SAP’s Internal Information Governance Program: Business Value Metrics Framework
This blog is a complement to the ASUG webinar delivered by Maria Villar. For details on SAP’s maturity assessment model, read Information Governance Maturity Models: Quick and Easy.
SAP Information Governance Program: background
SAP’s program has been running for 3 years.
Part I: What does your metrics framework look like?
- We Measure our Strategy
- We Measure our Individual IT & Business Projects
- We Measure our Master Data Domains
- We measure our Master Data Leaders
Why do we measure? To communicate results, prioritize, get funding, and make mid-course corrections. Needed metrics to continue to get funding for the program, after the initial kick-off.
- Business level metrics, not data specifics (# of records created)
- Benefits are quantified in $$ where possible
- Both simple and complex measures
- Cumulative and individual
Early on, SAP got our vision and strategy defined, and then communicated that vision throughout the company.
Notice that it was key to tie the capabilities and the measurements to the strategy and vision established.
Next, SAP identified the key inhibitors to quality master data. Then the capabilities were categorized into the areas of Organization and Governance (accountability, forums and KPIs, clear roles), Ongoing Data Maintenance (ongoing maintenance, trained resources, automated processes and tools), Process (CRUD processes, standards, and ownership), and Tools and Systems (data maintenance, automating processes, showcase SAP tools).
Business value metrics
We use both simple and complex metrics. This is an example of the simple metrics. This method works when communicating with executive
This example helps us tell the story of how the program is evolving. This is a self-assessment model. SAP looks at the completed projects and then maps the goals of the year, and then does a quick assessment. Notice that Customer domain is called out with an * to show that we are further along with that domain.
However, we also do more complex methods of assessment. Here, we measure each domain against our core capabilities. Broken down by domain.
The value here is that it is tied to the strategic capabilities, and we can compare progress across domains, and well as capabilities across domains. The result is an overall program view. We have been using the assessment method for 1 year, and have been using it to set yearly goals.
For these to be valuable, we also needed to be consistent across the domains. These definitions drive to that consistency. The definitions also make it clear for the Master Data Leads what it takes to get to the next level.
For details on SAP’s maturity assessment model, read Information Governance Maturity Models: Quick and Easy.
Remember, this is a self-assessment for individual domains. Our Master Data Leads report into the Lines of Business. For example, Marketing is tasked with the Customer master data plan across the company, not just for Marketing. The difference is that the criteria for scoring is much more specific.
These results are shared with COOs of individual business units, as well as with executive stakeholders. Indirectly, it also measures the effectiveness of the Master Data Leads.
We also measure the effectiveness of the Master Data Leads in another way. They sign up for KPIs over and above the maturity level assessment. These are committed to at the beginning of the year and committed to by the COOs, too. Notice that they have to understand which business process is impacted, and they have to outline the business value of the work.
This allows us to call out data areas that are not meeting their commitments. The effect is to drive accountability, tracks projects, tracks Master Data Lead effectiveness, and fosters healthy competition among Master Data Leads.
Measuring Individual IT and Business Projects : Defining KPIs and Benefits
SAP trained the individual groups on these topics.
- What is the Goal of the Project ?
- Increase productivity, cost savings, cost avoidance, etc
- Could be more than one goal
- What are the targeted Benefits of the Project?
- Quantitative Benefits that can be measured – Financial metrics
- Qualitative Benefits measured as customer satisfaction for example
- What are the Key Performance Indicators to ensure Goal attainment?
- Example: Percent of records cleansed; Number of duplicate accounts removed; increase in maturity of data by xx; Customer sat targets
- How will the Benefits be calculated using the Key Performance Indicators?
Must prove that Value has been added to one or more Master Data Capabilities
KPIs are Specific, Measurable, Attainable, Relevant, and Time-bound…SMART. Make sure to quantify the benefit in terms of business process efficiency, cost avoidance, cost savings, data quality, productivity gains, total cost of ownership, or more. These benefit categorized can be “dollarized” with a formula. If we can’t quantify with dollar terms, we don’t use them.
So, how do we do it?
To calculate process benefits, for example, look at the Required Information on the right-hand side. For example, it takes SAP Sales Exec 30 minutes to create an account with an opportunity. If we approve that by 20%, we can quantify time saved via fully-loaded salary cost.
Data Quality results are easy to measure, but hard to quantify business benefit. The best way is to tie it to a business process improvement. For example,, upsell and cross sell are improved with better product data. Or reduce your Day Sales Outstanding because customer address information is approved. Also understand the cost of acquiring new data…look to Marketing for those answers.
KPI and Benefits Management
Baseline “as-is” existing process or data quality. Then meet with the project stakeholders (including those responsible to measure the KPIs. Take the needed time to identify, categorize KPIs and solidify the measurement schedule. Don’t forget to agree and obtain approval! Then you are ready to measure the benefits against the KPIs, throughout the project lifecycle and operational run. For details on using the Project Management Office to further your EIM program, check out this blog.
Make sure that those receiving the benefits are in lock step with you. The natural fear is that the numbers will be used to adjust their headcount. This is exactly why you need to get those groups involved.
SAP wins Nucleus ROI Award
We won this for our Standardization and Matching solution (SAM), which is based on SAP Data Services and SAP HANA. The Nucleus team reviewed the cost and then they do the analysis and come up with the ROI number.
- Avoided investment in additional data stewards (Cost avoidance)
- Without the SAM project, SAP would have had to make a significant investment in additional staff to cleanse and deduplicate data just to maintain current levels of data accuracy.(direct)
- Reduced technology costs.(Cost saving)
- Building one standardized platform has enabled SAP to eliminate budget for additional tools and professional services it would have needed to provide accurate billing and other information to finance without SAM. (6 projects using SAM) (direct)
- Increased sales and marketing productivity. (Increased productivity)
- Because sales and marketing now have much more rapid access to up-to-date and accurate customer data they can accelerate the execution of sales and marketing programs. (Indirect)
Types of benefits: 51% direct (cost avoidance and cost savings), and 49% indirect (increased productivity)
Part II: Communicating the value of EIM efforts to the business
We use every opportunity we can, and tailor it to the audience.
- Quarterly Executive Stakeholder meetings
- Yearly Data Summit (master data leads, regional teams, and global stakeholders)
- Quarterly Newsletters
- Domain/Project $ Benefits w/ sign-off from business owners
- KPI & Data Quality Dashboards
- Internal marketing campaign (new in 2013) :One SAP for Data Quality
Understand your organization and speak to the right level. Our governance program has two significant layers: Master Data Leadership (director level) and the Executive Data Steering Committee.
Another forum is via this portfolio dashboarding. This is an executive level dashboard.
Instead of tracking KPIs, we are tracking cumulative, cross-LOB benefits.
We’ve had several flavors of this chart. The trend chart shows progress, and the pie on the bottom shows the errors per record. Pure numbers are not meaningful…have to add the context. For details on the SAP Data Quality program, check out this blog.
Our internal marketing program also pushes the metrics. We achieved 31million euro business benefit to date: be proud! Why? We were so
busy building internal programs, yet most employees did not know that we had data management initiatives. You need to spend the effort. With increased believability, comes more participation. If you have $100 to spend, you can’t spend $100 doing cleansing. You have to spend some amount communicating the results.
Part III: What processes and procedures are in place to manage data management performance
- Yearly Self Assessments
- Quarterly KPI reviews with Execs
- Monthly data quality results (Account/Contact)
- 2X Process Reviews with CPO (started in 2011. Pick a process and work with CPO to understand impact of master data on those business processes. Also capture how many accounts are created, how many have errors, etc.)
Remember that your Chief Process Officer is a key stakeholder!
Part IV: How do you make the case for investment in data management
- 3 year benefit calculation for individual IT projects
- Ongoing communication with executives
- Staying relevant / business priorities (Ex M&A, SAP showcase)
This frequent communication is necessary to show that we are NOT done yet. Our work remains relevant and has value for upcoming projects, too. We are getting great value from the SAP tools, too…SAP Data Services and SAP Information Steward.
- Get Baselines—these do not have to be perfect!!
- Surveys or Interviews
- Employee Time based studies if possible (sales, marketing, operations….)
- Can be simple : Measure a process with a Stop watch, number of screens, number of clicks
- Know your Cost –Finance can help you with this
- Cost of employees (Operations, Sales, Marketing …)
- HW/SW/IT development costs
- Cost to acquire external data (Marketing can help with this one)
- Penalties (Compliance Officer can help with this one)
- Train your employees
- Use % or comparisons
- Don’t just report error improvements numbers- Put it in context
- Interlock with groups receiving the benefits to confirm the numbers
- $$ Benefits will usually be conservative
- Understand your audience :
Tailor metrics and communication to what will “relate”
When you are standing up an ERP program, you need to establish a data program. This should be a requirement of an ERP system, not a luxury. If you don’t do this, you’ll have problems during the project, and you won’t receive the benefits you are projecting. Leverage the ERP program as a key stakeholder as your data management program.
At this point, we love our metrics and think that they tell the right story. If you have questions on the SAP Data Management Organization’s metrics program, please contact Maria at email@example.com.
You can also enter a drawing for a free copy of the SAP EIM book (http://www.sap-press.com/products/Enterprise-Information-Management-with-SAP.html). One winner will be chosen at random.
Related blogs on SAP’s Data Governance program: