Impact of poor data quality: is it accurate that data quality problems cost U.S. businesses only about $60 million per year (as cited in 2003), or is that figure significantly understated?
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AIncorrect
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BCorrect
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COnly for small businesses
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DOnly counting direct remediation costs
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ECannot be estimated
Answer
Correct Answer: Incorrect
Explanation
Introduction / Context: Data quality defects—duplicates, missing values, inconsistencies, and stale records—impose real costs: wasted marketing spend, operational rework, compliance risk, and lost revenue. This question evaluates whether a figure of approximately 60 million USD per year for all U.S. businesses meaningfully reflects the scope of the problem.
Given Data / Assumptions:
- The figure cited is extremely low for an economy-wide estimate.
- Data quality costs include direct (cleansing, tool licenses, staffing) and indirect (opportunity loss, reputational harm) components.
- Industry studies commonly report orders of magnitude higher impacts.
Concept / Approach: Consider the breadth of data quality touchpoints across finance, healthcare, retail, manufacturing, and the public sector. Even modest per-organization costs aggregated over millions of businesses would exceed 60 million USD. Additionally, indirect impacts (for example, churn due to inaccurate billing) dwarf simple cleanup expenses. Therefore, asserting a nationwide cost of only 60 million USD per year is not credible and grossly understates the problem magnitude.
Step-by-Step Solution:
Identify the categories of data quality cost (prevention, appraisal, internal failure, external failure).Estimate scale by combining per-firm costs with the number of affected organizations—quickly exceeding tens of millions.Recognize that cross-industry surveys routinely find multi-billion-dollar impacts.Conclude that the 60 million USD figure is inaccurate/understated.Verification / Alternative check: Compare with widely cited research from industry groups and analysts that report far higher national totals; review case studies where a single enterprise spends many millions annually on data quality initiatives.
Why Other Options Are Wrong:
- Correct: Accepts an implausibly low number.
- Small business/“direct costs only” carve-outs cannot reconcile the huge gap between real-world totals and 60 million USD.
- “Cannot be estimated” is defeatist; while exact amounts vary, the order of magnitude is known to be far larger.
Common Pitfalls: Confusing a narrow-scope estimate with a national total; ignoring indirect costs and risk exposure; relying on outdated or misquoted figures.
Final Answer: Incorrect