5 Steps to Improve Your Information Productivity

By Paul A. Strassmann  |  Posted 10-15-2006 Print Email
Paul Strassmann, the creator of the Information Productivity metric, outlines his step-by-step plan, along with a few key pieces of advice.

You can take some solace in knowing that it isn't easy to earn a top score in the Baseline 500. In fact, barely half of the public companies in the U.S. manage information well. Of the 4,952 public companies, 2,499 failed to generate a positive score when the numbers were crunched for this year's Information Productivity ranking, which is the basis for the Baseline 500.

Of course, that isn't what you really want to know. You want the inside scoop on how to make it on the Baseline 500 and beat your competitors in the rankings.

Paul Strassmann, the creator of the Information Productivity metric, has put forth a number of recommendations aimed at making your company a lean enterprise. Here are his key points, along with a few pieces of advice.

1 - Make the tough decisions. Since costs are a key factor in Information Productivity, companies need to know how to cut their losses on projects that aren't delivering. If management spends too much time trying to fix a project, the time and costs involved will quickly add up and eat the savings the project was expected to generate.

The solution is to either eliminate the project or scale it down to something manageable and less expensive. Either solution will save money.

"Cutting your losses is the quickest way to improve Information Productivity," Strassmann says. "That rule accounts for everything."

2 - Cut the fat. Information Productivity is calculated by taking a company's Information Value-Added—the value added to a company's economic performance by good information management; it equals profit minus the cost of capital invested by shareholders—and dividing it by sales, general and administrative (SG&A) costs, or the expenses related to managing information. So if your costs are out of line, your Information Productivity will be, too.

Strassmann recommends looking at your company's expenses to find out what's weighing it down.

Benchmark those expenses—looking out for pricey plants and factories, excess inventory and bloated SG&A costs—against those of three competitors. That exercise will give you some clues about where the fat can be trimmed. Technology projects can then be aimed at inefficient areas, say, high inventory levels, through automation or the streamlining of processes such as shipping and receiving.



 

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