If your organization is like many others, you haven’t given a second thought to how your vendor data governance processes and technology may be deteriorating the effectiveness and efficiency of the purchasing function. Many companies incorrectly assume that because timely payments are being made that vendor data management is an issue they simply do not have to worry about. While payment processing is an important use of vendor data, its applicability has grown well past payments and now drives areas such as eSourcing, Contract Lifecycle Management, Supplier Collaboration, Vendor Risk Management and Spend Analysis as well. With these broad organizational needs, it is no wonder that organizations are beginning to take a hard look at how this data should be governed and are quickly working to reap the rewards from enhanced vendor data management.
The erosion of vendor information and data most likely has not happened overnight. Acquisitions and mergers are just a couple examples of common corporate events that can wreak havoc on vendor data. In most cases, there are multiple reasons for data deterioration. Organizations need to understand that mis-managed data can lead to inefficient, underutilized and costly effects as shown below.
Every organization has unique data challenges that need to be addressed, however any of these issues are enough to reduce purchasing efficiencies, hamper decision making and decrease cost savings. By focusing efforts on establishing vendor governance and optimizing the use of enabling technologies, organizations can regain ownership of the process and take back these lost efficiencies. Leading organizations who have implemented data governance initiatives have cited the following key benefits:
Organizations need to come to terms that in order to reach true data efficiencies, active data management is needed. To do that, the organization needs to go through a targeted process to recognize the challenges, identify the contributing factors, and understand the benefits. Only then will organizations reach a place where inaction is no longer an option. Once this realization has occurred, a data cleansing and governance model development initiative can begin. I recommend the following three-step approach to this readjustment:
Cleansing data can be managed internally or expedited by third party service providers who can help run large diverse data sets through complex rules engines and identify duplicate vendors and data gaps – but this is not enough. Development of a proper governance model is critical and once one is implemented, it cannot be ignored. Vendor data needs to be managed and maintained long term. The governance model will ensure that the appropriate processes, policies & procedures, data standards, organizational structure, metrics and use of standardized technologies will be established and longer term benefits will be derived. Without the implementation of a long term sustainable process through execution of the above three steps, benefits will quickly erode and you will once again be left with another vendor data enrichment project – which is something your organization cannot afford.