Business Glossaries and Metadata: Building the Data Governance Business Case

I recently spoke at a user conference on the topic of building a business case to get your Data Governance program and Business Glossary funded. This is not a topic that I usually discuss but was asked to give the presentation. To my surprise we had almost 100 people in the room. Given the large number of inquiries since the presentation, I am excited about the future of Data Governance and the Business Glossary.

The future seems bright given the diversity of the audience and number of inquiries. It seems that Data Governance is now being embraced by smaller corporations such as medium sized retailers, regional banks and insurance firms, as well as technology corporations. The great news is that the value of Data Governance is being seen. Our successes are making a difference in larger international firms. However, smaller firms are certainly not “fat of budget” and thus, need to build a business case to achieve funding and program sponsorship.

Many of the large international financial services and insurance companies generally did not do a business cases for their implementations.  Current regulations demand that those firms implement data governance programs and business glossaries, plus a lot more. Many of those firms viewed the activities to meet the regulations as a crisis. The phrase “Allow no crisis to go unexploited” has often been used in the scramble to adhere to those regulations. Yet, the rest of us need to create business case justifications. Hopefully you can use some of these methods if your organization needs to prepare a business case for Data Governance.

The Value of a Business Case

A Business Case can provide significant value for the Data governance program. Your Business Case is a great educational and communications tool. The Business Case should focus on the business or technical outcomes and use cases desired.  It should identify the following:

• The business and technical outcomes that are desired to be achieved by the data governance program
• The desired business and technology processes and resources that will be involved
• The anticipated technology changes and costs
• The business value, return, and benefits expected to be achieved

The business case will be captured in a financial format, i.e., a spreadsheet. However, the spreadsheet will have to be summarized into a communications format: either document or presentation.

An important component to communicate will be the assumptions that were used as the basis for the computations in the spreadsheet. Your assumptions should include the processes you will impact, the types of resources used in each process, the number of resources of each type, and the technology used both currently and in the future.

The Business Case Levers

I believe there are three levers, or financial components, that you must use to properly build your business case. I consider them as levers that you can adjust to meet the formal needs of your organization. Those levers are risk, cost, and value. I’ll explain each in further detail.

RISK

These are the items of great concern that will need to be managed. Risk factors generally have the greatest weight to senior management, but are often difficult to assign a financial value to. Thus we assign a degree of concern (high, medium, low) to our risk factors. For example, can we put an actual value to the potential loss of public opinion? Not really, but we can assess the potential degree of such an impact.  Some of the potential Risk concerns that may be avoided with good data governance may include the following:

• Is time of the essence to meet specific business events such as government regulations?
• Is there an eminent negative public or governmental perception that could lead to fines or other direct losses?
• Are we susceptible to negative public opinion that will create a business loss either in revenue or stock price?
• Is there a risk that our revenue, regulatory, or capitalization reporting may be in error or questioned?

The level of concern associated with these questions may be used to determine the degree of Risk. Many have used the answers to these Risk questions to avoid creating a business case at all.

COST

Cost may be the easiest for us to compute since it is the component that we are most familiar with.  Cost is the financial costs for the infrastructure, operations, resources, and technology used in the execution of the processes identified in the business case. You will need to identify current costs as well as future state costs once the data governance processes, resources, and technology are in place.

VALUE

Determining the value of data governance is likely where you will dedicate most of your resources and time.  The outcomes and use cases of data governance dictates the anticipated value you will receive from data governance.  I am often asked how these value propositions should be defined. The following is a partial list of outcomes I have used in the past:

• Reduce cycle-time searching for data necessary to conduct management reporting and analytics
• Improve our business language and terminology across the enterprise
• Improve the data quality definition and business processes to enable data quality improvements and measurements
• Improve our discovery and access to authoritative data while maintaining security for our data
• Increase the transparency and accountability for data management functions
• Improve the processes and time to resolution while reducing the cost of Issue Management around data
• Provide improved traceability for the lineage of data to increase trust in our data
• Provide consistent definition and usage across the enterprise for our Reference and Master Data

Again, the above is just a partial list to stimulate your thoughts. Generally, it comes down to defining the use cases that will improve your processes and resource usage, increasing the trust in your data.

I tend to avoid the less tangible value outcomes such as improved business unit alignment, increase in education and knowledge of our staff, or need for cultural change. While all of those may be true, they are dependent upon other outcomes. These are great to know, but I suggest you focus on the tangible, which most people find difficult enough to quantify.

Building the Business Case Team

One of your first activities should be to create the team that will build your Business Case. Your senior leadership will have great recommendations for team members. A senior member of your Finance team should be solicited to join in. Finance will provide valuable insight and expedite the Business Case process. I always like to include all the individuals that will be in the final evaluation of the Business Case. I find it best to have them as members of the team to gain their input and make them a part of the Business Case development process. The following steps can be useful to complete the team:

1. Determine the Team members that will be involved in building the business case
2. Define the business outcomes and use cases desired. I recommend you have three to five use cases defined in your business case. Determining the value of data governance is dependent upon the use cases you have
3. Validate the business outcomes with your sponsorship team and the individuals that will approve the business case and provide the funding
4. Develop a Plan and Schedule for the business case, from initiation through the actual funding roll-out announcement
5. Develop the Business Case templates. This includes the financial spreadsheet as well as any documents and presentations needed for communications, funding requests, technology procurement, resource on-boarding, and process change requests

12 Steps for Building the Business Case

I like to keep to a 12 step program (all puns intended). The following are the steps I suggest you have in your plan. All of the financial numbers will need to be created in a spreadsheet for review, modification, and validation. Your Finance group may have a template for you to work with.

1. Determine the impacts of the Risks. Do this as a team and have your leadership validate the team’s understanding. Your sponsorship may ask you to stop the business case at this point and just start building the data governance program now.
2. Identify the processes for each outcome. Clearly define the current and future state processes that will be involved to achieve the use cases. There may be many processes required for one use case. For example, one process may be data quality profiling and measurements.
3. Identify the resource roles for the processes. The resource types can also be thought of as roles. For example: Business Analyst, Business Manager, Data Steward, or Data Scientist. Clearly identify the assumptions you are making to determine this step and all of the following steps.
4. Determine the number of resource roles needed in each process. Many processes will have multiple individuals from each resource type involved in a given process.
5. Determine the number of occurrences of each process in a given period of time. How many times does a search for terminology or the correct data occur each day? How many issues are logged each day or week? This becomes a multiplier assumption.
6. Estimate the cost of each resource role to build the current state Cost and future state Cost. Human Resources can help estimate the loaded cost of each resource type/role.
7. Determine tangible and intangible Value for each process in each use case. Value is the future state for each use case. Value may be stated as a reduction of current cost or a future benefit.
8. Estimate your Technology’s current state and future state costs. You likely can get a lot of help from the IT and Finance teams for this.
9. Review all assumptions around the financial model. Reviewing the assumptions made to build your financial model is critical. This is an opportunity to gain input, recommendations, and soft approval. I like to do this review with all the individuals that will have to approve the Business Case. I have had many tell us that our assumptions were too low and the value is much larger more often than the opposite. A review of the assumptions is often seen as a good precursor to the financial model review. All surprises and objections can be voiced by the audience in a more informal setting. Adjust the model as necessary.
10. Validate the financial model a final time. This is a detailed review of the spreadsheet to ensure accuracy.
11. Communicate and gain acceptance of the financial model and Business Case. This may involve the completion of documents and presentations as noted previously. Expect to do more than one presentation to achieve approval of the Business Case.
12. You are not done yet. Ensure you have the funding and know when it is available. You are not done just because the Business Case is “approved.” For many, approval does not mean you can start the project tomorrow. You will need to determine the exact timing of the funding of your Data Governance program. For some of you it may mean a start next quarter and for others it may mean a start next fiscal year.

As always: stay calm, take a deep breath, and allow your business glossary to prosper!

Cheers,

Lowell