Information-Driven BusinessHow to Manage Data and Information for MaximumAdvantageRobert HillardMaterial excerpted from Information-Driven Business:How to Manage Data and Information for MaximumAdvantage, by Robert Hillard, John Wiley & Sons,Inc. Reprinted with permission.Robert Hillard is the author of Information-DrivenBusiness (www.infodrivenbusiness.com) and was anoriginal founder of MIKE2.0 which provides a standardapproach for Information and Data Management projects.Robert has held international consulting leadership rolesand provided advice to government and private sectorclients around the world. He is a Partner with Deloitte inAustralia with more than twenty years experience in thediscipline, focusing on standardised approaches toInformation Management including being one of the firstto use XBRL in government regulation and the promotionof information as a business asset rather than atechnology problem.The concept of information overload is permeating every business. At the same time, the global economy ismoving from products to services that are described almost entirely electronically. Even those businesses thatare traditionally associated with making things are less concerned with the management of the manufacturingprocess (which is largely outsourced) than they are with the management of their intellectual property.Increasingly, information doesn’t provide a window on the business. It is the business.It’s a simple equation. Intellectual property is tied up in the data on computers. If it is the subject of focusedmanagement, then greater value is extracted from that data. If the intellectual property is a significant proportionof the value of the business, then such a focused effort will have a dramatic effect on the value of the business asa whole. Such an effort will also make the organization much more enjoyable to work in with less time lostsearching for information that should be readily available and less time sifting through irrelevant data thatshould never have hit the e-mail inbox.As business has become more complex, techniques are appearing almost every day that seek to simplify the taskof managing a large, multifaceted organization. Their quest is similar to a physicist looking for the singleunifying equation that will define the universe. Any approach that recommends focusing on one part of thebusiness must use a limited set of measures that aggregate complex data from across the enterprise. In providinga simple answer, detail and differentiation must be lost.A simple set of metrics by itself is no longer enough to sum up the millions or billions of moving parts thatdefine the enterprise. Perhaps, then, it is time to gain a better understanding of the role of information inbusiness.While large quantities of information have been with us for as long as humans have gathered in groups, it hastaken on a whole new dynamic form. The quantity of data has grown dramatically since the cost of computerstorage dropped as it did at the end of the twentieth century. The growth has taken business management bysurprise and the techniques that we use have not been able to keep up.With little differentiation in the bricks-and-mortar assets, business needs to enhance its service and differentiateusing the informational resources at its disposal. The winners tailor their product to the needs of their markets.
Successful leaders have a deep insight into the running of their business. Such an insight can come only fromaccurate information.Managing information has become as important to the enterprise as managing financial information has been tothe accounting functions of a business. Information now pervades every aspect of an organization, includingreporting, marketing, product development, and resource allocation. In the last twenty years, business reports tomanagement and investors have become much more dependent on information derived from nonfinancialsources than ever before.In fact, as the economy increasingly depends on information, the old assumptions about what is important havechanged. The value that business saw in scale due to shared functions and infrastructure have been turned ontheir head by business process outsourcing (BPO), which is the outsourcing of a business function that mightpreviously have been done within the organization. Examples include the processing of invoices, payroll, oreven customer contact through call centers. BPO is only possible because of advances in the storage,communication, and description of complex information at a cost that is much lower than imaginable eventwenty years ago. At the same time, the value that business might previously have seen in owning infrastructure(such as manufacturing plants) has been overtaken by the value of the knowledge of the manufacturing process.Everywhere we look, we see examples of how the management and exchange of intangible information hasbecome more important than the trade in physical resources. An information economy has been createddescribing the exchange of information among organizations and between individuals and departments within asingle organization.Robin Morgan, a feminist writer, once said that “Information is power.” Armed for the first time with masses ofinformation, head-office business executives have wielded previously unimaginable power, taking over not onlybroad strategy but the minutia of transaction review and approval. Morgan’s hypothesis was that those armedwith information are tempted to conceal it from others and use it to exercise control. Many staff in largeorganizations today regularly complain about their access to information and the lack of discretion they arepermitted in the fulfilment of their jobs. The excuse most commonly given for the concealment of information ismarket regulation (such as the prohibition of insider trading) or commercial sensitivities (such as those used bygovernment to avoid disclosing dealings withthe private sector).It is worth considering whether the reason some information is hidden from wider view may be due to a lack ofconfidence in its quality. This is particularly relevant if published results are derived from the detail and therecould be a genuine fear that independent analysis (even within their own ranks) of the data could yield differentand challenging results.The question that any organization needs to ask itself is whether it is using information to create the mostdynamic, responsive, and adaptable enterprise possible, or is it using information to satisfy the need for powerby a privileged few?Companies, like any social network, gain scale because there is an advantage to their constituent parts.Companies, like countries, break apart when the constituent parts are able to realize mo re value without theparent entity.During the majority of the twentieth century, conglomerates formed with the express purpose of providing back-end and management scale. By being part of the one entity, constituent businesses were able to share capital,administration services, logistic hubs, office space, and other traditional infrastructure.Business trends through the last decades have created third-party services that can provide such facilities moreeffectively and usually more cheaply than in-house equivalents.The growth of superannuation and other funds has created investments looking to provide working capital forhigh-growth business. Large-scale services firms have standardized the provision of administrative services suchas payroll, accounts, and even more hands-on services such as call centers.The privatization of traditional postal services is combined with much more entrepreneurial transport businessesto provide outsourced warehousing, distribution, and global integration at unit costs that are less than anythingavailable to even the largest conglomerate.
Commercial office space is much more commoditized with a mobile workforce that expects the facilities in thelocation or locations that they choose to work rather than an employer who requires them to relocate daily to asupercampus. In short, the infrastructural reasons for conglomerate businesses to exist have been dramaticallyreduced over time and the capital markets punish companies that have failed to realize this.There is, however, a new and even more powerful reason for conglomerate companies to exist. While they aremore complex to manage than their simplified competitors, they also have access to equally complex data abouttheir stakeholders and operations. To justify its existence, a conglomerate cannot rely on back-end infrastructuresharing; rather, it must be able to demonstrate that it is generating growth and cash flow through active sharingof information between every division of its constituent businesses. It can only demonstrate this effectively to itsstakeholders by measuring the equivalent of gross domestic product (GDP) in the terms of its own internalinformation economy.There is no better example of this than the attempts by media companies, such as Rupert M urdoch’s NewsCorporation, to establish their role in the information economy. Small media companies see the Internet as anopportunity to get their product to market without needing expensive infrastructure. Large companies like NewsCorporation need to find a way to use their extensive content to aggregate more effectively and offer consumersa product for which they are prepared to pay a premium.Most organizations, starting to recognize the role of information or pressed by regulatory compliance, haveintroduced some form of information governance, but in general it is seen as a committee-based audit processresulting in some score and identification of issues to be resolved.Human review and intervention is seldom sustainable without permanent intervention by an outside authority.Even when this happens, in the absence of a crisis, the review becomes superficial and compliance driven. Touse information to achieve business outcomes, organizations need to motivate their staff to use information forthe greater good of the organization rather than for individual gain or power.Centralized and mandated initiatives seldom work, with most economists agreeing that groups will seek to servethe greater good only when there is a currency that they are exchanging and that results in some type of personalgain (even if it is only in terms of credit or well-being). For this reason, the business that seeks to model itself toachieve its business goals must assign value for information and, even more important, a currency to recognizeits exchange. Information is neither free nor unlimited.It is the role of information governance to track the creation of information, understand the value it provides tothe organization, reward its sharing, and understand its depreciation through use or time. It should come as nosurprise that many of the activities of information governance are founded in economics and the management ofthe information economy.