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Organisations fail to measure the costs of information and system defects

Companies are losing 20 to 30 per cent of revenue due to process failure, says consulting firm
Veronica Coyle from Altis Consulting

Veronica Coyle from Altis Consulting

Many organisations are failing to measure costs of information and system defects despite these issues being relatively easy to fix.

Principal consultant at Altis Consulting, Veronica Coyle, has termed the phenomena "death by a thousand cuts or, the fall and fall of information system quality".

Coyle said while daily issues with data systems may seem easy to resolve, the problems could be costly if businesses don't address them early on.

"Most organisations have never measured the costs of information and system defects. While there are a number of well documented examples where companies have suffered large costs from individual quality defects, these are generally not a daily occurence.

"However, the many, many system and data issues that are daily occurences have small costs individually and are therefore seen as relatively harmless. The combined cost of these quality defects is rarely considered or measured," Coyle said.

Coyle said while the small "cuts" to a business' data systems will not mean the end of the business, it does mean more profits are lost in the long term.

"The results of these thousands of small cuts may not be death for the businesses, but until organisations wake up and measure the costs and the impact on their bottom line, they will continue to bleed a little more profit every day," she said.

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More about: Altis Consulting

Comments

1

Lizz Robb

Tue 06/07/2010 - 13:07

Amen to that! I never tire of pointing this out but business tends to be short-term in its thinking these days, which is a problem in itself. A reduced headcount is far more attention getting in short-term cost saving terms (the big driver for many organizations) than any attention to improved quality.

At the end if the day, rightly or perhaps more wrongly, what gets rewarded gets done. So unless the organization is quality driven, it will keep bleeding in terms of the bottom line, quality and market share.

2

Monique Attinger

Tue 27/07/2010 - 02:52

In the pursuit of economic "efficiency", organizations lose sight of the fact that "quality" is what will bring a customers back - and without those customers, the business does not thrive. Often, "small" problems with internal systems result in poorer quality service to customers which leads to poorer customer retention - a link that many organizations are still yet to make.

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