Estimating the economic and financial impact of poor data quality

I have blogged on numerous occasions about data quality issues relating to infrastructure data at utiltiies including geolocational accuracy, most recently here.  

There is an interesting compilation of statistics in an InsightSquared infographic relating to the cost  of poor data quality in general, not just for utilities.

  • The cost of bad or dirty data exceeds $600 billion for US businesses annually.
  • Dirty Data InsightSquared 3Poor data across businesses and the government costs the US economy $3.1 trillion a year.

But it’s worthwhile remembering David Loshin’s (The Practitioner’s Guide to Data Quality Improvement) perspective about the statistics relating to data quality.  He cited some widely known statistics available in 2011

  • Tom Redman’s 1998 article in Communications of the ACM said he was “aware of three proprietary studies that yielded estimates in the 8–12% of revenue range.”
  • In 1999, Larry English suggested that “Based on numerous cost analyses, the typical organization may see from 15 to 25 percent of its revenue go to pay the costs of information scrap and rework.”
  • In 2002, Tom Redman claimed that “Poor data quality costs the typical company up to twenty percent of revenue.”
  • IN 2003, TDWI produced a report estimating that “that data quality problems cost U.S. businesses more than $600 billion a year.”
  • More recently Larry English said “Poor information quality costs organizations 20-35% of operating revenue wasted in recovery from process failure and information scrap and rework.”

Loshin concluded that

  1. There are few (if any) published papers on actual case studies providing tangible details about the cost of poor data quality.
  2.  Academic notes and books base their numbers on estimates, “proprietary studies,” accumulations from survey responses, or extrapolation from other estimates of the “cost of quality.”
  3. In the absence of tangible evidence of actual costs, according to the experts the costs seem to be rising, from a low of 8% of revenue in 1998 to 20-35% of operating revenue in 2009.  I’m not sure if that means that the cost of poor data quality is rising or that our understanding of the impact of poor data quality has expanded.

Dirty Data InsightSquared 2Some other interesting items in the InsightSquared infographic

  • Data quality best practices boosts revenue by 66 %.
  • If the
    median Fortune 1000 company were to increase the usability of its data
    by 10%, company revenue would be expected to increase by $2.02 billion.
Geoff Zeiss

Geoff Zeiss

Geoff Zeiss has more than 20 years experience in the geospatial software industry and 15 years experience developing enterprise geospatial solutions for the utilities, communications, and public works industries. His particular interests include the convergence of BIM, CAD, geospatial, and 3D. In recognition of his efforts to evangelize geospatial in vertical industries such as utilities and construction, Geoff received the Geospatial Ambassador Award at Geospatial World Forum 2014. Currently Geoff is Principal at Between the Poles, a thought leadership consulting firm. From 2001 to 2012 Geoff was Director of Utility Industry Program at Autodesk Inc, where he was responsible for thought leadership for the utility industry program. From 1999 to 2001 he was Director of Enterprise Software Development at Autodesk. He received one of ten annual global technology awards in 2004 from Oracle Corporation for technical innovation and leadership in the use of Oracle. Prior to Autodesk Geoff was Director of Product Development at VISION* Solutions. VISION* Solutions is credited with pioneering relational spatial data management, CAD/GIS integration, and long transactions (data versioning) in the utility, communications, and public works industries. Geoff is a frequent speaker at geospatial and utility events around the world including Geospatial World Forum, Where 2.0, MundoGeo Connect (Brazil), Middle East Spatial Geospatial Forum, India Geospatial Forum, Location Intelligence, Asia Geospatial Forum, and GITA events in US, Japan and Australia. Geoff received Speaker Excellence Awards at GITA 2007-2009.

View article by Geoff Zeiss

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