Peter Drucker wrote – “The ability to gather, arrange, and manipulate information with computers has given businesspeople new tools for managing. But data processing tools have done more than simply enable executives to do the same tasks better. They have changed the very concepts of what a business is and what managing means. To manage in the future, executives will need an information system integrated with strategy, rather than individual tools that so far have been used largely to record the past…….”
So why is it so hard to sell the business on an information or data strategy? This happens in large part when the cost/benefit analysis is created. In most cases, the benefits are soft and difficult to measure. Business leaders are left asking, “So what is the value of better information?” Since quantitiative answers are so difficult to ascertain, many CBAs end up showing little benefit.
In our experience, framing an information strategy or data strategy as a way to gain a competitive advantage or as a stay in business proposition can be much more effective.
An effective data/information strategy prevents the typical waxy build up of information systems that end up leading to higher costs, rigid processes, and a lack of insight into enterprise data. It creates a more robust analytic environment by starting with an understanding of what information the business needs and creating the underlying technology to meet that need, as opposed to developing a data platform and only then addressing the business needs. Avoid the trap of building a solution first and then searching for the problem. An overarching strategy should lead to providing the right information to the right people at the right time.
Anecdotally, recent events clearly illustrate the value of better information. It has been reported that Goldman Sachs escaped the financial meltdown because they had the information to accurately understand their risk exposure to the mortgage markets and credit default swaps. USAA has excelled as an insurer as a result of their customer satisfaction. That capability is a direct result of a well-executed customer information strategy. Amazon’s $300M initial investment in data warehouses allowed it to capture and present customer information in a way that has led Amazon to obtain the highest ever service industry customer satisfaction score, while simultaneously achieving inventory turns 2X their competitors.
Being able to effectively communicate the value of a data strategy can be the key to getting the project off the ground. Try framing the strategy as a way to gain an advantage through better information if there are no hard, cost-saving benefits. Also, using anecdotes of top performers in their industries is an effective way of “making it real” for the business.