Business process and financial performance enabled by strategic data management has not been well documented in the literature. This paper examines how a business firm develops their strategic data management system to create new business processes and to enhance financial performance.
Keywords: Strategic data management, Competitive advantage, Business process, Financial performance
Data is a corporate resource (e.g. Levitin & Redman, 1998) and effective strategic data management yields competitive advantage (e.g. Vesely, 1990). However, the relationship between strategic data management and business process and financial performance has not been well documented in the literature. This paper is intended to examine how business firms develops their strategic data management system to create competitive advantage and to financial performance.
The research methodology employs a fact-based principle that combines quantitative and qualitative methods. Company access includes information retrieval from the company's website and interviews conducted with Kathryn Beaton, a Systems Development Manager at Paychex, Inc. Mrs. Beaton is in charge of the Enterprise Data Warehouse and is responsible for updating and maintaining the tools that allow it to function properly. Data was collected and analyzed at the corporate level of the subject organization. The paper begins with an introduction, followed by a literature review, then a case study, and concludes with a section of findings.
In quest of competitive advantage, the resource-based view of firm (RBV) has suggested that competitive advantage is derived from a bundle of strategic resources and focuses on individual resources while under-exploring multiple resources interactions (e.g., Barney, 1986, 1991; Dierickx & Cool, 1989; Peteraf, 1993; Rumelt, 1984, 1987; Smith, Vasudevan, & Tanniru, 1996). According to Barney, a resource must possess four attributes of value, rareness, inimitability, and nonsubstitutability, in order for it to provide a firm with the source of sustained competitive advantage (Barney 1991).
In recent years, many studies in information technology have adopted the RBV as a theoretical framework (e.g. Mata et al., 1995; Duncan, 1995; Ross et al., 1996; Sambamurthy & Zmud, 1997; Feeny & Willcocks, 1998; Bharadwaj, 2000). Vesely (1990) suggests that strategic data management is the key to corporate competitiveness. A recent global survey by Investment Weekly News supports this statement. The importance of the relationship between strategic data management and corporate performance warrants more empirical research (Investment Weekly News, 2011).
Yin (1994) suggests that the case study method is deemed proper for a research project that is exploratory in nature. The purpose of this paper is to substantiate that a strategy-driven data management can be a possible source of competitive advantage.
Paychex, Inc. offers payroll, human resource, and benefits services to small and medium sized business. The company was founded in 1971 by B. Thomas Golisano, who was the only employee at the time. Paychex now employs more than 12,000 people and serves more than half a million businesses in the United States. With more than 100 office locations in the US, the company has gone international and has 4 offices in Germany. Paychex went public in 1983 and is currently traded on the NASDAQ Stock Market and is a member of the S&P 500.
Paychex implemented an Enterprise Data Warehouse in 2005. Figure 1 Paychex Data Management System shows the flow of data through the data warehouse. Each "Source System" brings together different aspects of all of the products and services offered by the company. For example, "Source System 1" is client payroll data and "Source System 2" is client Human Resource Services data. …