Features
Delivering compliance and more
An enterprise data warehouse can help meet regulatory requirements while making an organization more competitive.
by Rajeev Rawat
Bankruptcy, lost market value, fines, prison sentences and diminished brand equity are only a few of the dire consequences organizations face when they don’t meet regulatory requirements. Avoiding a brush with prosecutors is just the tip of the iceberg as the recent economic meltdown illustrates. Iconic banks collapsed in large part because they failed to systematically measure risk and implement sound triggers to compel responsible action from the top managers and boards. A complete, accurate, up-to-date view of the enterprise performance and risk factors—as well as the framework to react quickly to anomalies as they arise—might help keep an organization in compliance with the law, but even more importantly, ensure its future existence. A combination of innovative decision tools and integrated management accountability can shield investors, employees and communities from colossal losses.
As executives evaluate and adjust their compliance infrastructures, two goals are paramount:
- Report accurate, verifiable information with a clear audit trail
- Establish a data management and analytics environment that applies operational and financial rules to alert managers of instances of ineffective controls, processes or outright fraud
But meeting these goals doesn’t require building a costly compliance infrastructure. An enterprise data warehouse (EDW) can be the key. It provides:
- A centralized data repository
- Robust data models that provide logical data linkage of business events across the complete transactional chain
- A single platform for rules definition and control
- A flexible metadata environment for quickly adjusting alerts and triggers for new rules without redesigning the base operational and enterprise resource planning systems
Time is of the essence
By identifying corrupt and duplicate data sources, an EDW eliminates considerable confusion while increasing the reliability, accuracy and traceability of all compliance information, as well as the underlying processes. This is crucial to the successful operation of continuously monitored, policy-driven controls that improve performance and enable compliance.
Ultimately, an organization gains more time to identify problems and take corrective action before a breach rises to a level that must be reported. When organizations have the time to fix potential compliance issues before they become substantial problems, they can preserve brand equity, investor confidence, credit ratings, market value, customer loyalty and employee morale.
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Meet multiple needs
Integrating compliance measurements and controls within an EDW does not require building a system from scratch. Indeed, companies can leverage the data warehouse they already have in support of business needs, such as management reporting or corporate performance management initiatives. The standard infrastructure needs of a compliance solution are typically the same as those used for business analysis and monitoring.
The data warehouse approach involves the convergence of existing yet disparate data sources to create a single, trusted, reliable source of information that can serve as a basis for business and regulatory reporting. (See figure.) Organizations that already have an EDW but do not migrate regulatory reporting functionality to it are not fully optimizing this powerful asset.
Beneficial byproducts
Conversely, if the data warehouse is first built to support compliance, consider the accompanying benefits to reporting and business efficiencies that can be realized as a byproduct:
By identifying corrupt and duplicate data sources, an EDW eliminates considerable confusion while increasing the reliability, accuracy and traceability of all compliance information, as well as the underlying processes.
- By storing data fields and record formats, functional and reporting applications can draw on common data. This can reduce or eliminate the need for expensive manual reconciliation. In fact, common data access reduces the need to expend system resources for separate applications. This approach also facilitates easier adoption of service-oriented architecture and report delivery via Web services. In some cases, fewer burdens are placed on auditing, accounting and programming skills as well.
- The standardized content and data structure can be used across the enterprise. This reduces or eliminates translation tables and scripts to strip or re-compute/re-constitute the data stream, thereby reducing potential errors. New efficiencies can result from consolidating application tools, such as different general ledger software programs or versions of the same program. A company can also see significant savings in licensing fees, skills requirements and integration.
- Rapidly available, clean, high-quality data, when used with simulation tools, can serve as a predictor for business and compliance dynamics. Automated triggers and alerts, when combined with the ability to program thresholds, can offer a new differentiating capability. This can create time for corrective action to avert the need to report a deficiency or enable the enterprise to react swiftly to blunt a competitor’s initiative.
- Data stored in an EDW can also be protected in a granular form and made accessible to analytical tools through policy-based authorization and authentication. Additionally, data can be replicated to guard against disasters.
More than just a common repository, the EDW can secure, store and supply granular data with common definitions and titles for operations, transactions and strategic analysis. Analytic applications and reporting tools across the organization can use a single, shared source of clean and validated data.
Be nimble and quick
An EDW can provide organizations with the information they need to make fast, accurate decisions. Those with an integrated data source and decision tools can take proactive steps to circumvent anticipated problems. They can rapidly implement corrective actions to avert either competitive or regulatory gaps.
By enabling organizations to be more nimble and responsive, the EDW serves as the basis for sustained compliance. Not only that, but by leveraging existing technology and resources, it can also eliminate bottlenecks, reduce costs, enhance brand value, and increase management and investor confidence. The end result will be a more agile, scalable, profitable and productive enterprise.
Rajeev Rawat is co-founder and president of BI Results, LLC.
Photography by Shutterstock