This article captured a session presented at the recent conference of the Data Governance Special Interest Group of the Americas SAP User Group (ASUG) by Sally Cheadle, VP Enterprise Finance Organization Center of Practice for Baker Hughes.
About Baker Hughes
The company is a leading supplier of oilfield services, products, technology and systems to the worldwide oil and natural gas industry. Its 2011 revenue was $19.83 billion, with roughly 58,000 employees and operations in 80+ countries.
Their Enterprise Finance Organization reports into Finance and includes master data management, compliance and controls, automated expense reporting, statutory reporting oversight and training.
Where the Data Governance Journey Began
The company had seven divisions, with a decentralized business model, and multiple versions of data standards. This federated model worked well for a long time, but at some point the company wanted more centralization and integration, in part to reduce costs.
The company approached the project with a top-down approach, and all the right best practices. They had an ERP system being developed with a “divisional flair”. In 2007, there was an “association” with the Department of Justice, which reconfirmed the commitment to SAP.
In 2009, approximately 90% of the company was on SAP, but they hadn’t set up a data governance function.
The Reorganization that Changed Everything
In March 2009, there was a big reorganization. The operating structure went from divisional to geographical, with groups like Finance set up as a matrix model.
This change provided more visibility to inconsistencies in the master data. Finance, IT, HR and other support functions needed centralization.
And all of the new operating model executives needed to see their data in a different way.
The Data Governance group was established in the Finance organization, to help improve metrics such as month end close time, Days Sales Outstanding and Days Payables Outstanding.
They stood up the team in May 2010, and began by removing obsolete terminology and formalizing processes and data standards. Improvements included standardized processes to create master data.
The group started out as the “master data police” and it didn’t make people’s Christmas card list that year.
The organization includes a mix of the Finance business people and IT people on the Data Governance Council, which meets monthly to oversee changes proposed by the Data Governance team.
There’s also a separate working group, with the business owners and the requesters of new master data.
Why was this Master Data group put in Finance rather than IT? The Finance organization was the only one ready to take on this massive challenge. But they quickly learned that they needed a healthy working relationship with IT.
The group was able to streamline processes and improve internal customer satisfaction, as well as removing redundant data, which improved reporting in the business.
Two Years of Data Governance – Achievements
They reviewed and renamed cost centers, identifying 23% which could be inactivated as they were no longer needed. General Ledger accounts were also streamlined, which helped with reconciliation and month end closing.
The customer and vendor master data areas are now disciplined, including getting rid of the “Fix It Later” mentality. This was impacting vendor spend analysis and 1099 processing. The business is really seeing the benefits.
To integrate a newly acquired company, the group participated in a 12 month project to migrate them to SAP. They had 8 different systems at the time of acquisition, with lots of duplicate data.
Looking to the Future
Baker Hughes is currently building a 3 year roadmap, with a new Enterprise Data Governance Executive (EDGE) Council. They’ll be extending their domains to include HR and Supply Chain, and eventually Sales & Marketing, Engineering and Logistics.
The group plans to implement improved data governance tools such as data monitoring, data input controls, and believes that without implementing these automated tools, it won’t be able to achieve its ambitious goals.
If there’s a problem with one of the crucial fields that drive a business process, it has very wide impact. The group has great executive sponsors, including the Global Products & Services President. He’s very keen on getting the material master standards up to date with the rest of the data governance group.
The group is rethinking its structure to include more of a “follow the sun” approach, understanding that it needs people from the international side of the business to pick up the country-specific requirements.
Some of the business groups are just starting with their SAP implementations, and they are thirsty for knowledge. The Master Data Council is going to a higher level, to be more enterprise-wide. It took a long time to get to that point, however.
One audience member struggled with the amount of matrix reporting at her company, and asked how to find specific executives and data stewards across distinct products lines. Baker Hughes was lucky enough to find someone at the top who realized that data governance and data integrity are a competitive advantage – someone who drove the change, made the time, and made the people available. Not everyone is going to “win” – in other words, things are going to change for some people. The senior people drove the message that “this is important, this is something we need to do”, and the group needs to keep pushing and continue selling.
Sally Cheadle suggested looking at the influences between the different executives at the top . And to make sure the group is not trying to do everything at once. This approach also helps people to learn more about other parts of the company and other product lines.
The Finance master data group is now expanding to include other areas, and has a mix of part time and full time roles. People will still report to the same executives, even as they become part of the master data program (on a matrix basis). There was some back and forth between IT and Finance, because some of the functions had been performed by IT in the past. There was a key meeting that cleared the air and convinced everyone they were all on the same team. You need the change management and the buy-in in order to make these changes.
The group does regularly provide some metrics, starting each meeting with metrics like how many cost centers, profit centers and vendors have been set up, and how many master data items get rejected on the first review. The group has developed some training to reduce the number of rejects. The group focuses on trends, trying to figure out where things are stuck. The EDGE Council will have its own metrics at some point.