There was a time when data governance was primarily about securing access to data. Who could see it? Who could not? Which data needs to be encrypted, and which is permissible to share?
Over time, companies have begun to understand that data is not just a by-product of their business activity; it is, instead, an asset, and as such, it must be managed, just as people, properties and products are managed.
Data governance has evolved to mean the orchestration of technology, processes and people to ensure the optimal evaluation, creation, use, storage and deletion of data.
The main goals of any robust data governance framework include the following:
- Designing and communicating consistent data policies, procedures and standards
- Tracking and enforcing conformance to policies and standards
- Managing and resolving data-related issues
- Effectively articulating and promoting the value of data assets
Data’s Prevalence in the Workplace
The relationship between data governance and decision-making is no longer relegated to IT teams or select committees. It is instead a concern that impacts every facet of business activity. This relationship is perhaps most apparent when we look at the various departments involved in entity management. Previously on this blog, we have discussed the complexity of entity management and how it defies easy definition. Pared down to the essentials, a quality entity management system should allow your company to:
- Manage your current information for the regulatory, statutory and fiduciary responsibilities of all of your business entities and of their directors, officers, partners and managers
- Better advise management, the board and all other related committees on pertinent governance matters
- Give permission for secure access to all the corporate records, which keeps in line with the internal company needs and all external requirements
- Management of the corporate record to reflect all transactions, filings, reports and audits and having the ability to easily update it
All of this activity represents a major interaction with internal and external data. The data may be relatively simple, such as the name and physical location of each business entity, or it could be increasingly complex, such as customer invoice records or bank account numbers for international subsidiaries. Paralegal departments and corporate secretaries are called upon to process and retrieve all sorts of entity information, from charter documents to annual meeting reports. In fact, for each business entity, a corporate secretary must be able to manage and report on as many as 100 discrete points of data.
How Can Entity Management Software Help?
Faced with the complex demands of entity management, many companies are depending on web-based entity management software. This software helps organize and channel information, while automating certain aspects of data recording and compliance updates. In making the shift to electronic entity management, these companies are also improving their overall data governance. While entity management is not a replacement for a data governance framework, the outcomes of the two processes overlap in some interesting and productive ways.
One goal of a data governance framework is the production and maintenance of consistent, reliable data. Mergers, acquisitions and changes in business entities’ names and locations must be constantly updated and kept current. Changes to the corporate record must be noted and accounted for. Consistent data recording allows this data to be shared across platforms and throughout the various company departments. With so many points of data being processed and altered, the likelihood of human error producing confusing and time-consuming problems looms large. Entity management software reduces this problem by organizing and streamlining information into standardized, usable formats. This helps managers and analysts sort through the mass of information in the company’s archives more quickly and efficiently, allowing them the freedom to make more knowledgeable decisions without worrying about their data being mishandled or becoming out-of-date.
The need for access to corporate data is constant. Management teams, select committees, boards of directors and regulatory bodies all demand actionable information. Making this information available in a way that is both user-friendly and responsible is one of the challenges of any data governance framework. By moving away from traditional, paper-based spreadsheets and toward electronic documentation, companies allow established information to be shared and distributed to all authorized users immediately. In comparison, paper-based spreadsheets must be requested, retrieved and delivered by an employee, adding to the time and cost of any information request. Further advantages of electronic document usage are that multiple users can access the same file simultaneously, and all authorized changes to that file can be registered in real time. Quality entity management software systems set protocols for who is allowed access to corporate data and provide a reliable tracking record of its use. Corporate secretaries can use entity management tools to allow full access to legal, compliance and tax personnel, while setting access to an “at need” basis for situations such as audits or outside counsel.
Paramount to any data governance system is the need for data security. Lapses in data security can be disastrous to a corporation, both in terms of the response costs and the loss of corporate reputation. Data governance systems work to locate sensitive data, protect data assets, help assess risk and define controls. Entity management software can aid in these efforts by allowing companies to track all corporate lifecycle activities and events and maintain documentation for reporting and corporate actions. In addition, implementing “role-based” security clearances ensure that only qualified users have the ability to interact with a company’s most sensitive data.
Entity management software is not intended to replace a robust data governance framework, but it can help improve the state of the data across your company. In an ideal setting, the two systems work in tandem to ensure improved data quality, maximized data consistency, fast and effective data sharing, and increased data security.