Poor data quality costs 10% of revenues, survey reveals

The average perceived cost of poor data quality is as high as 10% of organisations' revenues, according to a survey of New Zealand and Australian organisations on data quality. The survey showed that estimates of poor information quality costs vary from one to 20% of total company revenues. This disparity in cost estimation existed not only from company to company but among senior information technology managers within the same organisation.

The average perceived cost of poor data quality is as high as 10% of organisations’ revenues, according to a survey of New Zealand and Australian organisations on data quality.

The survey, conducted in May by US consultants Information Impact International, queried 29 organisations from government, banking and financial, utilities and service organisations. The average size of the participating organisations was about 5643 employees.

The survey showed that estimates of poor information quality costs vary from one to 20% of total company revenues. This disparity in cost estimation existed not only from company to company but among senior information technology managers within the same organisation.

The real costs of poor data quality may be even higher than 10%, according to Larry English, president of Information Impact International. “Our survey was conducted among managers from organisations which are at least aware of the importance of the information quality issue even though many remain ignorant about the real costs of poor data. One can only speculate on the severity of the problem among those businesses that have yet to recognise the value of good data quality.”

Further findings of the survey indicate that efforts to improve information quality are hampered by a significant set of management, cultural and technical barriers.

Of the 20 barriers identified, lack of accountability for data quality was most flagged by respondents. English says this is a symptom of the fact that most management has not recognised information is a key business resource and has not yet implemented principles for managing information.

The findings show that only a third of the 30 organisations responding had initiated some formal or informal data quality function. Of those organisations, the indication was that most of the information quality initiatives were reactive (such as cleaning up bad data) rather than proactive. The measurement of data quality by those companies was poor and the survey showed only half actually measure the extent of the data quality problems and the result of data quality initiatives they have in place.

None could actually show the amount or percentage of cost savings by quality data, nor could they show the amount or percentage of increased revenue from the data quality initiatives set in place.

The survey was sponsored by MasterSoft International and data warehouse firm Prism Solutions Asia-Pacific.

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