“I never get the accountants in before I start up a business. It's done on gut feeling, especially if I can see that they are taking the mickey out of the consumer.” Richard Branson, founder, the Virgin Group.
But not everyone is a successful entrepreneur like Branson. For the rest of us, we may have to contend with what is defensible – data.
Take the case of DBS Bank in Singapore. When it wanted to address the needs of customers, it went for the scientific approach to discovering the answer – it chose to read the data it had about its customers, as opposed to reading tea leaves.
The reality is that in today’s business environment, there are just plain too many factors that can influence an outcome. Trusting one’s gut feelings may not necessarily be a prudent approach when deciding a course of action.
But a common challenge for all organisations embarking on becoming more data-driven is the need to create a single version of the truth. Most successful companies comprise of multiple departments each with a myopic view of the business. Like the blind men and an elephant parable, each will interpret his or her version of the truth to come up with a course of action.
These days the task of discovering the single version of truth becomes even more challenging as organisations grapple with big data. After all, making decisions based on bad data can be catastrophic for all businesses – big and small.
Some organisations are turning to master data management to improve the chances of arriving at the right conclusion. FutureCFO spoke to Pierre Bonnet, vice president of Product and Engineering at TIBCO Software.
Bonnet defined master data management (MDM) as the software and practices for ensuring that data, as held by the company, is clean, is used managing the data of a company, ensuring that the data is clean and adheres to good governance.
How does MDM support the finance function? How does it support compliance with financial regulations?
Pierre Bonnet: The finance function owns a part of the most important data of a company, more precisely all data hierarchies on which financial computations are achieved. Rather than authoring this financial data in many heterogeneous tools that can generate errors, the Master Data Management enforces a high quality of the data governance in one secured place. The quality of financial reporting is increased and benefits from better traceability. It allows a company to be more compliant with evolving regulations.
What technical skills do finance [people] need to be able to effectively use MDM?
Pierre Bonnet: We must distinguish three types of people.
The IT engineer in charge of the MDM finance project must be able to understand the financial vocabulary and business to design the data model. Training in the financial domain and the data modelling for the MDM is mandatory.
The second type of people is the Data Steward who is responsible for the design of the governance workflow and participate as a stakeholder of their executions. Training in the MDM governance configuration is needed.
The third type of people is the end-users in the financial domain who will use the MDM like an Excel or Google sheet with stronger governance. Training to the MDM end-user features is mandatory and don’t require any IT skills.
What are the deterrents/inhibitors for this amalgamation of multiple data sources into MDM?
Pierre Bonnet: Many companies operate in siloed processes with system holding one part of the financial data. In such a situation, consolidation is achieved after a long process of data integration.
To reach a better quality of the data and a higher velocity, each owner of this data must share a part of their power to establish a common glossary and populate the MDM system. This organizational impact could slow down the understanding of the MDM benefits.
Any best practice to ensure sustainable use of MDM by finance?
Pierre Bonnet: The financial data is intensively connected to the rest of the company data domains. It is vitally important not to focus on financial data only, and risk creating an MDM silo exclusive for the finance. Rather effort must be directed towards designing and implementing a multi-domain MDM for which the financial data will share part of the glossary with the rest of the data as used by other departments within the company.
In the exclusive video interview, Bonnet further expands upon the challenges, trends and opportunities for the Chief Finance Officer and the Finance function to harness the potential of master data management.