The definition of BI governance is an integral part of enterprise-wide information systems management. It consists of governance structures, policies, processes, and procedures that ensure the effectiveness and sustainability of BI initiatives. It is a fundamentally business-focused initiative where stakeholders representing various cross-functional areas come together to decide how to manage data assets and how to take the BI strategy to the next level.
Compared to project governance, BI governance structures have a broader and longer-term scope to transform and further develop the competitive advantage of the enterprise through the use of BI solutions. While project governance is created to ensure the success of large-scale projects, BI governance is a platform for strategic decision-making to support current and future business needs.
Do not confuse BI management with BI governance. Although it is a common misconception, in reality, both serve their own unique purpose. The former focuses on the “how” of BI solutions. The second is about determining “what” BI capabilities to invest in to drive business growth. It is important to understand this difference to fully understand the impact of BI governance on a company’s growth trajectory.
Significant budget and human resources are often spent on selecting, purchasing, deploying, and managing BI and analytics solutions. However, these programs are often implemented without a governance framework. One of the biggest risks is not documenting the business definition and methods for using and integrating BI data into BI tools.
A Gartner3 study found that poor data quality costs companies an average of $8.2 million per year. Standardized data is a critical aspect that should be part of a BI governance model. But there is more at stake than just the $8.2 million loss. Without BI governance, current and future business functions are not prioritized and distributed to the right user groups. Multiple change requests from multiple entities increase the cost of BI development and its ongoing maintenance. And communication between end users and IT groups diverges. Organizations that want to get the most out of their data need proper BI governance.
For example, from a user perspective, not all BI initiatives consider how to balance the accuracy of standardized BI data with the flexibility that business users need. These users need the right tools to explore and edit information as needed while maintaining a unified view of the business. If data stewards are not assigned or properly identified, changes to the BI solution may ultimately deviate from their original purpose. Additionally, external economic and market factors may cause business priorities to change. As a result, business requirements for BI data will also evolve, enabling more complex types of analysis.
Given these risks, most organizations are concerned that efforts to define and implement standardized data and a comprehensive BI strategy will be in vain if proper governance and controls are not implemented. A Rand Secure Data survey found that approximately 43% of North American companies either have no formal data governance in place or conduct data governance at the department level, often in a very informal manner. As data volumes and sources grow, companies find it difficult to gain business insights from these more informal mechanisms.
