Sunday, March 16, 2008

Data Governance in a Recession

What effect will a recession have on your data governance projects? Some have predicted that the nation will fall into a recession in 2008, although others disagree. In other words, it depends on whom you believe as to our economic fate in 2008. Still, with even the hint that a recession is pending, companies often move to cut costs. These cuts tend to affect major IT initiatives like data governance.

For those of us in the IT and enterprise software business, CFO-thinking runs counter to logic. During revenue-generating high times, IT tends to spend money to deliver automation that either cuts costs and/or improves productivity. So, the money spent delivers something back. However, during tougher economic times, or even when those times are presumed to be around the corner, cost cutting will be on the forefront, preventing us from fixing the inefficiencies. When revenues are good, efficiencies can be made better through IT. When revenues are bad, efficiencies are thrown out the window.

Talk of a recession may slide your plans for big projects like master data management and data governance onto the back burner. Instead, you may be asked to be more tactical – solving problems at a project level rather than an enterprise level. Instead of setting strategy, you may be asked to migrate a database, cleanse a list for a customer mailing, etc. without devoting resources to establishing a clear corporate strategy.

The good news is that times will get better. If and when there is a recession, we most certainly DON’T want to have to rewire and re-do our efforts later on. If you are asked to become more tactical, there are some things to keep in mind that’ll save you strategic frustration:

  • Convince management that data governance will save money, despite the resources needed up-front. Any vendor worth their salt has case studies showing the return on investment and can help you make the case if you bring them into the process early.
  • If you have to stay tactical, make sure the tools and tactics you choose on the project-based initiatives have a life in the strategic initiative. In other words, don’t cut costs on technology that won’t scale. Don’t choose tools that have limitations like lack of global support, poor connectivity, or limited performance if you’ll need those things later. Choosing these tools may hurt you when you want to go enterprise-wide; they’ll get into your plumbing and will be hard to replace. They’ll also get into the minds of your people, potentially requiring training and retraining. Even in tough economic times, you’re setting the standard when you select tools. Don’t let it come back to haunt you when times are good.
  • Make sure you understand all the pieces you need to buy early in the process. Many enterprise vendors require a LOT of different packages to do real-time data quality, for example. Hidden costs can be particularly problematic.
  • Make sure you understand all of the work involved, both in your project and in an enterprise implementation. There are big differences in the effort needed to get things done. Take the services effort into account during scoping.
  • If cutbacks are severe but the need is still great, consider software leasing and SaaS (Software as a Service) to minimize costs. Many vendors offer their enterprise software as a service offering. If times are tough, work with the vendor on alternative ways to purchase.

On another note, I want to thank Beth from the ‘Confessions of a Database Geek’ blog for the mention of my blog this week. If you’re a blogger, you know that every mention by other bloggers gives you street cred, and I am most appreciative of that. It's great to be mentioned by one of the best. Thanks Beth!


Nigel said...

Steve, you say CFOs thinking is counter-logical - "cost cutting will be on the forefront, preventing us from fixing the inefficiencies". I think what really happens (or should) is that the business looks for projects that return their investment faster - within a single planning cycle if possible.

So look for projects that have near immediate payback; they might not be the best ROI overall, but they don't go heavily into the red over long periods.

Regards Nigel

Steve Sarsfield said...

Great point, Nigel. Quick successes become key. It's our job to keep the quick wins in line with long term strategy, if we can.

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