February 13, 2006

"USING INFORMATION STRATEGICALLY"

In Japan there is a movement underfoot for corporations to learn how to use information for strategic purposes, not just tactical. The Japanese want to go beyond their core systems and use information for competitive advantage. To do so, they are reevaluating the fundamental characteristics of information, which is a good place to start.

Even after 50 years of computing, there is still mass confusion over the sheer nature of information. Before we can use information for any purpose, be it strategic or otherwise, it would make sense to standardize our terms and establish a conceptual foundation. Fortunately, this has been well established in "PRIDE" since its inception.

There are those in both the corporate and academic world who have difficulties differentiating between data and information. Although they are closely related, they are certainly not the same. We follow a simple formula whereby:

INFORMATION = DATA + PROCESSING

Data is the raw material needed to produce information. By itself, it is meaningless. Information, on the other hand, is the intelligence or knowledge needed to support the actions and decisions of an enterprise. This is an important characteristic; if it cannot support any actions and/or decisions, it is not information but, instead, raw data.

Data is used to identify, describe, and quantify the objects of a business (e.g., products, orders, billings, shipments, employees, etc). Only when it is assembled into a specific context, at a given moment in time to support a specific business purpose does it become information.

As mentioned in previous broadcasts, specifying information requirements does not begin with the data or the layout of an output, but rather with an understanding of the consumer and what he/she wants to use the information for (actions/decisions) and when (timing). Following this, data and processing requirements are relatively easy to deduce.

There are fundamentally three types of information: policy, control and operational. Policy information is used to establish corporate direction; Control information is used by middle management to implement policy decisions and control corporate operations, and; Operational information is used by employees in the daily affairs of the business, such as processing orders, payroll, and shipping products.

Policy, control and operational information also fits conveniently into a three tiered model of the enterprise which specifies the actions and decisions of the business. Such a model represents the business functions implemented by the enterprise.

Up until now, our discussion has been limited to the use of information internally within an enterprise, not externally. This is where the Japanese interests are piqued. Feeling comfortable with the stability of their internal systems, they now want to take the next logical step and outperform their competitors and seize larger market-share. To do so requires new types of information systems to analyze consumers, markets, competitors, etc., and this is where strategic systems come into play.

TACTICAL VERSUS STRATEGIC

The difference between "tactical" and "strategic" is subtle, but significant; it would be erroneous to consider the two as synonymous. Tactical information deals with our day-to-day activities within the enterprise. Strategic information, on the other hand, is concerned with competitively broadening market-share in order to dominate. Perhaps the best way to differentiate between the two is to think of tactical information as addressing "internal" needs, and strategic information addressing the "external" world.

Whereas tactical systems are ultimately based on the model of our own enterprise, now it becomes necessary to devise new enterprise models representing our customers and competitors so we can best understand their information requirements and where their strengths and weaknesses reside.

Let me give you an example of how this works. I know of an automotive parts manufacturer in the U.S. Midwest who was interested in increasing their market share. To do so, they studied the operations of their customers, specifically independent auto parts outlets. Their study found one of the biggest headaches for outlets was in managing inventory. The parts manufacturer thereby devised a plan whereby they provided a free turnkey inventory system for their customers, complete with computer hardware. This greatly streamlined inventory for the outlets as well as simplifying purchase transactions. More importantly, the parts manufacturer was able to monitor inventory levels of the outlets which automatically triggered reorders as inventory levels got low (as opposed to waiting for the outlet to reorder parts). Further, the parts manufacturer was able to monitor sales trends and forecast production schedules. When sales volume slowed, sales promotions and advertising would be triggered to encourage business. All of this created a "win-win" situation for both the parts manufacturer and their customers. The customer got an easy-to-use and reliable inventory system for free, and the parts manufacturer, in turn, gained wider market share as more and more outlets bought into the program. Smart. Very smart.

Developing strategic systems such as the one mentioned here requires a new breed of systems engineer who understands as much about the outside world as they do about their internal operations, someone who can "think outside of the box." In addition to enterprise modeling and comparative analysis techniques, this next generation of systems personnel must be intimate in trend analysis and forecasting, so they can monitor trends in socioeconomic factors, technology, and the market overall. Such people are a rare commodity and will doubtless be well compensated.

IN CONCLUSION

The more we understand about the external entities affecting our business, as well as our own internal operating limitations, the better we can compete. The Japanese are cognizant of the lessons being taught by our representative in Japan, Kazuya Matsudaira, who uses analogies from the second world war to convey his message about strategic information with remarkable clarity. It is his contention that leveraged information resources used by allied forces played a strategic and decisive role in winning the war. Such an analogy is well understood by the Japanese. They know in today's global economy, the corporate winners will undoubtedly be those who know how to use information for competitive advantage.

OUR BRYCE'S LAW OF THE WEEK therefore is...
"The more we understand about the external entities affecting our business, as well as our own internal operating limitations, the better we can compete."

IN OUR "DOWN THE ROAD" SECTION

A special conference entitled "Cincinnati Technology: the Next Generation" will be held on Saturday, February 18th at the Netherlands Hilton in downtown Cincinnati, OH. Among the speakers will be yours truly to discuss the "PRIDE" approach to Information Resource Management. For information or to register, contact the First Rule Group at 513/375-3291.

On March 6th-8th, the Gartner Business Intelligence Summit 2006 will be held at the Hyatt Regency in Chicago, IL. For info, contact Gartner at 203/316-6757

The 17th International Conference of the Information Resource Management Association will be held May 21st-24th at the Wyndham Hotel in Washington D.C. For information, call IRMA headquarters in PA at 717/533-8879

If you have got an upcoming IRM related event you want mentioned, please e-mail the date, time and location of the event to timb001@attglobal.net

MY "PET PEEVE OF THE WEEK" IS "TECHNOLOGY OVERLOAD"

I recently came upon an interesting study performed by Kings College in London for Hewlett Packard, the purpose of which was to study the effect of technology on worker performance. Basically, the study said that excessive use of technology can have an adverse effect on a person's brain power. This is somewhat disturbing as technology now permeates our society. As an example, while traveling through the airports recently I observed the majority of my fellow travelers "tuned out" by technology. The lion's share of travelers today make active use of iPods, PDA's, cell phones, DVD & CD players, and laptop computers. It also seems to me that fewer and fewer travelers read a book or engage in conversation anymore.

If the study is correct, and I believe it is, the manager should take notice of this adverse effect of technology and discourage the use of such devices, particularly at break time, and encourage more interpersonal contact instead. Technology has its place, but I tend to believe we rely too heavily on it. For example, using an automated calculator allows our brain to relax while the machine performs the math. Too often I've seen people reach for a calculator to perform a simple computation as opposed to working it out with paper and pencil. They simply do not want to engage their brains. Further, I have seen whole engineering departments come to a standstill when power outages brought their computers down. Do they really lack the skills to continue their work? Not really; their minds have simply been turned off by the technology.

Such is my Pet Peeve of the Week.

AND FINALLY...

I received an e-mail from an AC Kemper in Athens, OH who wrote me regarding last week's essay on CIOS's: The Untouchables.
AC writes:

"I take exception to your comments about Chief Information Officers. Having served as one for a number of years, I had an open-door policy for communicating to my staff as well as other executives."

Thanks AC for your note,
If what you are saying is true, then you were the exception as opposed to the rule. Most are out promoting their programs in colleges and technical associations, which is very reminiscent of politicians trying to sell a program. When they are recognized for what their organization has accomplished, many forget to recognize the people who actually saw the projects through to completion. This kind of reminds me of running backs or quarterbacks in football who forget to acknowledge it was their offensive line who made it all happen. Very strange.

I also received the following note from a Bill Taylor of New Hampton, NH who wrote me about the CIO cocoon phenomenon:

"Why should this surprise anyone? Don't ALL professional groups try to cocoon themselves? Politicians cocoon themselves by gerrymandering their districts and by not prosecuting each other when they steal. Civil "servants" such a teachers cocoon themselves by making themselves impossible to fire regardless of performance. Social workers cocoon themselves by making it a crime for parents to discuss court actions in the press. Military guys cocoon themselves by invoking "national interest" and secrecy.

CEO's cocoon themselves by getting compensation committees to A) hide the details in the annual report, and B) make their compensation go up regardless of performance.

Why should anyone expect CIOs to be any different?"

Again, Thanks for your e-mail. Keep those cards and letters coming.

Folks, don't forget to check out our BRYCE'S CRASH COURSE IN MANAGEMENT which is a free on-line multimedia presentation offering pragmatic advice on how to discharge the duties of a manager, whether it be for a commercial or non-profit enterprise. Frankly, for someone aspiring to be a manager or for a new manager, it will be the best 45 minutes you can invest in yourself. Check it out on the cover of our corporate web page at: http://www.phmainstreet.com/mba

For a complete listing of my essays, see the "PRIDE" Special Subject Bulletins section of our corporate web site.

MBA is an international management consulting firm specializing in Information Resource Management. We offer training, consulting, and writing services in the areas of Enterprise Engineering, Systems Engineering, Data Base Engineering, Project Management, Methodologies and Repositories. For information, call us at 727/786-4567.

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Management Visions is a presentation of M. Bryce & Associates, a division of M&JB Investment Company of Palm Harbor, Florida, USA. The program is produced on a weekly basis and updated on Sundays. It is available in versions for RealPlayer, Microsoft Media Player, and MP3 suitable for Podcasting. See our web site for details. You'll find our broadcast listed in several Podcast and Internet Search engines, as well as Apples' iTunes.

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Copyright © 2006 by M&JB Investment Company of Palm Harbor, Florida, USA. All rights reserved. "PRIDE" is the registered trademark of M&JB Investment Company.

This is Tim Bryce reporting.

Since 1971: "Software for the finest computer - the Mind."

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