The Importance of Quality Data
Last week, I shared a news article from Commonwealth Bank of Australia’s Chief Technology Officer Matt Pancino, detailing just how much of a negative impact poor quality data and legacy can have on a business (you can read the article here).
I don't think people understand the stress and jeopardy they are putting on their current business and future strategies by having poor quality data, so thought I would take this opportunity to explain why data quality is going to be a bigger problem for knowledge firms (accounting, legal, engineering etc) than they realise.
Let me give you a direct comparison to something you deal with each day. You know you should manage your debtors, you know that by not managing these you are increasing your risk, you are exposing your business, you are bearing the load and potentially limiting your working capital to evolve. So, you decide enough is enough, you put a debtor collection system in place (such as FeeSynergy's Collect platform) which makes a dramatic difference to your collection rates, you spend less time manually monitoring and chasing, you recover more quickly, have less bad debtors, you pay less interest, and can now fund change as you have increased working capital.
It makes sense, right? Well data integrity is no different - it improves capability, reduces risk, exposes weaknesses, highlights training, changes culture and enables the practice to take the next step.
So why don't we do it? I think there are two major reasons:
1. It's too hard
2. You can't see the payoff
It's too hard
Firstly, the notion that data integrity is hard is a mindset we need to change. I admit data integrity is not easy, but it's also not as hard as we all make it out to be.
In most cases, we can reduce the number of issues in your database by half in four to six weeks, with a third of the effort you would otherwise have to expend. So its not hard, but it's also not magic. We give you the tools and the training (and, if you want, the accountability), and can help you build a data culture.
You can't see the payoff
To me, there are a few payoffs:
1. Reduce operational risk - by cleaning your data and building a data culture, poor and missing information becomes an opportunity to improve processes and reduces your risk of the wrong information going out of the practice.
2. Improve automation capabilities - as automation tools are becoming more prevalent and improving efficiency, we are able to better exploit their capabilities.
3. Reduce reputational risk - I will never get why we will spend hours reallocating transactions to produce financials that won't get looked at, but we won't spend five minutes to make sure the clients data is up to date. A massive reputational risk is merging emails and letters together that say "<dear client>". We do a lot with data integrity and just about no firm out there can actually do a simple mail merge of mail name, address and salutation across their active clients.
4. Improve marketing and targeting - have you ever seen a news article that you thought "this would be really great for my mechanic clients in the western suburbs with less than five people" (or any other client mix), but realised that it will take you a week to collate the list, so you do nothing about it. By improving data integrity, collecting and cleaning the right data you can do this more easily, in fact you can start changing your whole marketing model and start trying different strategies for acquisition and retention.
5. Improve the reporting in your business - this is a no brainer, but garbage in, garbage out. I could show you which clients are making you money, which ones are costing you, which jobs had blowouts, which clients are using what services, where your clients are located for your next information session, but I can't do any of these things if your data is crap.
When to start
There is an old Chinese proverb "the best time to plant a tree was 20 years ago, the second best time is now".
Everyone is busy and I know everyone has limited time, but this is one of those problems where time will not make it better.
Get your practice managers, your data stewards, your admin managers to give you their thoughts on how your data is enabling or slowing down your business - get the lay of the land from the people who have to deal with it, and ask them what they could do if they had clean data (like automate, run targeted marketing lists, have accurate reporting, reduce manual processes). If they say words like "crap", "terrible", or worse - "no idea" - the time to take some action is now. Not tomorrow, not next week, not after Christmas, but now. Plant the tree today.
Your other options
Do nothing and hope that:
Others are not adopting technologies that are automating their practices (they are)
Other firms are not going to start becoming more effective with targeted marketing and start going after your clients (they are)
Clients don't mind when you get their names wrong or send information to the wrong person (they do)
Others aren't using their data to weed out non-profitable clients, improve their efficiencies and counteract reducing prices (they are)
If you are reading this and acknowledge that your data integrity is lacking, or your ability to report and drive your business has not changed fundamentally in the last few years in the midst of the massive change to systems and tools, or you don't know where to start (or even worse, have the intent to start but don't have the resources), please reach out to us! We are helping firms in Australia and New Zealand to get past these blockages and build internal capabilities - we don't just do, we also help train.