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Trust in shared data: quantifying the benefits of Data Sharing

Chief Executive Officer
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Some call this approach 'Interenterprise MDM', some call it 'Collaborative Master Data Management', but the benefits of data sharing go beyond names. CDQ is the global pioneer in data sharing of customer and vendor data. Why should your organization join us on this mission?

Specifically in the business partner domain, which sets the foundation of company’s interactions with customers and suppliers, data sharing rapidly boosts data quality and can be translated into tangible benefits. More than 30 internationally present companies and corporations within the trusted environment of the CDQ Data Sharing Community are already successfully applying data sharing practices.

By setting shared quality standards and enriching data with trusted data sources, this approach boosts data quality, cuts data life cycle expenses, as well as fuels process automation, enhances analysis accuracy, and improves risk management.

Why organizations share business partner data

Many companies have the same customers. Likewise, Know Your Customer (KYC) requirements are also the same for these organizations. In fact, most of the customer data attributes like legal name, address, tax number, as well as financial stability and social compliance, refer to real-world status of a business partner.

However, existing business partners change their addresses, go into insolvency, their tax numbers expire, and these continuous changes at scale must be identified. Any company dealing with business partners needs to react promptly to keep the data correct and fit for use.

Customer and supplier data change too frequently for one organization to keep up with them efficiently and effectively. That’s why we at CDQ set out to make Data Sharing a reality.

Data sharing: trusted data in a trusted network

The gist of data sharing is to manage business partner data as a shared resource, based on shared knowledge, shared data sources and shared data. This leads to less effort per community member and brings higher data quality for all.

CDQ is the first company in the world to provide a Cloud Platform with solutions that foster data sharing approach in customer and vendor data maintenance. While many organizations are already realizing the benefits of collaborative master data management, some still may wonder, how exactly does data sharing create more trust and efficiency for the business.

Data sharing benefits quantified

Through practical experience, the CDQ data sharing approach shows clear advantages in managing business partner data.

Direct benefits can be seen throughout the data lifecycle, and in particular in:

  • cutting expenses for creating, verifying, and maintaining data
  • pooling the costs for quality assurance infrastructure.

Indirect benefits arise wherever business partner data is used in the company, e.g. in sales, logistics or purchasing, in logistics or purchasing.

Direct benefits

Data sharing direct benefit can be quantified along the data life cycle. The example calculation is based on the experience of globally active companies that standardize business partner data company-wide and use master data management systems (e.g. SAP MDG) for this purpose.

As a typical order of magnitude, we assume approximately 190,000 data records, divided into 60,000 customer and 130,000 supplier data records.

Data Sharing saving potential
Direct benefits of data sharing: potential savings per year (in €K)

This approach reduces the manual effort involved in creating data and speeds up the time it takes to provide high-quality data in operational systems. The extent of the effect depends on the overlap between own data records and the data pool, which is between 20-60%, as well as on the number of attributes for which information is first procured and then maintained. With approximately 5-10% of new data records with 18 attributes to be entered each year, this results in an effect of roughly 150,000 Euros per year.

In addition, effects arise from prompt information in the event of changes to business partner data and the transfer of addresses, bank accounts or other information. With a change rate of approx. 10-15% of all data records and 5 changed attributes each, this results in roughly 90,000 Euros per year.

Another direct benefit results from reduced IT costs. Today, every company has to operate an increasingly complex quality assurance infrastructure. In our example calculation the software license costs for address cleansing and data quality tools are reduced more than twofold: from 150,000 to 60,000 Euros per year.

More benefits with business partner data sharing - process efficiency, decision quality and risk management

In addition to the estimated 40% reduction in life cycle costs, reliable business partner data creates potential benefits in the value-adding areas. These are generally many times higher than the direct effects in master data management and relate to the following areas:

Process efficiency

Through data sharing, problems associated with incorrect information, such as inaccurate addresses or erroneous bank and tax numbers, can be promptly identified and fixed. Particularly in purchasing, shared data facilitates increased automation, noticeably reducing errors in logistics and payment processing. This leads to a significant decrease in incorrect deliveries and returns, and the need for invoice corrections, streamlining operational processes.

Business insights and decision quality

Complete, correct and duplicate-free business partner data is a prerequisite for a 360° view of customers and suppliers and therefore improves quality of strategic decisions. By deduplicating and enriching data records, data sharing in purchasing improves spend analysis, the bundling of purchasing volumes and supplier management. In sales, better customer segmentation and a targeting specific audiences are possible.

Risk reduction

Ultimately, higher data quality of business partner data also reduces risks and ensures compliance with regulatory requirements. In this specific case, data sharing means sharing trust scores based on transaction data, which enables prompt detection of supplier fraud, so that wrong payments are avoided.

 

See how other companies benefit from Data Sharing

 

The transformative power of data sharing, particularly in the realm of business partner data management, cannot be overstated. The tangible benefits quantified in cost reductions, process efficiencies, enhanced decision-making, and risk mitigation emphasize the essential impact of collaborative approach to data.

By nurturing trust within a shared network, organizations not only optimize their operational efficiency but also lay the groundwork for strategic growth and resilience. As CDQ continues to pioneer the data sharing journey, the invitation stands open for businesses to join our trusted network. 

Get a taste of our Data Sharing Community and join the journey!


This article contains insights from our earlier publication, ' Vertrauenswürdige Geschäftspartnerdaten durch Data Sharing,' which was recently published on ERP Information portal. For a deeper dive into the topic, we invite you to explore the original article (available in German). 

Vertrauenswürdige Geschäftspartnerdaten durch Data Sharing!

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