A couple of recent articles by Thomas Wailgum in CIO.com got me thinking – yet again – about information management (IM – for more on IM see Enterprise IT or Enterprise IM?). The first, Information Wants to Be Free, But at What Cost?, makes the point that the more information that enterprises continue to exponentially collect, the more difficult and expensive it’s going to be for them to understand and disseminate that information. The second, The Future of ERP, Part II, makes the case for change in that after four decades, billions of dollars and many huge failures, big ERP has become the software that no business can live without—and the software that still causes the most angst.
In The Information Paradox, and every time I present or discuss the topic of getting real value from our increasingly significant and complex investments in IT-enabled change, I use the slide below to explain how the way we use IT has evolved.
When I started in this business, back in the early 60s, most, if not all commercial applications of IT were automation of existing tasks – where the focus was on doing the same thing more efficiently. I call this the appliance era – applications were stand-alone and very little business change was required (as illustrated by the pie chart on the slide). You could essentially have be given the application for Christmas – plug it in and it would do the job.
In the next era, which emerged during the 70s, things became more complex. We moved beyond automation of tasks to creating, storing, distributing and manipulating information. The focus here was on effectiveness – using information to do things differently and to do different things. You now had to worry about what information was needed, by whom, where, when and in what form – and people had to be trained and incentivized to work differently. Appliances now had to work together in an integrated way, and the way business was done had to change – I call this the rewiring era.
In the next era, which emerged during the 80s, we began to see what I heard a Northrop Grumman CIO describe as “game changing plays” – changing the rules of existing industries and creating new ones. I call this the transformation era. While the changes might not be possible without the technology, the bulk of the effort required to achieve the desired outcomes involves changes to the business – including the nature of the business, the business model, business processes, peoples roles and skills, organizational structure, physical facilities and enabling technology. Those appliances – now ranging from “mainframes” to smart-phones – have to work together in an integrated way, not only within an enterprise, but outside it – on a global basis.
Unfortunately, while our use of IT has evolved – our management of it has lagged. In far too many cases, the focus is still on the IT appliance – “plug it in and the value will flow”. Those days are long gone. We are not today simply dealing with appliances – or with simple appliances – we are dealing with massive organizational and cultural change – transformational change. Change that is enabled by technology, but of which technology is only a small part.
The more that I have though about this, and talked about it, the more I feel that one of the sources of the perceived and real failure of investments in IT-enabled change to deliver the expected business value is that we have still not got the information piece right. (Note that in the following comments, I may appear to, and indeed do, to a certain extent, use the terms data, information and knowledge somewhat loosely. This is not because I do not understand the difference – or at least have an opinion on it – but because terminology in common use doesn’t always make a clear distinction, and I don’t want to bog this post down with that discussion.)
While the amount of data we store continues to grow – Gartner predicts that the amount of enterprise data will grow 650 percent during the next five years, a recent Forbes Insights survey of more than 200 executives and decision makers at top global enterprises found that nearly one-quarter of the respondents cited the availability of timely data as one of the top barriers to aligning strategy and operations today. In an earlier post, The Knowing-Doing Gap, I quoted James Surowiecki, from his book, The Wisdom of Crowds, where he said “…information flows – up, down and across organisations – are poor, non-existent or “filtered” in all directions, decisions are made by a very few with inadequate knowledge and information, and there is limited buy-in to whatever decisions are made.” So, with an enormous and growing amount of data being collected, at considerable cost, why haven’t we got it right? I would suggest that there are a number of reasons for the current state of affairs:
- Knowledge is power
- Not knowing what information is relevant
- Too much information
- Bad data
- System complexity
- Go with the gut
Let’s examine each of these.
Knowledge is power
Building on the Surowiecki quote referenced above, Sir Francis Bacon was (among) the first to say that “Knowledge is power”. Peter Drucker expanded on this saying “Today knowledge has power. It controls access to opportunity and advancement.” This presents a cultural and behavioural barrier to sharing information and to getting it to (all) the people who need it – one that should not be under-estimated.
Not knowing what information is relevant
In another life, I led a lot of what we then called Information Resource Planning assignments. We would interview key stakeholders in an enterprise to find out what information they required. Once we had their requirements, I always asked one final question: “If you had this information, what would you do differently?” Very few people could answer this question or had even thought about it. Enterprises need to take an outcome and role based approach to identifying and meeting information requirements. Expanding on my earlier question, we need to ask: ” Based on the outcome(s) we want to achieve, what decisions/actions need to be taken, who needs to take them, and what information do they need – where, when and in what format – to take them, and what information do we need to know that things are working as they should be?”
Too much information
Today we are drowning in information and, as per the Gartner prediction above, it is only going to get worse. Even if the information that we require is available, it may be lost in the sheer volume of information – the information noise. This noise level is only going to increase. If we are to cut through this noise to what is relevant, it is even more critical to take an outcome and roles based approach to defining information requirements. We will also need to beyond the traditional reporting metaphor and simple, or simplistic dashboards to much more sophisticated, yet intuitive (see “System complexity” below) analytical and data visualization tools.
One of the biggest risks to organizations is “bad data quality.” Results from Scott Ambler‘s September 2006 Data Quality Survey show that 46% of data have some data sources that are a “complete mess” or the data itself has serious problems. In an April 2009 data quality PRO survey of Data Quality in Business Intelligence, 42% of respondents reported minor issues, 50% reported major issues, and 4% didn’t know – leaving just 1% reporting no problems. A 2007 Accenture CIO survey claimed that the costs of compromised data quality are clear—billions of dollars squandered each year due to mistakes, manual processes and lost business. Of the CIOs surveyed, 29 percent said that they had minimal or limited data quality efforts in place, even for critical systems, and only 15 percent of respondents believed that data quality was comprehensively (or near comprehensively) managed. Indeed, not a single North America-based organization reported that they have a fully comprehensive data quality program today. Information is only as good on the data it is based on. It will take time to implement workarounds for, and fix the mess that we have created. In the interim, we need, at a minimum, to know how credible the information is and what confidence we can have in decisions based on that information.
ERPs were promoted as one “solution” to the information management challenge, but have proven a challenge for many enterprises – see ERPs – Can’t live with them – Can’t live without them!. Where they have been successful, they may have done a good job of integrating data across enterprises, but few would describe them as easy to use. Even if relevant information is available, if it is too complex or time-consuming to get at it, people won’t. While somewhat simplistic, I have often felt, and even more often heard that “if I need to be taught how to use it, I won’t use it.” Again, information needs to be relevant, outcome and role based, and easy to access and understand.
Go with the gut
Business intelligence was identified in the 2009 SIM Trends Survey as one of the top technologies that enterprises were planning to invest in. Research reported by Accenture in 2008 found that close to half (40%) of major corporate decisions are based on “gut feel”. The reasons for this executives cited most often, which reinforce some of the points above, were: because good data is not available (61 percent); there is no past data for the decisions and innovation they are addressing (61 percent); and their decisions rely on qualitative and subjective factors (55 percent). 23 percent of respondents identified “insufficient quantitative skills in employees” as a main challenge to their company, and 36 percent said their company “faces a shortage of analytical talent.” 39 percent of respondents said that IT capabilities restrictions were a major challenge and 27 percent said there was an inability to share information across organizations within their company. I also wonder if this might not also be a bit of the “cult of leadership” where they believe that they have achieved a level of knowledge/wisdom where they don’t need information to make good decisions.
Information and people are the two most important and, in all too many cases, the most ineffectively utilized assets in today’s enterprises. What information is available to people – be they executives, managers, workers, suppliers, customers or other stakeholders – the quality of that information, and how they use it is a key part of what determines business success or failure – value creation and sustainment, or value erosion and destruction. This is true both for “business as usual” activities and – even more so – for transformational change. If enterprises do not get the information piece right, their transformational efforts, and their survival, will be in extreme peril.