Companies have been concerned with dirty data in their organizations for some time, but a recent report makes it abundantly clear that the problem isn't going away.
The overall information quality market will pass the $1 billion mark in 2008, according to Cambridge, Mass.-based Forrester Research Inc. The information quality market, as defined by Forrester, includes software, professional services and data enhancement.
"The challenge for data and information quality is that it's not a specific application, it's a function of almost every application," said principal analyst Lou Agosta. "If information lacks quality, then it's not really information."
Ultimately information reduces uncertainty, but dirty data actually increases uncertainty, Agosta said. Companies are starting to understand this, he said, and are realizing that it takes more than just a technology solution to clean up their data.
In fact, Agosta said organizations have awakened to the fact that they have data quality problems. Many have moved beyond an initial phase of denial about poor data, as well as a phase focusing on information quality captivity where data is siloed in the data warehouse environment. Now most companies are in the proliferation phase, demanding information quality at the periphery of the enterprise, according to the report.
CRM and customer data integration (CDI) initiatives are driving investment in data quality, particularly as organizations seek to segment customers and capitalize on events in their lives, such as a college graduation or retirement. But it is not the only driver.
In fact, Forrester recently found that 20% of information quality applications now address noncustomer data, including product information, inventory, pricing, order management and business administration.
Additionally, regulatory compliance is making accurate information an imperative. Defective data contributed to delays in closing company books, according to 12% of respondents in a recent Forrester survey, and 10% of respondents cited improperly credited revenue due to bad data. More direct savings are evident in reduced mailing costs and labor costs for incorrect addresses.
"One of the lessons of CRM is that you can buy a shiny new CMR system and still miss the customer," Agosta said. "To get the customer, what you need is information quality. That's what IQ software comes in. That's a positive driver. What I've seen is information quality has moved from the back end data warehouse to the periphery -- all the customer touch points."
Agosta said organizations need to be vigilant of dirty data coming in at the entry points by putting processes in place to either clean it or keep it out.
Projects focused on CDI are going to need an information quality component, Agosta added. With CDI spending enjoying annual growth rates of 17% and 10% in the past two years, data quality will keep pace.
All the attention will likely mean more industry consolidation. When a software market reaches $250 million, it starts to come to the attention of large software companies, according to Agosta. Last month's announcement by IBM that it is acquiring Ascential Software is just the latest and most high profile. Pitney Bowes recently purchased Group 1; SAS has added DataFlux and Trillium is a division of Harte-Hanks.
The vendors should have plenty of customers to fight for, according to the report. Sixty-one percent of respondents to the Forrester survey reported that they do not have an information quality tool in production.
While technological development and an increased awareness of information quality imperative will drive growth in the market, there are constraints. Firms often do not want to discuss data defects and individual departments do not want to accept responsibility. That could potentially keep data quality investment a reactive force and dampen the $1 billion forecast, according to the report.