The role of the enterprise data warehouse in building sustainable compliance

With enterprise information in one place, companies can avoid many of the steps involved in securing the proper data snapshots for regulatory reporting. In addition, you get six clear, competitive advantages for building a sustainable compliance program.

Some of the goals of a sustainable compliance program are to build agility and provide organizations with a more comprehensive picture—along with actionable information—of how data is flowing throughout their enterprises. When decision makers have to cobble together data from incompatible and often conflicting sources, simply meeting the letter of the law—for example, quarterly reporting or preparing organizational "snapshots"—may require a cross-organizational, Herculean effort of gathering and verifying data, involving armies of auditors.

That's because today's laws and regulations are all about managing data. The Sarbanes-Oxley Act (SOX) mandates that organizations more effectively track financial data as well as issues that can impact that data. Most other regulations—such as the Health Insurance Portability and Accountability Act (HIPAA), the USA PATRIOT Act and Basel II—also center on data management in one form or another.

Organizations that have a robust enterprise data warehouse (EDW) infrastructure in place may find that they already have much of the agility needed to support sustainable compliance.

"Companies that do financial analysis and forecasting with business intelligence tools and data warehouses are much further ahead with compliance than companies that are looking at data integration issues for the first time," says Jill Dyché, partner with Baseline Consulting.

"For the early adopters who may already have financial data that's integrated in their data warehouses, the next step is to identify the gaps," she says. "'What is the collection of regulatory requirements we need to meet?' 'What should our audit trail look like?' 'What are the systems of record for the necessary compliance data?' and 'How do we strengthen controls and formalize our processes for the long term?'"

"At the core of all compliance requirements are rules around data," agrees Rajeev Rawat, president of BI Results. "They require the measurement of data in accordance with guidelines based on time frames, accuracy or confidentiality."

Rawat identifies three initiatives necessary to achieve the agility required not only to comply but also to add value. "First, you need clean data," he says. "Second, once you get clean data, you need to measure or scale it so you know that what you've got is the right information. Third, you need to build continuous improvement into your enterprise."

An EDW by itself cannot help companies fully comply with very complex regulations. However, since an EDW can deliver enterprise information in one place, companies can avoid the many steps and processes involved in securing the proper data for regular reporting. Much of the pain associated with Sarbanes-Oxley, for instance, stems from the need to unload and reload data from disparate systems. Even more importantly, the enhanced view into critical corporate data can help organizations build a world-class finance environment, along with world class production, operations, customer relationship management and marketing.

Organizations that are just now considering building an EDW or are already in the early stages of an EDW may find an increasing groundswell of support for their initiative from across the organization. With the information gathering and analysis requirements recently imposed on companies by lawmakers, "there is a renewed emphasis on the quality of information and (on) removing redundancy," says Cory Shouse, data architect with McKnight Associates. "This leads directly to the enterprise data warehouse, because it's the best architecture to deliver a single version of the truth to the enterprise."

The EDW offers six clear advantages to organizations building a sustainable compliance program.

1. A single, comprehensive view of the enterprise
One of the greatest challenges for many companies has been reconciling information from a plethora of systems across business units and divisions. Some companies, for example, have up to eight enterprise resource planning systems, limiting information about accounts receivable or inventory to divisional views. Typically, organizational politics and turf wars have stymied efforts to integrate such disparate data into a single system. At the same time, compliance requirements have forced many executives to acknowledge the need for an enterprise view. "Companies that have been fighting data integration for years all of a sudden realize that with compliance they need to put all their information in the light," Dyché notes.

Sarbanes-Oxley and other regulations demand that executives be aware of "material events"—events that are important to business decisions—in virtually every corner of the enterprise. An EDW provides a single view of the enterprise, regardless of the number of disparate applications and backend data stores. This goes a long way toward enabling companies to accurately identify and monitor the information that has the greatest business impact.

"Imagine building an internal control system that fully integrates with financial monitoring and reporting systems and providing a program that allows users to drill down from financial results to the underlying controls and that automatically flags exceptions, unauthorized entries and other anomalies," says Lee Dittmar, principal with Deloitte Consulting.

This single view can reduce the operational risks faced by organizations. For example, each of the multiple divisions within a company might be extending large lines of credit to the same customer without knowing what the others are doing. With the visibility provided by an EDW, corporate financial managers can flag such potential credit abuse.

2. A metadata repository
Metadata—or data about data—is a "powerful tool" for managing information in audit trails, says Shouse. Information from audit trails helps decision makers see all changes taking place in business performance data.

"We haven't always been good about tracking the design and business requirements for easy-development, low-risk projects, such as adding a column to a table or bringing a small table into the data warehouse," he explains. "You now have to have an audit trail for each and every change, and that's where IT organizations are going to be feeling the pain. But it's something we should have been doing all along, and we can still make it easy, and we don't need a whole 50-page document on one little change. We just need to make sure we have data on why we did it, how we did it and how it's going to affect data in the short term and long term."

3. A data discovery process and methodology
The EDW deployment process—in which key data sources are identified and data is extracted, transformed and loaded into a data warehouse—forms the basis for effective sustainable compliance. "The inherent processes that enable an EDW platform give companies a leg up in sustainable compliance," says Dyché. "Understanding your business requirements informs your data architecture, data cleanliness techniques, security controls, and data requirements for business intelligence. Current adopters of data warehousing have such standards in place in addition to having the platform itself."

Once up and running, the processes and automation developed as part of a compliance effort can also easily be transferred to other initiatives. "An executive may realize ... 'If we can do this for compliance ... why can't we use the same approach to audit my customer correspondence across different areas of the organization?'" Dyché explains. "We're doing it with Sarbanes-Oxley right now, so maybe that's a repeatable process we can then apply to other areas of the business."

4. Key performance indicators and business intelligence
An EDW can be tied into analytical systems and executive dashboards that monitor the overall health of the business to serve as an early warning system, reporting anomalies or issues that may impact the organization. Alerts or notifications on a number of factors—from finances to supply chain performance—can be automatically delivered to decision makers when thresholds are crossed. "You can set your incoming data to trigger mobile or dashboard alerts when it is no longer within an 'acceptable zone,'" says Rawat. "This helps you keep up with the marketplace."

Business intelligence tools are an important component of any sustainable compliance strategy, since decision makers need to have the capability to drill down into data. Financial managers, for example, increasingly require insights into various parts of the business as part of the auditing process. Many companies have multiple systems of record, which require consolidation at reporting time. "An enterprise data warehouse allows fast access to data to do deep analysis on the data, rather than having to pull data out and put it into a data mart or some other operational data store to do analysis somewhere else," says Rawat.

Financial executives will be able to integrate departmental data with customer and operational data to gain insights that will help the business and grow revenue. The EDW provides accuracy and ensures all the data is in synch and represents a snapshot of the business at a given moment. Executives can ask questions about the business and drill down into the appropriate numbers to answer those questions, without jumping into multiple systems.

5. Timely information
One of the most time-sensitive requirements mandated by Sarbanes-Oxley is the reporting of material events to stockholders within 48 hours of their occurrence. Such a requirement calls for near real-time reporting and actionable analysis capabilities. While experts agree that it will take some time before most organizations are capable of delivering and acting on data that is actually real-time—the technology is quickly evolving.

"Performance data warehouses will increasingly reflect the business as it's happening," said John Hagerty, vice president of research with AMR Research. "There's going to become much more of a need for near real-time or just-in-time data, so people can make some assessments as to what's going on in the business and make course corrections as necessary."

He continues, "In some cases, when something happens, people feel they're powerless to do something. The idea behind performance management, underpinned by a data warehouse, is that you'll be able to sense and respond to what's going on. ... This ties the analytic component to the operational components and forestalls problems that are potentially starting to occur."

While regulations are driving the need for more near-time visibility of events occurring throughout the company, such knowledge can also mean competitive advantage as well. For example, if decision makers in a retail organization are aware of a large order of inventory that is not moving in some locations, they can proactively take measures—such as spot promotions—to address the situation. "If your revenue was tied into a certain activity, and you were at risk, you could turn things around even before you have to report it to somebody," says Rawat. "With the right information delivered through alerts or dashboards, your managers can take action on a situation," he says. "You can take something that's potentially sour for your company and turn it into a competitive advantage because you were able to react quickly."

6. Greater access
Sustainable compliance also enables organizations to realize the vision of putting business intelligence tools and information into the hands of any employee who needs them. Claudia Imhoff, CEO of Intelligent Solutions, observes that the new compliance environment has moved the requirement for business intelligence gathering from accounting and finance to everyone in the organization.

"It used to be the accountants who were responsible for reporting on specific material events, and usually they had a month or two to report on them," she says. "With this 48-hour requirement, reporting on events will be the responsibility of everybody in the organization. ... Everyone needs access to the data and intelligence in their hands to recognize that a material event has happened."

Ultimately, the EDW serves as the main point of information flowing in and out of a sustainable compliance effort. "There's power in moving toward a common enterprise database to glean information on a business unit from an enterprise-level perspective," says Dittmar. Sustainable compliance should lead to "getting the quality information we need, getting it to the right place in the right time, and turning it into insight to run the business better." T