Excellence in Information Integrity
William M. Sinnett Director of Research Financial Executives Research Foundation
the source for financial solutions 200 Campus Drive P.O. Box 674 Florham Park, New Jersey 07932-0674 www.ferf.org
an affiliate of
financial executives international
Excellence in Information Integrity
TABLE OF CONTENTS Purpose and Executive Summary
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Information Integrity Defined and Described
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Survey Results: Technology Issues for Financial Executives
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Case Studies of Companies Recognized for Information Integrity
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Steria
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Swedbank
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Wal-Mart
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Lessons from the Case Studies
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About The Information Integrity Coalition
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Past Winners of the Excellence in Information Integrity Awards
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About the Author and Financial Executives Research Foundation, Inc.
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Excellence in Information Integrity Purpose The purpose of this study is to define and describe the concept of “information integrity,” and provide case studies of companies who have received the Excellence in Information Integrity awards, which illustrate the practical applications of information integrity. For background information, financial executives’ responses to questions about information integrity from the Technology Issues for Financial Executives: 2008 Annual Report are also provided. Executive Summary “Information Integrity” has two definitions: • The dependability and trustworthiness of information. • The accuracy, consistency and reliability of the information content, process and system. Data quality and information integrity continue to be a concern of senior financial executives. In a recent survey of financial executives (Technology Issues for Financial Executives: 2008 Annual Report) published in May 2008, the executives rated data quality and information integrity as their most pervasive critical technology concern. The Information Integrity Coalition (IIC) is a not-for profit, membership organization. Its mission is to enable society to use and exchange information with confidence, and its vision is to be recognized as the principal advocate, chief educator and global standards setter for Information Integrity. Each year, the IIC presents a number of Excellence in Information Integrity (EII) Awards to organizations that have put forth a concerted effort to provide accurate, consistent and reliable information to their customers, suppliers and partners. This research report provides case studies of companies that have won the Excellence in Information Integrity Award. These case studies illustrate the application of the following lessons: • Involve senior management in information integrity initiatives to emphasize that the project is a top priority. • Standardize systems on a common technology platform and use a common chart of accounts. • Processes should be automated. This will result in increased control and reduction of manual intervention and errors. • Quality standards can be assured and maintained through rigorously applied Service Level Agreements and Key Performance Indicators. • Implement software that will automatically detect errors. • This software should replace manual controls.
Information Integrity Defined and Described “Information Integrity” has two definitions: • The dependability and trustworthiness of information. • The accuracy, consistency and reliability of the information content, process and system. The term “Information Integrity” has been further described by the Information Integrity Coalition (See www.informationintegrity.org ) The Information Integrity Coalition, a not-for-profit organization founded in 2001, works to increase awareness of the need for improved Information Integrity, and works to develop Information Integrity standards (analogous to the International ISO 9000 Standards). According to the Information Integrity Coalition: “Broadly speaking, information integrity refers to the dependability and trustworthiness of information.” Information integrity may be viewed as one of three main components of “Information Value” that provides benefits specific to a consumer of the requested information. The three components of Information Value are: • Usefulness, or suitability to purpose; • Usability, or its form and accessibility; and • Integrity, or accuracy, consistency and reliability. Again, according to the Information Integrity Coalition: “In contrast to data quality, the expanded scope of information integrity also includes: 1. the specification and modeling of the information user’s needs, 2. an assessment of the information integrity impacts of the processed information on the user, the user’s organization, and society, and 3. the appropriate specification and performance of the supporting application and system components.” In 2004, the IT Governance Institute published Managing Enterprise Information Integrity: Security, Control and Audit Issues. It explained the importance of information integrity as follows: “Information integrity is an important enabler of business activity because information with integrity enhances individual decision-making and value exchanges through business relationships.” Indeed, it can be said that information integrity is the sine qua non of information quality, as it is difficult to imagine how information could have quality without having integrity.” (page 14)
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Survey Results: Technology Issues for Financial Executives Data quality and information integrity continue to be a concern of senior financial executives. In a recent survey of financial executives, the executives rated data quality and information integrity as their most pervasive critical technology concern. The survey results were published by Financial Executives Research Foundation, Inc. (FERF) in Technology Issues for Financial Executives: 2008 Annual Report in May 2008. (This research report is available under “Publications” at www.ferf.org ) The survey, conducted by CSC in early 2008, asked a number of questions regarding top financial management issues, information technology (IT) strategies, technology applications, and managing the IT function. Question 2.8 asked financial executives to: “Please indicate how important you believe each of these technology issues is to your organization.” About 42% of the 629 respondents considered data quality and information integrity to be a critical technology concern. Here is a list of this and other concerns: Improving data quality/information integrity Achieving the expected benefits from IT investments Upgrading or replacing legacy systems Prioritizing technology investments Aligning business and IT strategy Identifying the appropriate level of security for information applications Using technology to drive business change Establishing and maintaining effective dialogue between IT and users Increasing the usage of common systems and shared technology Identifying how IT can improve business processes Identifying the appropriate level of technology investment Developing disaster recovery capabilities
42% 33 32 31 30 29 28 28 27 24 21 18
This 42% response was down somewhat from 2007, when data quality and information integrity was also the number one critical technology concern, indicated by 58% of the respondents.
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Question 3.5a asked: “What is your overall level of satisfaction with your organization’s “information integrity,” defined as accuracy, consistency and reliability of information?” Only 20%, or about one in five financial executives were “highly satisfied” with their company’s information integrity. About 40%, or two in five, were “somewhat satisfied.” To make matters worse, these low satisfaction levels were actually down from the prior year, when 66% of the respondents were either “highly satisfied” or “somewhat satisfied.”
Lack of information integrity seems to be negatively impacting business performance. Question 3.5b asked: “To what extent is the current level of information integrity hampering (lengthening response times, raising cost, reducing confidence) your ability to attain your business objectives?” Nearly 70%, or seven in ten, of the respondents (an increase of eight percentage points from last year) indicated that information integrity was negatively impacting business performance. Here is a table with percentage of respondents by company size, as measured in annual revenues: Size Less than $100M $100M - $499M $500M - $999M $1B - $5B Greater than $5B
Significant 14.2% 18.7 12.5 15.5 9.3
Moderate 53.3% 53.3 42.9 64.9 60.5
None 32.5% 28.0 44.6 19.6 30.2
As stated in the 2008 Technology Issues research report, “Information integrity is a fundamental underpinning of effective and efficient business operations, from routine transaction processing to management reporting to decision support. To the extent that information integrity is lacking, it becomes one of the major costs of doing business. The business pays for the lack of information integrity every day, so it becomes a normal cost of operation.” (Technology Issues for Financial Executives: 2008 Annual Report, May 2008, page 19.)
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So what should financial executives do to address the problem of a lack of information integrity? Question 3.5c asked: ”Does your organization have a formal, on-going program to improve its information integrity that includes routinely monitoring and reporting status/progress?” The survey showed that less than half of the respondents have formal information integrity programs: Size Less than $100M $100M - $499M $500M - $999M $1B - $5B Greater than $5B
Formal Monitoring Program 38.1% 45.4 50.9 45.4 69.0
Given the importance of information integrity, and the percentage of companies admitting that a lack of information integrity was negatively impacting business performance, it is surprising that more companies do not have improvement programs in place. Even among companies with over $5 billion in annual revenues, only about seven in ten have these types of programs.
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Case Studies of Companies Recognized for Information Integrity The following case studies describe efforts to improve information integrity. These companies were awarded with Excellence in Information Integrity Awards by the Information Integrity Coalition (see page 18): • • •
Steria Swedbank Wal-Mart
Steria Background Steria acquired Xansa Plc in 2007. The new business now employs 18,000 staff worldwide and has combined total revenue of €1.8 billion. Steria offers customers a complete portfolio of IT-enabled business services based on an integrated on/near/offshore delivery model. Steria’s portfolio of services reaches far beyond IT into the very heart of the business support activities that underpin clients’ organizations. These may include back-office functions such as Finance and Accounting (F&A) and Human Resources but also other processes specific to a client’s business. The Challenge Due to the complex organization structure and operating model, the United Kingdom’s (UK’s) National Health Service (NHS) faced many challenges, such as non-standard technology platforms, lack of robust IT infrastructure and spiralling costs. All these factors resulted in duplication of efforts, lack of economies of scale, lack of quality financial and accounting information and lack of controls. With little effort devoted to strategic thinking and value-add expertise, NHS functions were finding it hard to deliver against demanding targets and service levels. NHS had challenges in achieving the best possible cost model for its non-core operations and lacked the indicators of cost saving avenues. The effectiveness of business systems in supporting the organizational goals was found to be weak and did not effectively measure performance. The quality of information, timeliness and the efficiency of all the business systems relied upon the legacy systems and applications used by NHS. Business processes also needed to be significantly improved. The above challenges diverted critical resources from front line patient care. The United Kingdom’s Department of Health had a strong desire to provide a costeffective financial service for NHS organizations using a standardised common technology platform and significant process improvements.
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The Solution In April 2005, the United Kingdom’s National Health Service Shared Business Services (NHS SBS) was launched to provide business services to NHS organizations. It was a groundbreaking 50:50 joint venture between the Department of Health and Steria to enable the NHS organizations to focus their expenditure and expertise on doing more for frontline patient care. The objective of NHS SBS was to create and enhance a common integrated technology platform to provide dependable, accurate and timely information across the entire organisation. It was also tasked to reduce the F&A operating cost by 20% with an additional 2% year-on-year savings through economies of scale derived from using shared services and annual increased efficiency, thus saving £224m over a period of 10 years to be re-invested into front line patient care. The whole NHS SBS project was conceived and executed with the involvement of senior members of the leadership team not only to emphasize that the project is a top priority, but also to help monitor progress. The leadership team plays a key role in resolving issues, making decisions, committing resources to the endeavour, motivating and rewarding participants, monitoring progress and achieving the desired results. The services provided to NHS organizations are continually optimized and fine-tuned so that the NHS organizations reap the advantages of various IT developments such as common Oracle 11i platform, e-procurement, electronic invoicing, web-based reporting portal, Electronic Staff Records and workflow software. In addition, NHS SBS increased its computing capacity by more than 50% and increased the bandwidth of links to the NHS organizations. Large File Processing (LFP) was used to manage large volumes of interface files or data feeds into the Oracle financial system resulting in the reduction of process time, manual interventions and continuous monitoring of progress. NHS SBS has automated many processes, which resulted in increased controls, reliability, reduction of manual intervention and errors. NHS SBS provided a robust framework of controls and compliance that enabled the NHS clients to create an environment that promotes consistency, predictability, process efficiency and helps reducing regulatory risk. The quality standards were assured through rigorously applied Service Level Agreements and Key Performance Indicators that provided NHS organizations a reliable quality information for strategic decisions. The NHS SBS system has been designed to support the production of NHS statutory and management accounts. This is supported by a common chart of accounts already proven across all types of NHS organizations.
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The Results NHS Shared Business Services improved the information integrity of the services provided by streamlining and standardizing the processes and bringing them onto a common technology platform. This improved the quality and the efficiency of the services, enhanced the controls within the operations and improved the accuracy, reliability and timeliness of the information available to management and other stakeholders. NHS SBS provided demonstrable results, including the following: • Standard technology platform customized to NHS’ needs • Streamlined standard processes • Reliable service delivery • Guaranteed service levels • High quality, timely reporting • Service and efficiency improvements • 20% guaranteed initial cost savings and continued year-on-year savings • Simplified and streamlined procurement route • High quality financial and business information to the clients to support strategic decisions • SAS 70 accreditation – an internationally recognized standard for reporting on the effectiveness of controls in a shared services environment Highlighted below are some of the benefits enjoyed by the NHS Trusts in terms of improved information integrity of the services provided by the NHS SBS. e-Procurement: NHS Shared Business Services’ e-procurement system provides the technology to deliver a future-proofed online purchasing portal with a fast, automated process, reduced paperwork, more control and significant financial benefits. NHS Shared Business Services’ existing Oracle footprint is integrated with the services and applications provided by NHS logistics. Benefits: • Online web-based requisitioning functionality; • Improved procurement process automation and control; • Electronic purchase order completion and dispatch facility; • Control over requisition approval; • Reduced maverick spend; • Increased compliance with procurement contracts; • Error-free confirmed transactions; • Paper-free environment; • Full integration to General Ledger and Accounts.
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E-Invoicing: NHS Shared Business Services’ e-invoicing system enables the suppliers to submit invoices electronically, eliminating the need for invoices to be posted and scanned. Suppliers will submit invoices electronically to NHS SBS via the OB10 network, either as a direct feed from their accounting system or via an online web portal. These will then be integrated direct into purchase order (PO) or Non PO workflow. Benefits: • Reduction in the number of disputes; • Reduction in the overall cost of invoice processing; • Elimination of manual intervention to a greater extent; • Timely approval and payment of invoices; • Reduction in postage and courier charges; • Reduction in archiving costs. Electronic Staff Record (ESR): A new integrated human resources and payroll system was developed to offer a full range of payroll services to NHS clients through a fully integrated platform. ESR will give access to modern systems, specifically built around NHS needs, and based on eenabled services. Benefits: • Cost reduction in running the payroll services by up to 30%; • High delivery of service; • Reduction of manual errors and improved quality; • Significant savings in productivity and time; and • Automated management information tailored to the needs of the clients Scanning: Invoices are scanned into the system on the day they are received. The optical character recognition (OCR) software captures key data into the system and the invoices are automatically matched to the POs where applicable, or, in the case of invoices without an associated PO, directed to the appropriate budget holder for coding and authorization online. Benefits: • Speeding up of the invoicing process; • Reduction of manual work; • Reduction of manual errors; • Significant savings in productivity and time; • Ability to refer back online to the invoice documentation.
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Period End Automation and Automated Balance sheet reconciliation: NHS SBS has automated the ‘soft close’ process and the balance sheet reconciliation to correctly account costs and liabilities at period end and to reconcile the balance sheets online. Benefits: • Reduction of manual interventions and human errors; • High reliability and accuracy of available information; • Identification of invalid code combinations; • Efficient monitoring through the online system and via error reports; and • Automatic scheduling of reports. SAS 70 – Accreditation: NHS SBS has received an unqualified SAS (Statement on Auditing Standard) 70 accreditation for the second year running from independent auditors Ernst & Young LLP and it is one of the first public sector shared services to comply with SAS 70. SAS 70 defines the professional standards used by a service auditor to assess the internal controls of a service organization and is an internationally recognized standard for reporting on the effectiveness of controls in a shared services environment. For all of the joint venture’s clients and services, quality standards are assured through rigorously applied Service Level Agreements and Key Performance Indicators. Client Quotes: “I think we are seen across all of government as a trail-blazer for what the rest of the public sector will be doing in the future”. Richard Douglas, Director of Finance and Investment, Department of Health “SBS is a force for greater efficiency combined with cost-saving. It frees up funds for the front-line. It is built around a vision of an NHS where local management are empowered to make decisions and enabled to make the best use of the NHS’ resources.” Jim Vincent, Managing Director, NHS SBS
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Swedbank Background Swedbank is a leading Nordic-Baltic banking group with 8.8 million retail customers and 441,000 corporate customers in Sweden, Estonia, Lithuania, Latvia and Ukraine. In Sweden, the group has more than 470 branches. In the Baltic countries the group has another 280 branches. The group also has offices in Copenhagen, Helsinki, Kaliningrad, Luxembourg, Moscow, New York, Oslo, Shanghai, St. Petersburg, Kiev and Tokyo. As of December 2005, the group had total assets of SEK 1,200 billion and approximately 16,000 employees. The Swedish Central Bank System is at the center of the Swedish payment system. Ten years ago, the Swedish Central Bank settled once a day at noon. Today the Central Bank settles at least 50 times each day with a daily turnover of 600 Billion SEK per day, or approximately $83 billion. The four main banks in the Nordic region are the source of over 85% of this turnover. This rapid development has created new demands, which generally have resulted in increased system complexity for clearing and settlement. In this new complex environment, the number of information integrity challenges has also increased. The major banks in Sweden have direct accounts with the Swedish Central Bank (or indirect ones, through an intermediary clearing bank), in the same way that households and individuals have accounts with banks via branches or the internet. The Central Bank functions as the banks' bank for payments. The Central Bank System manages payments to and from the banks' accounts with the Central Bank. When more than one bank is involved in a transaction, the payment will ultimately go through The Central Bank System. In addition to the large Swedish banks, the Central Bank system is also used by the main clearing organizations, such as BGC, the leading automated clearing house in Sweden. [Bankgirocentralen, BGC AB, is the main intermediary of retail payments between the banks. BGC is owned by the banks and is responsible for running, administering and developing the Bankgirot credit transfer system. In addition, BGC AB manages some payments arising from other systems than the Bankgirot system. The Bankgirot system is an open system, which means that it can handle transfers between all participating banks. The system is based on bankgiro numbers, which are addresses to bank accounts. During 2007, 620 billion payment transactions were mediated through the Bankgirot system to a total value of SEK 6,734 billion.]
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The Problem Swedbank uses BGC as a Clearinghouse for their internal domestic retail payment flows in both SEK and Euros. When Swedbank routes payment information to BGC, the bank faces two main exposures: 1) Swedbank settlement information sent from BGC to the Central Bank Payments are settled through BGC and the Central Bank System up to Swedbank’s account in the Central Bank. If BGC fails to send timely settlement information to the Central Bank system, Swedbank will have the wrong amounts in its Central Bank accounts, sometimes overnight or even over weekends. These incidents cause Swedbank to incur both unnecessary interest costs and other costs related to manually tracking down the actual errors. They also cause it to lose goodwill and credibility with its peers, because the Central Bank monitors all incidents that occur within the Central Bank System on quarterly basis. In other words, Swedbank lacked an information control within this critical payment process. 2) Payment files sent from and to Swedbank via BGC On occasion, Swedbank does not manage its payment files sent to BGC properly. When errors occur, Swedbank again incurs costs necessary to correct the errors and also loses goodwill with its customers. The Response To mitigate these exposures, Swedbank sought a solution to automatically detect errors in the settlement process. With such a solution implemented, potential costs could be avoided by using alternate account transfers or payments. Of primary importance were information controls not only internally, but also externally within third party premises and systems. The Solution RIX INstream was the solution developed by Swedbank to mitigate the risk and reduce the costs associated with sharing “Business to Business” (B2B) information. RIX INstream is a real-time B2B information control solution. The original idea was developed during the Infogix Annual Conference 2002. After that, several discussions on both business and technical level took place to figure out how this could be done. Finally, with assistance from Infogix and BGC, RIX INstream went live in December 2005. Now, BGC will pass every settlement transaction from BGC’s Clearing and Settlement System to a domain within their ACR/Instream. Within the domain, Swedbank settlement transactions will be identified, separated and sent on to Swedbank ACR/INstream solution. Swedbank then uses their ACR/INstream to reconcile the information sent from BGC with information from their own internal controls, both with regards to Central Bank settlement information and Payment file information.
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The Results The RIX INstream solution has helped Swedbank mitigate the risk exposures experienced when it routes payment information to BGC: 1) Swedbank settlement information sent from BGC to the Central Bank Using the latency function within ACR/Instream, Swedbank will receive information about the timeliness of settlement transactions before they are sent to the Central Bank. Thus, it has a control to track all settlement information that is delayed and that potentially would have cost it both goodwill and direct financial losses. 2) Payment files sent from and to Swedbank via BGC Through ACR/Instream’s automated real time control function, Swedbank can monitor all payment transactions sent to BGC. Also included in the solution is a file transmission control between Swedbank and BGC, which will give Swedbank control over the payment file flows. When delays or other errors occur, it can act accordingly to avoid related costs and risks. Again, it has a control to track all settlement information that is delayed and that potentially would have cost it both goodwill and direct financial losses, for example, through error detection activities. 3) External Benefits Not only will Swedbank benefit from this solution, but by setting up the Swedbank requested solution, BGC will also benefit by replacing manual controls and reducing both cost and risk exposures within their internal processes. The RIX INstream solution has been recognized throughout the Swedbank organization, not only because of its critical contribution to the payments process and relations with the market, including the Central Bank, but as a B2B information control solution involving both internal and external resources, it has generated many contacts and created continuous interest in Information Integrity. In addition, it has created a virtual Information Integrity team within Swedbank, which will focus on Information Integrity challenges within the organization. But RIX INstream did not only impact Swedbank. The solution has been frequently presented in various forums during last twelve months, including forums within the Central Bank: • SIBOS (SWIFT Organized Payments Conference), • The Clearing Steering Committee, • The Payment Market Reference Group (led by Central Bank), • Plus various market focus seminars at BGC. The main focus for these presentations has been to create awareness of RIX INstreams contribution to the whole payment market. The solution is a landmark on the way to reach the fully end-to-end controlled payment process.
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Wal-Mart Hurricane Katrina Response – Leading the Nation Wal-Mart’s Information Systems Division played a key role in the company’s ability to respond to the human crisis caused by Hurricane Katrina in August 2005. Wal-Mart reestablished a massive information network and control system in an area with no electricity, telephone, or even cellular service. Many associates volunteered their time, working literally around-the-clock to establish remote generator-operated satellite links, so Wal-Mart could provide fresh water and food to the devastated communities in Louisiana and Mississippi. The rapid revitalization of Wal-Mart’s information network allowed it to provide the most basic needs to stranded victims of the storm and flood, through its state-of-the-art logistics supply chain network. Wal-Mart gave away more than $3 million in merchandise and in-kind donations to the relief efforts, $18 million in cash donations, and its stores raised an additional $8.5 million in public contributions, which were donated directly to the relief effort. Replenishment Systems – Moving Products to Where Customers Need Them In the aftermath of Hurricane Katrina’s devastation of the Gulf Coast, Wal-Mart served as one of the main distributors of badly needed food, water and supplies in the stormravaged areas, and also in the areas that experienced huge population growths due to the evacuees. Wal-Mart was able to do this because of the strength of its replenishment systems. The shipments began immediately after the storm hit and continued for weeks afterward, totaling 2,498 emergency truckloads of supplies in all. Wal-Mart was able to use its advanced predictive capabilities to anticipate and prepare a response to events before they happened. Using its 500 terabyte data warehouse system to research sales transactions from previous hurricanes, it was able to develop a good idea of what will be the most needed items before and after a storm. It started stocking those items in the 100 store strike zone days before the storm hit. These items included bottled water, batteries, flashlights and other emergency supplies. Wal-Mart’s replenishment system included an ability to have staged “canned orders.” These are orders that cover the basic needs of the stores and allow the distribution centers to start processing orders and getting the trucks on the road as soon as power is restored. The systems also enable truckloads to be redirected. Earlier, loads were built and scheduled for stores that could not receive the merchandise due to the storm’s impact. The system allowed them to redirect and invoice another store that could take the product. For stores that had completely lost their inventory, the system “zeroed” out the inventory so they could replenish these stores automatically, and accurately, without having store associates key large volumes of data.
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The ability to replenish stores from different distribution centers played a key role in serving not just the damaged stores but the stores in the outlying areas where the population had moved and had not been able to return to their homes. Seventy-two stores were being replenished from different distribution centers that were supporting their regular stores. Within hours, Wal-Mart was able to change which distribution centers were supplying the stores to keep the stores replenished. Stores were doubling and tripling their normal sales and needed to be replenished. This was different from the impact of hurricanes in prior years because people couldn’t get back home after the storm. After the storm, its systems allowed the stores to be changed back to their normal distribution center without interruption to the flow of merchandise. Michael Bertaut, who ran the media “War Room” for Blue Cross Blue Shield of Louisiana in Baton Rouge said, “In my research, which has basically gone 24/7 since August 29, I discovered one critically important fact: East Baton Rouge Parish with a population of 410,000 people grew to 850,000 in one week and NOBODY went hungry. Now, we scratch our heads and ask ourselves why, and interview people, and the only answer we can come up with is Wal-Mart. As a result of your pre-positioned logistics depots, incredible supply chain flexibility and real time monitoring, and fleet of trucks to insure that last-mile is not lost, the stores never ran out of food, at least not for very long.” Item File Systems – Accurately Identifying Products Wal-Mart has a simple business model: “We provide the right products for consumers at the best possible price.” The focus of the Item File systems at Wal-Mart is to accurately collect and maintain information on these items, such as their product description and price. As many downstream systems use Item File information, accuracy is paramount. Customers count on accuracy when purchasing items in the stores. A significant improvement to Item File accuracy is the roll out of Global Data Synchronization, or GDSN. GDSN is a network where a supplier and retailer synchronize their Item File information. An example would be when a supplier changes the size of their package, which could have impact on how a retailer displays the item. Prior to GDSN, the supplier would notify their local account teams to communicate the change to retailers. Timeliness and accuracy of this change were based on the quality of the account team to communicate the change. With GDSN, the supplier systematically publishes the change to the network, and all retailers subscribing to the network would receive the change. The improvement is two-fold: the supplier wins by publishing the change once instead of to every retailer, and the retailer wins by getting the change real-time and without manual intervention.
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Pharmacy Systems – Serving Customers in Any Location Wal-Mart pharmacists themselves developed the work flow for “Connexus,” Wal-Mart’s integrated proprietary pharmacy computer system. A significant enhancement was made in 2005 to Connexus and was rolled out to Wal-Mart’s Rx Network, which is driven by a central database. Prescriptions from all over the nation are securely stored real time within the national database in Bentonville, AR. Wal-Mart pharmacists in any store can access that information instantly, eliminating the need to key in all of that information repeatedly. From the customer’s standpoint, it is all about customer convenience. If a customer is traveling to Florida and forgets his prescription bottle, Wal-Mart’s pharmacist can still get access to the prescription and easily transfer the prescription to get it filled for him. The national roll out of the Rx Network came in time for a crucial test of its capabilities, a test that proved just how valuable a national prescription database can be: Hurricane Katrina. Rx Network came through with flying colors. A lot of customers were displaced, and Wal-Mart had over 100 stores closed during that time. It was an emergency situation for the customers, but they could go to any Wal-Mart in the nation and just give their name and address and the pharmacist had instant access to their prescriptions. RFID and Electronic Product Codes – Providing Visibility into the Supply Chain Customers expect retailers to ensure that any item is in-stock and on the shelf when they want to buy it. Today, without Radio Frequency Identification (RFID), you could know how many items are in the store, but you would not know where they are located. One-third of the inventory in a store is not on the shelf. It may be at the receiving dock and in the process of being unloaded. Thousands of items may be stored in the miniwarehouse in the back of the store. Some of them may have been temporarily relocated to another area for space reasons. Accurate, timely and complete RFID information opens a whole new view to where merchandise is located. This is the first step in a journey to transform the way retailers replenish their shelves and provide service to their customers. Radio Frequency Identification (RFID) is a rapidly growing technology that is full of potential. Initially, Wal-Mart asked their top 100 suppliers to ship RFID enabled cases and pallets to the central Texas area starting in January 2005. Based on this success, more than 300 suppliers use electronic product codes (EPC) to tag more than 3 million cases of freight that flow through over 500 distribution centers, stores and clubs each week. RFID data is shared with suppliers and used internally at Wal-Mart to improve supply chain efficiencies. Examples include: Improved targeting of field personnel, establishing actual lead times to improve replenishment, improved promotional management, improved new item launches, streamlined invoice reconciliation, quality assurance and product/batch tracking, improvements in code life management.
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Lessons from the Case Studies As noted on page 2, “Information Integrity” has two definitions: • The dependability and trustworthiness of information. • The accuracy, consistency and reliability of the information content, process and system. The case studies of companies in this report all won the Excellence in Information Integrity Awards, as awarded by the Information Integrity Coalition (see page 20). These case studies illustrate the application of the following lessons: Steria: • Involve senior management in information integrity initiatives to emphasize that the project is a top priority. • Standardize systems on a common technology platform and use a common chart of accounts. • Processes should be automated, which will result in increased control and reduction of manual intervention and errors. • Quality standards can be assured and maintained through rigorously applied Service Level Agreements and Key Performance Indicators. Swedbank: • Implement software that will automatically detect errors. • Detection software should replace manual controls. Wal-Mart: • Use date warehouses to provide information for special projects as well as routine business activities. • Develop information networks which can synchronize information that may be shared with customers. • Promote customer convenience with the use of centralized databases.
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About The Information Integrity Coalition The Information Integrity Coalition (IIC) is a not-for profit, membership organization [501 (c) (6)], registered in the State of Illinois: http://www.informationintegrity.org/ IICs Mission: The IIC mission is to enable society to use and exchange information with confidence. IIC’s Vision: Be recognized as the principal advocate, chief educator and global standards setter for Information Integrity. IIC’s Objectives: 1. To promote Information Integrity awareness by communicating benefits, sense of urgency and compelling messages for Information Integrity. 2. To establish Information Integrity as a theoretical and applied discipline through research. 3. To initiate Information Integrity formal education and certification programs with industry and government support. 4. To recognize the accomplishments of For-Profit and Non-Profit organizations toward improving Information Integrity. 5. To create a set of generally accepted Information Integrity standards that will promote improved accuracy, consistency and reliability of communications from organizations to their internal and external stakeholders resulting in better judgments and decisions. The IIC’s Excellence in Information Integrity Award The Excellence in Information Integrity (EII) Award has been presented to organizations that have put forth a concerted effort to provide accurate, consistent and reliable information to their customers, suppliers and partners. The EII Award is open to any organization that has made demonstrable progress towards achieving Information Integrity. Whether through a single project or an enterprise-wide effort, organizations that have made exceptional progress towards achieving Information Integrity deserve recognition for their efforts. The Award will recognize two categories of organizations: For-Profit and Non-Profit organizations. In each category there will be up to three award levels: Gold, Silver and Bronze. With increased scrutiny and transparency in today's business environment, progress toward achieving Information Integrity is a very valuable message to take to shareholders, employees, regulators and other stakeholders. The EII Award attests to such progress.
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Past Winners of the Excellence in Information Integrity Award 2007 For-Profit: • Gold Winner: Xansa Plc, UK (Xansa Plc was acquired by Steria in 2007) • Silver Winner: Motorola, Inc., USA • Bronze Winner: Nova Information Systems, USA (now known as Elavon) • Finalists: American Express, USA; Lufthansa AG, Germany; TSYS, USA Non-Profit: • Gold Winner: The UAB Clinic for AIDS Research, USA • Silver Winner: SKS Microfinance, India • Bronze Winner: Lok Satta, India • Finalists: Blue Planet Run Foundation, USA; Office of the Clerk of the Circuit Court of Cook County, Illinois; Village of Schaumburg, Illinois 2006 For-Profit: • American Express (Profitability) • Wal-Mart (Innovation) • Swedbank (Quality Improvements) Non-Profit: • Chicago Shakespeare Theater (Leadership and Overall Award Winner) • University of Rochester Department of Imaging Sciences (Improved Customer Satisfaction) 2005 For-Profit: • American Express (Overall Award Winner) • Scotiabank (Improved Customer Satisfaction) • TSYS (Quality Improvements and Profitability) • Wal-Mart (Leadership) Non-Profit: • AdvocateLutheran GeneralHospital (Innovation) 2004 For-Profit: • American Express (Improved Customer Satisfaction and Overall Award Winner) • KidsDadsMoms.com (Innovation) • TSYS (Leadership) • Verizon (Profitability) Non-Profit: • Chicago Housing Authority (Quality Improvements) • Society of Critical Care Medicine (Quality Improvements)
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2003 • • • •
American Express (Profitability) Certegy (Quality Improvements) TSYS (Innovation, Improved Customer Satisfaction and Overall Award Winner) Verizon (Leadership)
2001-2002 • Certegy (Improved Customer Satisfaction) • Nordea IT (Quality Improvements) • OneBeacon Insurance Group (Profitability) • Postgirot Bank AB (Innovation) • TSYS (Overall Award Winner) • Verizon (Leadership) 2000 •
Acxiom Corporation
1999 •
American Express
1998 •
PNC Bank
1997 •
M&T Bank
1996 •
Bank of Nova Scotia
1995 •
Sprint
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About the Author William M. Sinnett is Director of Research at Financial Executives Research Foundation, Inc. (FERF). He received his Masters of Business Administration degree from the University of Pittsburgh. Prior to joining FERF, he held positions in financial management with Mellon Bank and Carnegie-Mellon University in Pittsburgh. Bill can be reached at
[email protected] or (973) 765-1004.
About the Sponsor: Infogix, Inc. Infogix offers a complete portfolio of software products and services to monitor, detect, and prevent information errors. Infogix Controls are independent, continuous, and automated. They can be deployed enterprise-wide across applications, platforms, and business processes. For more information, go to: http://www.infogix.com/fei
About Financial Executives Research Foundation, Inc. Financial Executives Research Foundation, Inc. is the research affiliate of Financial Executives International. Financial Executives Research Foundation is the non-profit 501(c)(3) research affiliate of FEI. FERF researchers identify key financial issues and develop impartial, timely research reports for FEI members and non- members alike, in a variety of publication formats. The Foundation relies primarily on voluntary tax-deductible contributions from corporations and individuals. The views set forth in this publication are those of the author and do not necessarily represent those of the Financial Executives Research Foundation Board as a whole, individual trustees, employees, or the members of the Advisory Committee. Financial Executives Research Foundation shall be held harmless against any claims, demands, suits, damages, injuries, costs, or expenses of any kind or nature whatsoever except such liabilities as may result solely from misconduct or improper performance by the Foundation or any of its representatives. This and more than 80 other Research Foundation publications can be ordered by logging onto http://www.ferf.org.
Copyright © 2008 by Financial Executives Research Foundation, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any means without written permission from the publisher. International Standard Book Number 1-933130-93-8 Printed in the United States of America First Printing Authorization to photocopy items for internal or personal use, or the internal or personal use of specific clients, is granted by Financial Executives Research Foundation, Inc. provided that an appropriate fee is paid to Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923. Fee inquiries can be directed to Copyright Clearance Center at 978-750-8400. For further information please check Copyright Clearance Center online at http://www.copyright.com.
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FINANCIAL EXECUTIVES RESEARCH FOUNDATION, INC. would like to acknowledge and thank the following companies for their support and generosity: CORPORATE DONORS – FISCAL YEAR 2008 Platinum Major Gift Donors $50,000 + Exxon Mobil Corporation Microsoft Corporation Silver Major Gift Donors $20,000 - $24,999 General Electric Company, Inc. Research Sponsors CSC The Board Institute Platinum President’s Circle $15,000 - $19,999 The Coca-Cola Company Gold President’s Circle $10,000 - $14,999 Abbott Laboratories Bristol-Myers Squibb Company Silver President’s Circle $5,000 - $9,999 Alcoa Foundation American International Group, Inc. Cisco Systems Comcast Corporation Corning Incorporated Credit Suisse Cummins Inc. CVS Corporation Dow Chemical Company Duke Energy Corporation E. I. du Pont de Nemours & Company El Paso Corporation Eli Lilly and Company General Motors Corporation H. S. Grace & Company, Inc. Halliburton Company Hewlett-Packard Company IBM Corporation Infogix,Inc. Johnson & Johnson Kimberly-Clark Corporation Maple Leaf Foods Inc. Medtronic, Inc. Motorola, Inc. Pfizer Inc. Procter & Gamble Co. Siemens AG Sony Corporation of America Tenneco The Chrysler Foundation Time Warner Inc Tyco International (US) Inc United Technologies Corporation
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