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Information Strategy

The Decisioning Frontier

With corporate America's data processing infrastructures in better shape than ever (thanks in large part to massive investments in ERP systems and Y2K legacy remediation), why are key decision-makers still frustrated by the difficulty of accessing relevant business information? With the sweeping passion across all industries to enhance the value of customer relationships, how can an organization leverage its information base to fully realize the potential of its customer franchise? As unprecedented amounts of data from a company's Web sites pile up ­ is this friend, foe or simply not relevant to mainstream processes? Because the life blood of the wired world is information, now is the time to put to rest these nagging questions by redoubling efforts in establishing a coherent information strategy.

What is an Information Strategy?

An information strategy does not come in shrink- wrap form, which leaves considerable room for debate, if not confusion, regarding its definition and composition. An effective information strategy should set out the vision of connecting the corporate strategy, the e-business strategy and the information asset. The scope of enterprise information which will be managed as a corporate asset is not arbitrary, but rather should directly reflect what is needed to achieve the mission of the enterprise. The information strategy should encompass all types of business information including transaction system data, customer contact data, Web data, decision support data and external syndicated data. It also defines the road map for building the information asset over time. Business priorities and budget realities will likely require an infrastructure which evolves. Capturing, managing and administering data is neither trivial nor inexpensive. The appropriate data-governing processes must be described in the information strategy. Specifying information architecture and enabling technologies is essential, and an ongoing process for information valuation should be provided.

Implementation

Two separate perspectives must be balanced when approaching the information strategy. First, design and build the information strategy and related infrastructure from the customer value point. Information content, access needs, security parameters, management protocols, timeliness and inter-enterprise exchanges can all be derived when dissecting the business strategy. Use this to guide the development of the information strategy. Second, recognize that the information strategy will be put into motion from the information forward. This means that an effective information strategy will serve as a catalyst for improving business operations and competitive advantage through information leverage. At some level, either implicitly or explicitly, it should challenge the organization to perform better. To keep the information strategy germane and impactful, organizational processes, dedicated resources, effectiveness measurement criteria and ongoing executive commitment are critical. The following steps (illustrated in Figure 1) summarize the process for developing and implementing an information strategy.

  1. Align the information strategy with the business imperatives.
  2. Define communities of information producers and consumers (both external and internal).
  3. Map usage requirements, access needs and business applications.
  4. Define the information content model.
  5. Identify cost-effective data sources and storage structures.
  6. Establish data stewardship functions.
  7. Initiate value measurement processes.
  8. Implement refinements for continuous improvement.

The Value of Information

Placing value on a company's information asset has significant implications for shareholder wealth measurement. An information strategy is an appropriate, if not the only, avenue to address this key issue. Current regulations do not permit capitalization of internally generated intangible assets such as information and knowledge, although encouraging progress has been made. Two notions which are gaining increasing clarity and credence in this area are the concepts of structural capital and customer capital. Structural capital is what's left in the company when the employees go home at night. This includes the information, systems and processes that are built into the company's operations, patents and other intellectual property. Customer capital is the value locked up in brands, customer databases and the quality of relationships. Some leading organizations are considering these new types of capital within the context of "performance statements." These are attachments to their annual reports which may potentially improve the view of their equity base by placing value on these intangible assets. Performance statements attempt to quantify the impact on business results which is attributable to information utilization that would allow traditional financial calculations such as return on assets (ROA) to include a company's information capital. This particular mechanism may or may not ultimately succeed, but rest assured that some similar instrument will soon be used to drive explicit valuations of a company's information capital. Formulate and execute your information strategy with a valuation method in mind to put your organization ahead of the competition.


John Distefano is a vice president with Cap Gemini Ernst & Young and is practice leader for the firm's business intelligence and data warehousing consulting services. He has more than 19 years of systems development and integration experience, and he has assisted numerous global 1000 companies with data warehouse and decision support solutions. Distefano can be reached at (314) 259-1578 or john.distefano@us.cgeyc.com.

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