Challenging the ROI Paradigm: Is Calculating ROI on Data Foundation a Valid Measure?
In?the realm of?procurement, there's a universal belief that a solid data foundation is non-negotiable to achieve savings targets, reduce risks, and achieve many other goals that procurement as a function must deliver. Procurement professionals across industries recognize that the effectiveness and efficiency of rather expensive digital tools to?be implemented?or already in production for procurement digitalization depend on the quality of the underlying data, influencing decision-making processes and operational outcomes. However, organizations often face the dilemma of showcasing direct ROI on investments in data quality itself as a stand-alone business case. This necessity is absurd in some ways because it is as if we demand an ROI from?the construction of?an industrial shed that ensures the protection of business production but is?obviously?not directly income-generating.?ROI should be calculated?based on?the total investment, that is, the production machines and the shed, which, even if it does not produce anything per se, is nevertheless essential for production to?take place.
With data quality, it is?precisely?the same case.
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Navigating the Path to Value Creation
To address this dilemma effectively, organizations need to adopt a holistic perspective that acknowledges the intrinsic value of data quality while also recognizing the expectations around tangible returns. Here are some key considerations:
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By?balancing?the essential need for data quality and the pressures for immediate ROI, procurement professionals can steer their organizations towards a future where digital tools deliver value at every level, supported by a foundation of high-quality data.
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As Sophie Scholz , Director?Global?Material Master Data at MSD, aptly says,?"We don't invest in our business cases in MDM directly. We invest in process optimization of processes that rely on robust MDM."
This statement emphasizes that acting on the quality of one's data is a prerequisite for effectively implementing digital tools or exploiting the value of the existing one better. These can yield the desired results in terms of automation and optimization; in these aspects, it is right to assess an ROI!
Consulente Globale della Funzione Acquisti | Coach | Temporary Purchasing Manager |
5 个月Mi piacioni queste affermazioni. Tra le righe leggo la stessa mia esperienza. Ovvero, diversi C-level vedono i dati come una parte necessaria della burocrazia piuttosto che come valore necessario al business.
Experienced global transformation leader | Change Management | Performance improvement | Data & Process Analytics | Board member
5 个月First comment: we invest in process optimisation that rely on mdm, but if your process is amazing it will still not perform without good MD. You can have the best Ferrari, but if your road is bad you will still have a bad experience. I’d prefer cost of poor data quality as a measure, my former colleague Bartek Pabiasz is a legend in this. This cost expresses itself in rework, delay, friction, siloed behaviour, sometimes 5 or 10 steps down the line, when the link is less obvious. This is where process intelligence powered by process mining can help, flagging poor performance, triggering an action to the custodians of master data.
nice article Stefano, with a quote on data quality which is quite on point. This is why it is important that Procurement as a function contributes to Enterprise Data Governance by setting the standards and participating in governance and improvement activities with certain data objects having a Procurements co-ownership. A fundamental aspect to get that ROI of a great data foundation is to have sufficient data literacy and a culture of integrating data into facts-based decisioning.
Marketing Coordinator Manager presso Creactives SpA
6 个月I like Sophie Scholz 's statement so much because it sums up in one sentence the correct approach: a robust Data Foundation is, as the word itself says, the foundation for building successful projects to improve internal processes and business organisation by implementing digital tools that solve specific use cases and that rightly bring home an ROI. Data quality is not a philosophy and should not be pursued as an end in itself but as the pre-condition for any initiative! What is your point of view? Jo?l Collin-Demers Jose Bustillo Stephany Lapierre James Meads Joseph Yacura - M.B.A., M.S., M.Q.M Joseph Yacura Lance Younger Philip Ideson Michael Lamoureux Jason Busch Matthias Gutzmann Pierre Laprée Anna Spinelli Marielle Beyer Patrick Foelck Ralf Peters Vanya Petrovic Klaus Staubitzer Simon Geale Diego Barillà Bart Peetermans Nicolas Dubois Mo Ahmad Tom Mills Adriano Garibotto Mor Cohen-Tal Vin Vashishta Koray K?se Ulf Venne Chad X. Moore Nico Bac Ian Lawless Richard Beaumont