Thursday, September 04, 2003

Drowning in Data, But Needing Conclusions: Some Solutions (Part 1)

You can tackles this problem from various perspectives.

The technically inclined will want to pursue best practices. How can we simplify our processes? How can we pursue architectures and data representations with high reuse and low cost modifiabilty? The Convergent Engineering Institute has argued that a move to a an object representation of an organization has enormous pay off for companies, a view I agree with.

The methodologically inclined may want to pursue the Capabilities Maturity Model (CMM) and begin the process of creating an organization that can reliably and predictably engineeer systems, optimize them, make rational decisions about what to do internally and what to outsource or purchase in a best practices manner. The CMM model can make a lot of sense, but with so much of information management purchased and so many legacy systems being maintained, then sometimes the decision to eliminate old systems may be more important than improving the processes of maintaining them.

But my take is more strategic.

It seems to me that while best practices, better engineering and architecture make a lot of sense, reengineering the IT practices behind a "legacy system or activity" makes no sense in having the system or doing the activity in the first place.

In other words, if you don't know where you are going or what your objectives are then it is very hard to figure out the return on investment or the prioritization of investments. Having ROI on an information technology project is not as important as knowing whether the activities it supports are critical to the company.

In the current environment, downsizing and outsourcing are enormously popular strategies. But to be frank, cutting costs is always easy (however hard it is on the managers doing the job and the unfortunates being laid off). But cutting costs often has hidden and unmeasured consequences. Take for example a customer information repository, where a company tracks key information about customers, their accounts, sales activities towards the customers, purchases, warranty information, etc. Cutting costs in this area might have the consequence of storing inaccurate information that would cause customer alienation, lower loyalty and repeat purchase.

In the same way, failing to maintain procurement systems and the other supporting systems that coordinate with key suppliers may put you out of business in a hurry, particulary when disasters strike.

And information systems go through life cycles, so just as you need to separate out the different management, marketnig and reporting requirements for early stage, growth, mature and declining businesses, you also need to make sure that you are not starving new IT projects that have the potential to change industries.

RFID or radio frequency identification (wireless tags for tracking people, inventory and assets) represents one of those technologies in retailing and asset intensive industries.

Alistair Davidson

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