Data Integrity - Consequences Of Faulty Data

The consequences of bad data are real. Chain Store Age Executive with Shopping Center Age, revealed how a lack of data integrity can cost companies money, explaining: "At the most fundamental level data error attacks those things that affect revenue, costs, and ultimately, customer loyalty. Unanticipated out-of-stocks equal lost sales. Excess safety stock requires higher investment and more mark-downs. Inaccurate inventory data demands that resources be allocated to determine the availability or shortages of items. Data error also feeds invalid information to the inventory replenishment system, driving poor merchandise planning and purchasing decisions, resulting in more obsolete and excess inventory."

The Chicago Tribune listed several serious data errors that serve as examples of the kinds of things that can happen when large volumes of information is digitized, stored, and transferred. Among them were a credit reporting company that accidentally labeled 1,400 residents of an Eastern town as having bad credit and a health insurance company that accidentally sent out $60 million worth of duplicate checks after its new computer system malfunctioned. Finally, Legal Assistant Today described how an engineer at PairGain Technologies Inc. created a false Web page announcing that it was about to be acquired by an Israeli telecommunications firm. The page's design was similar to that of a popular news service, and it falsely motivated investors, causing the company's stock to increase by 31 percent.