The following is adapted from Guaranteed Analytics.
Businesses that use analytics systems are frequently confounded by a problem in collecting data and putting it to use: lack of common governance. Common governance is simply using the same set of rules for everyone. In the case of business analytics, it entails using the same terminology and methodology to avoid arguments, miscommunication, and misinterpretation of data.
Your data are the foundation of your analytics system. If you don’t get data collection right, you’ll be building your analytics house on a shaky base, and everything from there on will be subject to error or faulty premises.
Let’s take a look at why common governance is so important and how your business can get everyone who is involved in your analytics program on the same page.
Common Governance in Action
Let’s say you are the owner of 40 gas stations, and you want to assemble and analyze data about sales. You want to make sure all 40 stations are submitting data based on the same criteria. So, you ask each station to submit sales totals per fuel pump. But what does “fuel pump” mean?
It turns out, you discover, the term has a more ambiguous meaning than you thought. A “fuel pump” might refer to:
- An island with multiple handles
- One side of a fuel island
- A single gas dispensing handle
- A single octane designation
So, the data you get from each station could be wildly different, depending on how that stations interpret the words “fuel pump.” If you want the data to be meaningful, so you can derive insight and use it to reach whatever goals you’ve set around it, you obviously need to define “fuel pump” in the same way for every station. That’s using common governance.
The Importance of Common Governance
Not using common governance in analytics can result in more than just nuisance issues or excess labor to correct misaligned metrics, which at minimum cost your company money. These discrepancies can cause employee friction or even result in your business making catastrophic decisions based on faulty assumptions.
In the scenario above, it might look like one gas station was underperforming because the sales data they submitted was based on an entire fuel island, not individual dispensing handles like the other stations. You could decide to close the station or lay off employees, which would clearly be a mistake.
The larger your business, the more common governance is vital to your analytics program. With so many people or locations supplying data, the easier it is for different standards to be applied.
What Can You Do to Get on the Same Page?
So, how do you ensure that your analytics has everyone on the same page? There are five steps you should take to create common governance in your business.
Define roles and responsibilities in advance of any projects. For example, your sales team is responsible for submitting data on fuel pump sales for the stations in their respective territories. On the last workday of the month, they hand those data off to the IT department, who run them through a program to look for patterns before sending a report to marketing, where new sales opportunities are developed.
A common lexicon must be developed. As you’ve read above, employees may have vastly different definitions of the same phrase. When the sales team submit numbers, is it by fuel island, by nozzle, or by octane option?
For efficiency’s sake, allow a few to represent the many. If 20 IT department employees are involved in running data, they don’t all need to sit in with the marketing department to pass on the information they discover. A few representatives could meet to give their interpretation of the findings and reiterate what formulas they used. Whenever possible, create team leaders to represent larger groups, so you save time and money.
Like establishing a common lexicon, you must use central validation. This keeps people from arguing about information because they look at it differently than others. In the fuel pump scenario, everyone would use the same predetermined equation to calculate dollar sales per fuel pump, rather than coming up with their own formula.
Establish an analytics specialist. This is a liaison between the business side of things and the tech side, someone who can speak the lingo of both. As much as you push for a common lexicon, having someone in place who understands multiple vocabularies and contexts will smooth the path for more insightful results. The more areas where you can build common governance into your analytics foundation, the more effective it will be for your business.
For more advice on common governance in analytics, you can find Guaranteed Analytics on Amazon.
Jim Rushton began his career in analytics working with some of the biggest consulting companies in the world, including Accenture, Deloitte Consulting, and IBM Global Services. Jim then moved to an executive position with Verizon, where he oversaw the company’s customer and marketing information. Leveraging his experience across corporate America, he helped found Armeta Analytics, and in the past decade, his team has helped dozens of Fortune 1000 companies learn how to monetize their data.