Data Governance is often seen as the preserve of IT and Compliance departments, but it’s becoming increasingly clear that Finance departments are putting themselves at risk by ignoring Data Governance. These risks include data breaches (and the hefty fines that accompany them), inaccurate reporting and a whole host of inefficiencies and unnecessary costs.
By implementing robust Data Governance practices, Finance departments can not only avoid these pitfalls, but they can begin to drive true and meaningful business value from their data.
The benefits of implementing a robust Data Governance framework fall under two main categories - improved financial data accuracy and improved cost efficiencies. Let’s take a look at some of these benefits…
Benefits of Effective Data Governance for Finance Departments
Ensuring Financial Data Accuracy
Effective data governance ensures data quality and consistency, preventing costly financial reporting inaccuracies.
This is achieved by:
Setting Data Standards: Data Governance provides a framework to define and enforce data standards across the organisation. This includes defining data formats, naming conventions, and data input rules, which help in maintaining consistency and accuracy.
Data Quality Management: By creating processes to continuously monitor, measure, and improve data quality, organisations can identify errors, duplicates, and inconsistencies, allowing them to easily rectify any inaccuracies.
Data Validation: Establishing automated validation rules to check data at the point of entry allows Finance teams to minimise errors from manual data entry and ensures that the data collected meets predefined quality standards.
Defining Roles & Responsibilities: When implementing Data Governance principles, Finance departments will establish who is responsible for managing, maintaining, and ensuring the quality of data. By ensuring accountability, you can drastically reduce data inaccuracies and inconsistencies.
Data Integration: By establishing procedures for integrating disparate data sources, Finance departments can ensure data is accurately consolidated without redundancies or discrepancies.
Training: By educating team members on Data Governance and their role in maintaining proper processes, you can get increased employee buy-in in terms of maintaining data integrity.
Version Control: Data Governance policies ensure there are clear version control practices in place, which is especially important when multiple stakeholders access and modify the same data sets. This reduces the risk of data inconsistencies and inaccuracies.
Metadata Management: Data Governance also involves managing metadata – data about data. This helps users understand the data context, enhancing data interpretation and reducing the chance of errors.
Cost Efficiency
Data Governance can drive efficiencies across your business operations by eliminating data redundancies and improving data processes. This is achieved by:
Improving Decision-Making: As noted above, by maintaining high-quality data, organisations can base their decisions on accurate, timely, and consistent information. This can help reduce costly errors, improve efficiency and avoid missed opportunities.
Reducing Data Redundancies: Effective Data Governance can help prevent data redundancies, meaning businesses can save on unnecessary data maintenance and storage costs.
Compliance and Risk Management: Robust Data Governance, can ensure compliance with regulatory standards, thereby avoiding potential fines and legal complications. It can also help in identifying and mitigating risks associated with data breaches, which can lead to significant financial losses.
Enhancing Productivity: Effective Data Governance can empower employees by allowing them to quickly access the data they need instead of spending their time searching for the data they need. This can help businesses derive true value from their teams.
Data Monetisation: Effective Data Governance can unlock the potential of data monetisation - turning high-quality data into valuable business insights or even new revenue streams.
By creating and implementing the right Data Governance strategy for your business, you can not only ensure data security and accuracy, but you can start to truly drive value from your business data.