Single Point of Truth
Data is one of the most important raw ingredients for a company's success. It is therefore essential that it is reliable and easily accessible to employees. However, as data volumes and IT infrastructures grow, the risk of redundancies, outdated data and inconsistencies increases. To prevent data chaos, companies can work with a "single point of truth".
Definition: What Is a Single Point of Truth?
The term Single Point of Truth (SPOT) describes the corporate practice of operating a central database instead of many data silos. In management, the term Single Source of Truth (SSOT) or Golden Record is sometimes used synonymously. With a single point of truth, companies simplify their data analyses. With a SPOT, they ensure that employees in every department work with a uniform, reliable database.
Advantages of the Single Point of Truth Approach
The introduction of a single point of truth offers companies many advantages. With the increasing importance of reliable data for successful business operations, this data management concept has become a standard.
If employees have to retrieve the information they need for their work from different systems or ask colleagues for information, it is not very productive, but time-consuming - and drives up internal costs. With an SSOT, data is available in a fraction of the time. Employees are relieved of data retrieval and gain time that they can use for higher-value tasks.
The less effort it takes to obtain helpful data, the more likely employees are to use the option in their day-to-day business. Especially in companies with multiple locations or subsidiaries, teams benefit when they can include data from other regions or branches in their analyses and forecasts. A golden record that includes customer data from all countries, for example, can be worth its weight in gold for marketing activities.
If departments maintain redundant databases, this not only ties up unnecessary working time. The complexity of the IT infrastructure also increases, and the maintenance effort rises. The larger the data pools, the higher the costs of providing and maintaining sufficient storage capacity, for example. If, on the other hand, companies consolidate their data in a golden record, hardware, maintenance and opportunity costs can be significantly reduced.
When employees trust their database, can dispense with additional checks, and have uncomplicated access to all relevant data, decisions can be made more soundly and more quickly. Especially in competitive markets and modern business models, speed and forward-looking data-based action is often the decisive competitive advantage.
Single Point of Truth as the Basis for Effective Data Management
The single point of truth architecture ensures the reliability of a company's data inventory on a technological level. Especially when using master data, companies benefit from a central data source, as the data is used by many departments - from marketing to sales all the way to controlling.
However, for data management to support strategic corporate goals, further measures must be taken in addition to implementing a SPOT: Processes, responsibilities and rules for handling data must be established. Only when organizational culture, processes and technology interact will companies tap the added value of a single source of truth.
Single Source of Truth - Application Examples
All departments benefit from the introduction of an SSOT. Three examples from corporate practice:
Single Point of Truth in Customer Relationship Management
Creating an optimal customer experience - from initial brand awareness to purchase and contact with customer support - is the goal of marketing. However, if customer data is not centrally stored or synchronized, this task is nearly impossible to accomplish. A 2020 Salesforce study discovered that 54% of customers feel like they're talking to different companies when they contact a company because information doesn't flow between departments. Then, after making an online purchase with customer support, for example, customers have to mention their data again and describe their concerns from scratch. An SSOT avoids such frustrating experiences for customers.
Single Point of Truth in BIM
In construction projects, Building Information Modeling (BIM) can be used to combine all project and building data from the various trades in one interface. Not only are plans and documentation stored there, the building is also visualized in its entirety in 3D. This bundled database serves as a single point of truth. It makes it easier to prevent collisions and comply with quality standards. Invoices can also be derived automatically from the BIM information.
Single Point of Truth in Business Intelligence
With the help of business intelligence applications, executives can gain a quick overview and detailed insight into how their company is performing in terms of specific key figures. The applications show their added value particularly when they are based on a central database as SSOT. Then they are able to bring together relevant data from the departments ad hoc, prepare it quickly and visualize important correlations.
Single Point of Truth: How Companies Consolidate Their Data Into One Source
The implementation of a single source of truth differs depending on the corporate strategy, technologies and objectives. In some cases, not all data sets are to be integrated in the SSOT, in others, additional data systems are connected successively. However, the basic implementation process is always the same.
First, all data sources in the company must be identified. What data is collected and for what purpose? This already provides an overview of where redundancies and "data garbage" are collected.
Subsequently, it must be clarified which data should continue to be collected or be collected for the first time in the future and which evaluations should be dispensed as they are not meaningful and relevant.
3. Data Governance
Even before the technological implementation of the single point of truth, companies should determine how they want to organize their data collection, data use and data maintenance in the future. Which roles, processes and rules will be required or need to be adapted? Data governance is essential to ensure that the introduction of a SPOT leads to sustainable success.
4. Software implementation
The last step is the selection of a suitable IT solution. In some cases, it is sufficient to use or expand existing systems. In other cases, it is more effective to introduce dedicated master data management systems.
The restructuring of data management into a single point of truth architecture changes the workflows of many employees. The process - change management - should therefore be accompanied by communication right from the start so that teams recognize the benefits for their daily tasks and view new processes as an opportunity rather than a burden.
Frequently Asked Questions About Single Point of Truth
The more corporate decisions are to be made based on data, the more important it is to establish their reliability. A single point of truth ensures that data is up-to-date and consistent throughout the company.
The two terms are often used interchangeably. If a distinction is made between them, the single point of truth refers to the practice of always obtaining certain data from a central source. The single version of truth requires agreement throughout the company as to which KPIs are current for certain processes and are used as a data basis.
Companies without SPOT work without a uniform database. Each department maintains its own data silos. Management and other stakeholders are thus unable to gain a comprehensive data-based view of the company.
SPOT – Your roadmap