percent accurate.

                Widget, Inc. Data Sample

                              Widget Company USA, Inc.
                   Customer ID   Name                        Product    Quantity
                   P_346982      United Business Mechanics   Wid23334   100
                   P_346982      UBM                         2334       234
                   UBM           U.B.M., Inc.                Wid - 23334 1710
                   U100          Un. Bus. Mech.              W23334     -99
                   U101          United                      23334      500
                   3469822       United Bus. Machiens        23344      225
                   346982        Sielpia (Formerly UBM)      323334     1050

                For example, given the inaccuracies in the data table above, how
                many widgets did U.B.M buy last year? Was U.B.M. treated as a top
                customer last year or just one of the crowd? If your reports miss just
                one of U.B.M.’s transactions, it could be missing as much as 20
                percent of business in projecting sales from the company this year.
                Loss of confidence in the system devalues it, leading to a manual
                check of the database, a crosscheck against billing records and
                other productivity sinks.

                Going Concern – Strategically, businesses must face the onslaught
                of data flow while thinking about the “going concern” of the
                corporation. Most businesses experience IT turnover. Experts agree
                that enterprises will experience turnover rates of at least 20 percent
                annually among key knowledge and leadership workers.

                A well-documented and enterprise-wide system of business rules
                helps the company to withstand such intellectual turnover with
                minimal costs. Data quality solutions are the best way to implement
                and maintain a process that will continue to provide with clean data
                that withstands the evolution of the employee bases, the corporate
                direction and even the market.

page 16 of 22
The ROI of Data Quality: Six Business Cases for a Data Quality Solution

                                  Staff Turnover ROI Calculation

                                     Opaque/         Transparent
                                    Nonexistent         EWDQ
                                   EWDQ Process        Process
                              $       100,000           100,000 Salary and benefits in Year 1 for IT manager
                              $         10,000           10,000 Cost of EWDQ staff training in Year 1 under
                                                                manager A
                              $        100,000          100,000 Cost of EWDQ product, service and
                                                                maintenance in Year 1
                              $        100,000          100,000 Salary and benefits in Year 2 for IT manager
                              $         10,000              N/A Cost of EWDQ staff training in Year 2 under
                                                                manager B
                              $        770,000              N/A Cost of new EWDQ product, service, and
                                                                maintenance in Year 2
                              $        195,000          155,000 Average costs per year of EWDQ solution
                                                                and staffing
                                                                [(Year 1 + Year 2 costs) / 2 years]

                              $             0            40,000 Total savings on transparent EWDQ

      Another look at Staff Turnover ROI: Costs of Non User-Editable EWDQ Solutions
                                     in the Call Center


Company A does not                                                                         Company B uses the
have a data quality tool.                                                                  Trillium Software System
When the call center                                                                       to manage data quality.
manager leaves to pursue                                                                   The new chief must
greener pastures, the new                                                                  investigate the business
chief takes on the issue of                                                                rules in place and
data quality and sets up a                                                                 continue to train new staff,
new system. Research                                                                       but since data quality is a
and training costs climb                                                                   documented, repeatable
as the new chief                                                                           process, it is easy to keep
implements a new                                                                           in place and tune to the
methodology. All staff                                                                     new chief’s needs.
must be trained according
to the new standards.

                                                                                               page 17 of 22
                Data Quality Solutions: Three Approaches
                The demonstrated impact of EWDQ on the organization’s bottom line
                illustrates its value in creating operating efficiencies and competitive
                advantage. Still, implementing a robust data quality solution—first in
                one project, then across your enterprise—can be a conundrum.
                Ignoring the problem won’t make it goes away and is the least likely
                route to success. In fact, the problem is most likely to grow,
                unbeknownst to either organizational users or IT staff. According to
                analyst META Group, most organizations realizing that neither IT nor
                data users are very good at estimating data quality problems, much
                less quantify their characteristics.

                Some organizations take the manual route, hiring staff to manually
                scour their databases and deduplicate records. Such manual efforts,
                however, are relatively expensive and don’t provide record linking.
                Training costs and challenges involved in making sure staff learn and
                follow business rules are only the beginning of the investment. As
                databases grow and diversify, manual solutions become
                exponentially less efficient and effective. Finally, most such home-
                grown solutions aren’t easily managed across multiple data systems.

                A more common approach is launching an in-house programming
                effort that specifically targets record linking and postal data
                correction. Such solutions often provide good-news-bad-news
                results. On one hand, the database programmer will never be out of
                a job; on the other hand, the payments for that job will never end!
                The diversity and complexity of data quality issues means that a
                home-grown solution might eat up programming resources for
                months or years. Home-grown solutions also generally lack the data
                profiling functionality of EWDQ software solutions. Without clear
                insight into data characteristics, it is nearly impossible to effectively
                address the unique challenges of diverse corporate data.

                In the final analysis, a software solution that analyzes, standardizes,
                cleanses, enhances and links global customer information is often
                the most economical and effective solution. An enterprise-class
                software solution leverages vendor expertise in data management to
                augment and empower the capability of data quality staff. EWDQ
                software provides the transparency that helps preserve an
                organization’s going concern.

                Enterprise-class data quality solutions incorporate a scalable,
                repeatable process for data quality management. This key feature is
                a critical distinction over most home-grown and manual solutions,
                taking the business beyond localized data cleansing. Scalability and
                repeatability enable rapid initial implementation, phased deployment
                against concrete objectives and consistent process implementation
                across the entire organization.

page 18 of 22
The ROI of Data Quality: Six Business Cases for a Data Quality Solution

                          The Trillium Software System®
                          Successful companies agree that the most appropriate tool for
                          achieving EWDQ is the Trillium Software System . John Elliott, a
                          senior manager at Microsoft and a Trillium Software customer, says
                          “Within the first year, Microsoft experienced a tenfold ROI from our
                          initial investment with Trillium Software.” Since its initial success,
                          Microsoft has expanded the use of the Trillium Software System
                          across the enterprise, cleansing virtually all customer records.

                          Wes Hilman, the data quality project manager at 3M says, “Bad data
                          was costing us mightily. 3M saves some $200,000 a year with the
                          Trillium Software System.” 3M’s project was featured in the
                          November 20, 2000 issue of BusinessWeek.

                          Austin Bridges, the database development manager at Littlewoods
                          Ltd in the United Kingdom says, “The ability to know which accounts
                          belong to the same customer is worth over £100,000 a year to us in
                          reduced bad debt costs. This savings alone more than justifies the
                          cost of the Trillium Software System.” Other such user testimonials
                          are available on the Trillium Software Web site at

                          The Trillium Software System is an integrated software solution that
                          can lead you to efficient and effective customer information
                          management-increased productivity, lower costs, and increased
                          value of your customer information database. The bottom line is
                          quality customer information that drives improved profitability.

                          Rapid Deployment Methodology

                          The Trillium Software System rapid deployment methodology lets
                          you quickly improve the quality of almost any data type. For fastest
                          time-to-launch the data quality suite includes a proven methodology
                          for customer identification and relationship matching. This
                          methodology is:

                          Data Investigation: You can’t begin to fix data quality issues until you
                          can see the problems. With our data investigation tools, you’ll be
                          able to see commonly mistyped addresses and cities. You’ll gain
                          insight from reports that show blank field occurrences, frequencies of
                          data “shapes”, and data that doesn’t follow standard convention.
                          You’ll use these reports to tune the rules that will standardize your
                          data. Later, you’ll even be able to show the return on investment and
                          hit that home run with management.

                          Data Standardization and Enrichment: These tools bring consistency
                          to your dataset to allow for better household and business matching

                              •   Customer name and address data: Standardize names (e.g.,
                                  Bob, Robert, Rob), business names (e.g., IBM, I.B.M.
                                  International Business Mach) and address formats. Any
                                  misplaced or misspelled elements can be corrected.

                                                                                     page 19 of 22
                    •   Business data: Standardize Tax ID numbers, part numbers,
                        telephone numbers, and other non-personal information.

                The Trillium Software System can check your records against
                worldwide postal directories and local business rules for worldwide
                postal verification.

                Data Enrichment functionality incorporates third party data from
                Harte-Hanks Market Intelligence, Dun & Bradstreet to add
                geographical and other valuable information to your data.

                Complex Data Linking: Match households and businesses on your
                own criterion and remove/consolidate duplicates. Find the
                relationships in your data that you may have been missing.

                Enterprise Job Stream Exposure/Integration: Once your legacy data
                is cleansed, incorporate the Trillium Software System into the job
                stream throughout your enterprise across platforms and applications.
                Our plug-ins support many of the top enterprise applications,
                including Microsoft DTS, IBM DB2, Siebel, Oracle and others.

                The Trillium Control Center is a graphical user interface (GUI)
                application used to set up, tune and optimize the tailored output from
                the Trillium Software object libraries. Out of the box, the Trillium
                Software System includes more than 200,000 business rules that
                reflect the expertise Trillium Software has gained from processing
                millions of customer records a year. You can also create and edit
                business rules through the Trillium Control Center.

                Your Challenge
                Picture your business 2, 5 and 10 years in the future. Now, focus on
                your prospect, customer, and transaction databases. Will they be full
                of valuable, timely information or a jumble of duplicate records and
                misleading data? Most experts agree that businesses will
                increasingly rely on worldwide data to make decisions and market
                products. Poor data quality does not stifle this trend, but it does
                impede competitive position as you place more value in
                organizational data. The ROI examples presented in this article
                demonstrate that EWDQ solution can help you gain and strengthen
                both strategic advantage and your bottom line.

                For more information on the Trillium Software System, see:

                For questions and comments about this paper or Trillium Software,

page 20 of 22
The ROI of Data Quality: Six Business Cases for a Data Quality Solution


1   PricewaterhouseCoopers. Global Data Management Survey, 2001.
    PricewaterhouseCoopers. Boston, Massachusetts, 2001.

2   Gartner. “Customer Data Quality and Integration: The Foundation of Successful CRM.”
    Gartner, Inc. 26 November 2001

3   Laney, Doug. “Customer Data Quality: Part 1 – A Taxonomy of Troubles.” META Group
    Research. Stamford, Connecticut, 19 June 2000.

                                                                                 page 21 of 22
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