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Data Talks Episode 18: What COVID-19 Taught Us About Matching

When the unexpected occurs, examine your business rules

Host: George L'Heureux, Principal Consultant, Data Strategy
Guest: Andrew Merkel, Data Strategy Consultant

When the COVID-19 pandemic descended on the world in early 2020, some businesses were more prepared than others to weather the ups and downs that followed. Among the advantages the more prepared enterprises had was that they were already regularly checking their business processes to make sure that they were finding marketing targets, evaluating partners, and assessing risk properly.

As Dun & Bradstreet Data Strategy Consultant Andrew Merkel explains, the ability to do that well is rooted in matching rules that make sense for those companies’ business goals, and that are regularly reevaluated and updated as needed. Companies that didn’t do that – or still don’t – may find themselves lagging as economies recover.

 

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George L’Heureux:
Hello everyone. This is Data Talks presented by Dun & Bradstreet. I'm your host, George L'Heureux. I'm a Principal Consultant for Data Strategy in the Advisory Services team here at Dun & Bradstreet. In Advisory Services, our team is dedicated to helping our clients maximize the value of their relationship with Dun & Bradstreet, through expert advice and consultation. On Data Talks, I chat every episode with one of the expert advisors at Dun & Bradstreet about a topic that can help consumers of our data and services to get more value. Today's guest expert is Andrew Merkel, a Data Strategy Consultant at Dun & Bradstreet. Andrew, how long have you been here with the company?

Andrew Merkel:
Yeah. Hi George. Thanks for having me. So I started my career with D&B back in August of 2008, working out of the Atlanta area with one of our D&B multinational clients. And recently I marked my 13 years with the organization.

George L’Heureux:
Congratulations.

Andrew Merkel:
Thank you.

George L’Heureux:
Tell me a little bit about what you're doing these days as a Data Strategy Consultant.

Andrew Merkel:
Absolutely. So today as a D&B data strategist, I am supporting Dun & Bradstreet's clients to help them understand, organize, deploy, and grow in their data journey. My role is to understand the client's goals and challenges, and to create a realistic expectation of maximizing data and technology assets to make sense of data and how to deploy those across their organizations.

Andrew Merkel:
I would say the most impactful aspect of what the D&B data advisory service provides is optimization around identity resolution that helps our clients with their overall business performances.

George L’Heureux:
Wonderful. Thank you for that. I'm sure I don't have to remind you or anyone who's watching about the way in which the COVID-19 pandemic has caused disruptions and changes to businesses around the country and across the world, which is why I thought that the topic that you wanted to discuss today was so important. This idea of what the pandemic experience can teach us and has taught us about how to approach master data and specifically matching like you were talking about.

Andrew Merkel:
Yeah. The reaction to COVID back in March of 2020 was felt almost immediately and almost non-discriminatory amongst any size or industry, and that was due to forced shutdowns, globally in many cases, and we saw significant economic retraction as a result of this. And it's not over either. The impacts are still here, we're still living through this and learning from it, and it's changing. It's interesting to try and examine, generate learnings that can really help impact an organization's data governance and other business policy.

George L’Heureux:
So you mentioned impacts that are still ongoing. Let's talk about some of those. What have we seen happening?

Andrew Merkel:
One of the biggest things that we've seen happening is on the credit side. So creditors, they didn't understand the true risk going into the pandemic situation. They were overexposed on their credit based on the positive selling environment leading into March of 2020. So some still haven't addressed these risks. Some creditors are dealing with different parts of the same enterprise and they don't have visibility into that, and that's just compounding this risk over time by not knowing the full exposure of a corporate family, and this is creating a credit failure nightmare during the pandemic.

Andrew Merkel:
But we also see a similar incident occurring on the vendor side of the house, not understanding the vendor risk of failure, complexities from a corporate family exposure, or at risk vendors supplying multiple services or products to an organization. And at the same time, you have to adapt to survive, and so lots of companies are rushing to expand or pivot, moving outside of their comfort zone, misidentifying a critical vendor, misestimating these risk levels that are out there and not acting fast enough on overexposed credit limits. And it's creating a huge problem on multiple fronts of an organization.

George L’Heureux:
So a lot of companies are encountering these problems. They're having to deal with these impacts. And I'm sure a lot of them are saying, how could we have prepared for this? Now, COVID-19 seems like it would be once in a lifetime, let's hope. Can you really prepare for something of this scale? And if so, how do you do that? How can Dun & Bradstreet help you do that?

Andrew Merkel:
You can absolutely prepare for it, and it starts out foundationally by having a sound data governance policy in place. And you also have to limit the overriding of rules in that policy to maintain compliance and due diligence across your various divisions. And whether it’s customers, your prospects or suppliers, you need to be taking the right level of due diligence to make sure that you know who they are, the risk levels associated, and the supply chain exposure or the credit exposure that you could be facing on a multinational family. And let's face it George, even when the economy's great, companies that stick to the rules are going to have a better outcome and have the policies in place to prevent this from happening in the future with other pandemics or unforeseen events.

George L’Heureux:
That's true. But to stay in the world of reality, not every place has that sort of preparatory stuff in place. They don't have those data governance committees in place. And so when COVID hit, what did companies like that do? Were they doing nothing, or did they do something that just wasn't effective?

Andrew Merkel:
Well, I think it came as a shock to a lot of these organizations, because if we remember the economy prior to March 2020, it was in overdrive. It was a seller's dream. You have this hyper-growth going on. Lots of expanding, opening of new branches, and the focus of most businesses in that economy was, how do we sell more? Organizations were looking at taking on more clients, extending more and higher credit to draw that business in, and in an economy like that, you can almost afford a few missteps, be looser with your credit policy, you can even misidentify clients or vendors. But to support that growth, on the other hand, organizations were onboarding new vendors to keep up with that increased demand. So you're brewing the perfect storm. And doing so quickly, many organizations, they were sourcing the same commodities and services from new suppliers. So you partner that up with the increased credit limits, and you brewing that perfect storm, and it's not something that you can do in a COVID like economy.

George L’Heureux:
So let's go back to something you mentioned a moment ago in that last response, one of the components of that perfect storm, that sort of misidentifying who you are doing business with. How does that sort of high impact misidentification occur?

Andrew Merkel:
That occurs, honestly, by not having a trusted source of information. You're either not pulling enough, or the right information back on your customer or your vendor, and maybe you're moving at a faster pace because of the improved economy, or you've got a smaller, nimble team, but you lose sight of the ongoing identity management and the continuous data hygiene, and you're digging yourself a giant hole.

Andrew Merkel:
A big driver is that sometimes you're also dealing with two parts of the same company, because you don't realize they're related, and that ties back to our identity resolution. And so your issues, whether it be vendor risk or customer risk, begins to magnify the effect of those risks during a heightened pandemic or other unforeseen events.

George L’Heureux:
I'm glad that you tied it back to identity resolution. Obviously that's one of our strengths here at Dun & Bradstreet. How long did it take into this pandemic before companies started realizing that they needed to make changes? That they needed to basically adapt or die?

Andrew Merkel:
Honestly, it took most people, I would say, just a little bit too late. You look at certain geographies, like New York City, locked down. While that doesn't have a huge impact maybe on the rest of an organization, as those lockdowns began to expand and extend, entire organizations and even industries were becoming very vulnerable to the pandemic. And that starts to impact your supply chain, and rapidly increasing days past due on credit where people can't pay you, and that absolutely crushes your organization's cash flows.

Andrew Merkel:
And, so, suddenly these companies found out that they needed to better understand and predict risk, but it was almost too late. They'd already began to have people default on payments and already began to see their vendors starting to fail on them. D&B, I would say, was stepping that up. We brought in the COVID Index Score, and that was a measurement of a company's likelihood of being impacted by the pandemic. So our customers were receiving that benefit during the beginning of the pandemic and all the way through to today. But I guess George, to tie it back, the fact is companies that struggled early tend to struggle late and are still possibly struggling today.

George L’Heureux:
So Andrew, you mentioned three, four, maybe five different things that companies who are looking to try and make their way through this pandemic era could do, and you and I both know that those are all areas in which Dun & Bradstreet could help, but could you go into a little bit of detail around how?

Andrew Merkel:
I would say that the first thing that we would recommend companies out there do is use match to tie to the right entity. It's really the most crucial step, is that first right off the bat identity resolution. Find out about their corporate family tree, their structure, their risk across that tree and how it could potentially impact your organization. And then using things like industry, revenue, employee figures, to find similar companies, healthier suppliers, and prospects to continue those operations is crucial. And then, you need to get predictive. You need to use things like the COVID Index or D&B's Predictive Risk Scores and other traditional elements to show you where the risk is truly located, and always be monitoring this process in an ongoing effort to maintain data hygiene as part of your or strategy.

George L’Heureux:
So this may be difficult to quantify, but perhaps you can do this really quickly. As a result of the pandemic, is it possible to really assess how companies’ approaches today to identity resolution compare to what they were say at the end of 2019?

Andrew Merkel:
Versus the end of 2019, today, you need to have a more extensive due diligence policy into your identity resolution. It's as simple as that. It's become such a higher prioritization to know who you're doing business with, whether it be a prospect, a customer or a vendor. You need to take a deep look into the family and the global risk, not just the local, but the global risk that could be impacting those organizations, and making sure that your credit limits being allocated are in line with the businesses' projected bad debt. You may want to reassess things like bad debt and your overall risk policies that you should be tolerating during a time of pandemic or not.

Andrew Merkel:
A big question is understanding who are our vendors? How do we check the compliance and understand how we'll be supported should the unexpected occur? Those are some great questions that organizations should be asking themselves. And then some companies are going to survive and thrive during a pandemic, and those are the ones who are likely using Dun & Bradstreet to look for expanded insights and opportunities, even during what's perceived as a global pandemic.

George L’Heureux:
So let's break it down before we head out and finish this up. Andrew, what did we learn when the pandemic hit? How did the way that companies are looking at matching and data management change?

Andrew Merkel:
So what did we learn about match? I would say match rules may need to change. Many organizations may need to get very, very tighter on their match rules up front to identify risk and increases in risk across their business. Knowing your suppliers, knowing your customers is crucial, and it's an ongoing process. It's not a one and done process. Being prepared with backup vendors and a secondary sales target market based on who your best vendors, your least risky vendors, and your best customers are that are going to survive in tough times. Being able to mirror them is crucial for having that mitigation plan. But I would say, lastly and most importantly, is maintaining that strong identity resolution and that ongoing data hygiene process. That's really going to be crucial at all times to make sure that your business is performing optimally and going back to its data governance policy.

George L’Heureux:
And it's something that we preach every day here at Dun & Bradstreet. Andrew, thanks so much for joining me today and sharing your expertise on this topic.

Andrew Merkel:
Absolutely. Thank you, George.

George L’Heureux:
Our guest expert today has been Andrew Merkel, a data strategy consultant at Dun & Bradstreet. This has been Data Talks. Hope you've enjoyed today's discussion, and if you have, I encourage you to share it with a friend or a colleague. And for more information about what we discussed on today's episode, you can visit www.dnb.com or talk to your company's Dun & Bradstreet representative today. I'm George L'Heureux. Thanks for joining us. Until next time.