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Capping the Gusher: The Value of an Effective Information Strategy

  • February 01 2002, 1:00am EST

I have devoted several recent columns to a discussion of enterprise data strategies ­ the plans by which companies leverage their data for better decision making. This month I will talk about the larger strategic context within which an enterprise data strategy works. That context is an "information strategy."

The Accenture Institute for Strategic Change recently published a research report about the corporate use of information strategies entitled, "Capping the Gusher: Turning Information Torrents into Competitive Power." The research defines information strategy as "the part of the business strategy that describes how the firm will leverage information to create value in a dynamic business environment." It's not just that the information strategy has to be "aligned" with the business strategy ­ the two are actually inseparable. According to Debbie Richman, vice president of technology for, "If people think of information strategy as distinct from their business model, they won't be competitive. It has to be central, not peripheral."

An effective information strategy will lay out the ways that an enterprise intends to leverage information to achieve competitive outcomes. It will describe those outcomes and explain the ways that the enterprise will collect, create and use information to help achieve them. It will also have an action plan for practical implementation.

The focus of the information strategy is obviously very different from the technology focus of the typical enterprise data strategy. A data strategy focuses on the key ways to store, move and access the data to support the higher-level information strategy. An information strategy focuses on the business functions that are information-driven, the integration of information planning with business planning and the use of information to make competitive breakthroughs that distinguish companies from their competitors. An information strategy cannot be created by data architects or other members of the IT organization. They may be able to inspire business leaders as to the value of certain kinds of information; however, it is the business executives who set strategic direction and need to define the information strategy for the organization. Tactical implementation, but not the information strategy itself, can be delivered by IT.

The potential benefits of an effective information strategy are huge: Firms that leverage information strategically achieve tight integration across business units, watch customers and competitors actively, and tend to be first in identifying new opportunities. Without the information strategy, executives can't easily identify competitive threats and opportunities. They may not know where their firm has fallen behind, and they don't have a good grip on the kind of information leverage it would require to become a market leader. The Accenture study quotes one beleaguered financial services executive who admits that the extent of their information leverage is to buy an industry publication and then copy what someone else has done.

In many cases, a company's information strategy lacks the clarity needed to create competitive advantage. Most executives interviewed for the Accenture research were sure the company had an information strategy, but could not describe its main theses. Almost no one had in mind a comprehensive framework by which information is shown to support the business model. By contrast, companies using information to achieve competitive breakthroughs have information strategies that are tightly tied to the business planning process.

To develop a powerful information strategy, companies must build information leverage. There are five strategic levers for getting that edge:

Shift the value chain focus: In many industries, over time, competitors end up doing the same sorts of analyses around the same sorts of strategic information priorities. To break out of the pack, a company needs to try to shift the focus to a new, untapped part of the value chain.

Raise the analytic ante: Numbers rule ­ companies that can replace "art" with science and achieve more rigor in their use of information are more likely to achieve a breakthrough.

Integrate pervasively: Create pervasive, end-to-end links including not only your global teams, but your customers as well.

Tune in for impact: Information doesn't have to come from data on computers. Companies get some of their most provocative and valuable information by stationing key people on the boundary of the organization and asking them to tune in to what's going on outside.

Develop new information assets: Leverage unique, distinctive information resources. For example, one pharmacy-benefit management company in the Accenture study created extensive communication networks to connect its proprietary managed- care infrastructure with retail pharmacies nationwide, as well as its own mail- order pharmacy systems.

Innovative companies and leaders of their industries realize that information often provides the key vehicle for innovation. It's the rocket sled that carries the company beyond a humdrum consistency with their peers and propels them to that leadership position.

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