Why Is Data Integrity Important? Your ERP Software Has the Answer
In the business world, data is king—and its reign is just beginning. Our access to and reliance on an endless stream of information is transforming the way we do business.
For evidence, look no further than your ERP system, which houses all the most critical data from every facet of your organization. Small and midsize businesses (SMBs) are gathering, analyzing and leveraging thousands of data points each day as part of their decision-making process—something you should definitely be doing if you aren’t already.
Without strict data governance standards, businesses fail to get an accurate view of their business and even run the risk of relying on duplicate, inconsistent or inaccurate information.
How can SMBs integrate all that ERP data while preserving the integrity of their system—and, by extension, their business?
SMBs that establish drivers for integration objectives, assign data governance responsibilities and develop standards for data consistency will be able to report, forecast and strategize with accuracy and confidence.
Here’s what we’ll cover:
Why Is ERP Data Integrity Important?
How Can You Ensure the Integrity of Your Data?
What Is Data Integrity?
Data integrity is exactly what it sounds like: determining whether or not your data is lying to you. Its three integral components—accuracy, consistency and duplication—can significantly impact the efficiency of your ERP system, and even your business as a whole. After all, if you can’t trust your data, what can you trust?
Let’s explore these components in more detail:
Accuracy
Of course you want your data to be accurate. That’s a no-brainer. But it’s especially important in an ERP, where one ill-placed decimal point can throw off every module in the system.
Consistency
More than any type of software, ERP systems rely on consistent data across the board. Capitalization, punctuation, abbreviation—basically all of the “-ations”—should be standardized so that every ERP module can correctly identify and correlate them.
Duplication
Inconsistent data opens the door for duplication. For instance, an address that hasn’t been properly cleansed could be stored as both “Dr.” and “Drive,” an error that gets easier to overlook in systems with large quantities of data—like ERPs.
Why Is Data Integrity Important in an ERP?
Accurate, consistent and nonduplicate data are ideal in any scenario. But in an ERP, they’re imperative—more so than any other type of software. Here’s why:
It gives SMBs the confidence to logically allocate and utilize business resources.
Without 100 percent confidence in your business data, you can’t confidently assert how and where to use your resources.
A lack of consistency could yield conflicting insights across ERP modules, making it that much harder to ascertain the right solution. But ensuring the integrity of your data will give you the confidence you need to make better decisions and achieve your business objectives.
EXAMPLE: A small manufacturing business wants to increase sales in a specific geographic region. Business leaders can use their ERP data to pinpoint the root cause of the existing sales deficit, whether it be supply chain inefficiencies, a dearth of consumer demand or a failure to execute growth strategies.
It provides a better understanding of customer needs.
Client satisfaction is a key component of the success of a business. Feedback through surveys and other forms of communication give businesses granular insights that, taken as a whole, provide a comprehensive picture of how an organization is performing from a client-side perspective.
But unreliable or duplicate data can taint these insights, opening the door for overlooking or misunderstanding the demands of a specific client. By shoring up the integrity of an ERP’s CRM data, sales associates can sufficiently cater to individual customers—an integral component of the long-term success of an organization.
EXAMPLE: A tortilla manufacturer is experiencing an influx of demand for flour tortillas in the southern portion of the United States, while the data shows West Coast businesses seem to prefer corn tortillas instead. Because it has confidence in the integrity of its ERP data, the business can optimize the distribution and shelf life of its tortillas, thereby eliminating waste and conserving valuable resources.
It certifies the accuracy of key performance metrics.
One of the chief features of an ERP is its reporting capability. With a seemingly endless supply of data points consolidated into easily digestible dashboards, businesses have unprecedented insight into the inner workings of their organization.
This data can be used to not only demonstrate organizational performance, but formulate and justify critical business decisions as well—all the more reason it needs to be as accurate and consistent as possible.
EXAMPLE: A beverage bottling plant wants to decrease the average time from requesting raw materials to their delivery. Between acquisition, inspection and time spent on the warehouse floor, there are myriad data points throughout the production cycle to assess. But only when a business has confidence in the integrity of its data can it assess where and how to optimize production.
How Can You Ensure the Integrity of Your ERP Data?
To fortify your business’s data integrity, Gartner recommends taking the following actions (content available to Gartner clients):
Empower Business Leaders to Assign Responsibilities for Data Governance
In short, data governance is the process of determining who controls and modifies the data. These designated gatekeepers of data are usually the ones best equipped to own this critical business component, so deciding who owns these responsibilities ought to be made in coordination with the leaders of the business.
Empowering C-Suite executives and managers from relevant departments—especially IT—to drive data governance strategies will provide a better understanding of what data integrity means for each facet of the business.
Consult Business Leaders to Determine Integration Objectives
Similarly, knowing the big-picture objectives that drive your ERP integrations will produce more effective data cleansing strategies. Ask important stakeholders:
Which ERP data points should you prioritize?
How is your business applying the data to inform its strategies?
What key insights do you hope to reveal through integration?
Only until you’ve consulted management in IT and other ERP-focused departments can you confidently determine the best solution to the problem.
Establish Data Standards With a Formal Style Guide
After evaluating the who and why behind your data integrity initiatives, it’s time to establish the what—and the first part of that is determining the standards to which all data should adhere.
Business leaders should come to a consensus on how to properly format individual data points—things like production cycle times and asset-related metrics—and document their decisions in an official data style guide. This will make the lives of those responsible for data cleansing much, much easier, and the process will be much more efficient.
Remember the Big-Picture Drivers Behind Convergence Initiatives
Converging data from across different ERP applications may be time-consuming, but its importance cannot be understated. Assigning data governance responsibilities and standards will help streamline the process and avoid duplicate work.
But to keep the integration ball rolling, it’s important to consider why you’re streamlining your data in the first place. Throughout the convergence process, Gartner advises referencing the following driving forces:
To achieve integration that gives your system the speed and agility your business requires.
To enable digital business and lay the foundation for future growth in the new data-dependent economy.
To optimize staffing in a way that minimizes duplicate or unnecessary work and cultivates a highly productive workforce.
To align ERP technologies in the most efficient way possible to position the business for future growth.
To embody stewardship through the entirety of the integration process.
Manage Data in a Single Location, But Distribute Accountability Across the Business
One surefire way to derail data integrity is to manage it across multiple locations, opening the door to an inconsistent and unproductive governance process.
The best way to avoid this is to manage your master data in a single system, but be mindful of the inclination to silo governance responsibilities. Accountability should be agreed upon and spread evenly throughout the business, giving ownership to the most pertinent departments while providing a system of checks and balances for data validation.
Next Steps
Now that you know what data integrity is, why it’s important and how to make it a reality for your business, you’re three steps closer to kickstarting the process. That said, there are still a few more things you can do before get started:
Consult department heads and end users to evaluate existing data-related pain points and quantify the overall integrity of your ERP data.
Establish a detailed needs document and project itinerary.
Give us a call at (855) 998-8505. Our 15-minute phone consultations are always free of charge, and our knowledgable software advisors are here to answer all your ERP- or data-related questions.