Turning data into useful commodities is the subject of Data Driven: Profiting From Your Most Important Business Asset, a new book by consultant Thomas C. Redman. Too many companies fail to make that basic process happen. Part of the problem, as Redman argues in this excerpt, is that the flow of data is misaligned with business needs.
In some respects, organizations are singularly ill-designed for the Information Age. Almost all companies are organized along functional lines--finance, order fulfillment, product development and so forth. The various departments and business units connect at the top. Most day-in, day-out management is conducted vertically--up and down the organization chart.
In contrast, most data flow horizontally, from one person and department to the next. Data that are born with a customer order wind their way through fulfillment, inventory management, and billing.
Data born when a patient checks into a hospital follow a parallel path as the patient winds his or her way from the ward to various laboratories to the operating room. Similarly, data born when a retailer requests delivery of a shipping container follow a parallel path to the container as it transits the globe. Importantly, these horizontal flows align with the ways organizations create the most value for customers.
The obvious conclusion is that horizontal data flows to create value and day-in, day-out vertical management are completely misaligned. On an organization chart, they are perpendicular to one another. Further, data spend much of their time in transit, effectively in the "white space" of the organization chart, where they are essentially unmanaged.
Adding to the woes brought about by the misalignment of management and data flows is confusion about the respective management roles of the IT department and the business when it comes to data. Indeed, many people automatically assume that data and information are largely "systems issues" and therefore the natural province of IT.
People reach this conclusion with good reasons. First, most people access [much] data and information through their computers. Second, to define new data or effect any changes to existing data, people have to go through IT.
Third, IT often leads, or at least appears to lead, business intelligence, enterprise resource planning, customer relationship management, and data warehousing projects that promise better reports and higher-quality data--despite the fact that the previous system did not deliver on the same promise. Finally, IT always seems willing to take on data clean-up projects, in effect, assuming responsibility for erroneous data.
In time, I believe that more organizations will evolve their management systems to better utilize data and information, improve their quality and account for the special challenges in managing them. As one example, many will name chief data officers to lead and coordinate their data and information programs.
One note of caution: It took a full generation to work out the organizational forms best suited to the Industrial Age. One should expect that it will take that long to work out organizational forms fully attuned to the challenges of the Information Age.
Avoiding the "If it's in the computer, it must be the province of IT" trap pays enormous dividends. Organizations should adopt the stance that data and information are the province of the business [departments] ... responsible for the quality of data they create and are responsible for ensuring that their people can find the data they need.
Headquarters may set certain ground rules that departments must follow, just as headquarters sets policy for the management of financial and human assets. And it is perfectly appropriate to assign certain roles to IT. But the business bears ultimate responsibility for work conducted on its behalf.
Reprinted by permission of Harvard Business Press. Excerpted from Data Driven: Profiting From Your Most Important Business Asset. Copyright Â© 2008 Thomas C. Redman. All Rights Reserved.