Problems with data warehouses
A conversation with John Urquhart
Many companies have multiple data warehouses. There may be good reasons for this, for instance legacy systems acquired through mergers or acquisitions, but senior directors should try their best to have only one data warehouse in the company to ensure maximum productivity and minimum confusion. Award winning financial journalist Peter Williams discusses data warehousing with John Urquhart.
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Transcript
Hi, I'm Peter Williams, financial journalist.
Hi, I'm John Urquhart.
PETER: John, tell me a little bit about your background.
JOHN: I'm an ex finance director and IT director, and my area of expertise is to join up the finance function with the operational IT systems, and making sure that everything is giving consistent data throughout the organisation.
PETER: OK, well let's talk about information management in companies. John, it strikes me it's somewhere between a shamble and a scandal. Responsibility lies as much with whom, the IT department or the finance department?
JOHN: That's a common mudslinging that happens across boardrooms as you can imagine. It's your fault, it's not my fault, it's your numbers. I think the systems can very easily be seen as a convenient barrier to hide behind in the case of poor performance, and that's where a strong finance director who's interested in the quality of data in the systems and has an understanding of how transactions lead to data flowing through the systems across the business can really make sure that those barriers are stripped down and the CEO gets to see the true performance of his business warts and all.
PETER: OK, you clearly quite passionate about this. You must have learned from experience. Tell me some of the examples you have seen of terrible practices in IT departments and data warehouses.
JOHN: Well, only the other day we were working on a system making sure that all its data feeds are working in time for a year end process. Everybody is keen so that they can have the final year end numbers on the following day of the close in the business, suddenly up pops a series of changes that have been made in an operational side of the business, contracts that have been moved from one legal entity to another, lack of consideration of how that will feed through in the financial systems, and suddenly the year end numbers which the CEO was hoping to publish to the organisation are delayed because nobody is sure exactly what the true result is.
PETER: Well, OK, as a CEO I would be furious about that. Surely one answer for me as a CEO would be, OK let's JOHNst go out and buy a completely new system. What's wrong with that?
JOHN: Absolutely, that's the easiest decision to make. Unfortunately, in my experience, it never leads to a solution of the actual underlying problem. At the end of the day, people have to understand their data, understand how it is flowing through the organisation before they can make best use of their systems. Throwing in another system JOHNst throws out a whole load of experience of using that system and you start from scratch. You get fresh vendors in, fresh people to learn your organisation and it ignores the people who truly do understand data, or should understand the data, which is your own internal finance department. PETER: OK, so the solution isn't buying new equipment. It isn't having turf wars, so what is the way ahead? What is the best way to solve this problem?
JOHN: The best way I believe is to look for the simplest data flows through your systems. Wherever you've got multiple systems without good reason, cut them out and stick to your core systems. Get your numbers in that are coming out from different areas of the department as close as they can to the numbers that are coming out of the finance department, get one version of the truth, capture your data as early as possible and make it widely available throughout the organisation with no barriers.
PETER: OK, you told us about the bad practice you've seen, are some companies actually doing what you recommended?
JOHN: Yes some companies are, and I think that's where they are putting the finance system at the heart of producing the finance numbers. They are capturing in their finance systems data at its lowest level of granularity. Very often you'll find that a finance director isn't interested in the level of data that an operational system holds, but if he can make sure that it's available through its finance system then all the checks and balances that he would normally expect to be around financial data are suddenly available and lots of operational information at a lower level of granularity.
PETER: Ok, so on the whole do you think we're in a better place that we were a few years ago, or worse place?
JOHN That's interesting. I think that potentially we're in a worse place despite the advances in technology. What's happened with technology is that we've moved to a place where we've got more disparate systems, more smaller systems, more offshoots of systems, more websites, more databases that run websites that sit outside the normal flow of data within the organisation and corralling that all together is becoming an increasingly harder task, so the technology has made things easier, the businesses have expanded sideways, and the old-style where we had one giant system that ran everything is no longer the case.
PETER: Presumably a company that can get this right can gain quite a significant competitor advantage can't they?
JOHN: I think so. I think that if you understand what's driving the business when changes are happening at the sales end, the quickly you can understand those and take advantage of them, the quicker you can react, the more you're going to have a competitive advantage. And certainly the quicker your numbers can be produced after your particular period end, month end, week end, the more real time you're working to, absolutely the quicker you react.
PETER: So that's the challenge for FD's is it?
JOHN I think they should be involved in that challenge because ultimately if they're going to be truly at the forefront of making decisions in the organisation, they should have the information about all parts of the organisation at their fingertips.
PETER: Lovely. John, thank you very much indeed.