Advancements in technology and the standardization of business processes have facilitated the ability of organizations to create robust information solutions. While proven development standards, methodologies and approaches have become widely publicized, their application and impact varies widely. These variances are typically a reflection of the maturity of the organization's business model and information systems and its appreciation for business intelligence (BI) and data warehousing (DW) technologies.
Information Appreciation Stages
Having worked with numerous clients to address their information needs, as well as drawing on my own experience starting a company, I believe that the value of information has a natural progression that occurs as an organization evolves. Based upon these observations, I devised the following progressive stages to describe the characteristics of organizations at each level and their appreciation for information's importance in managing their operations.
The Entrepreneurial Venture
Starting a company requires a good business model, an understanding of the market for which the goods or services are sold, and a passion to make the venture succeed. Small businesses such as a local bakery, restaurant or services provided by a sole practitioner do not require any information systems to start their business venture. With these ventures, the business processes are rather basic and can be performed manually. For example, a local bakery orders supplies and materials without any formal requisition, purchasing or inventory management procedures. In this case, monitoring inventory is as easy as pie - the baker simply looks in the pantry to see what's on the shelf.
Organizations at this stage are either newly formed or a small business with a basic business model that does not require formal operational processes. The information needed to run the business resides in the head of the entrepreneur or on random pieces of paper on his or her desk.
The Automated Organization
As the activities of the organization increase in volume and complexity, manual processes begin impeding the pace of operations. To support operations, transactional systems such as enterprise resource planning (ERP) applications are implemented. An ERP system automates and integrates business processes, thereby enabling the organization to significantly increase its activities. For example, as the local bakery expands its operations from selling goods from its storefront to distributing its products to convenience stores and restaurants, it needs a transactional system that can record and process its sales, production runs, inventory and purchases. Without automation, these business processes would be overwhelming. In addition, business activities are now monitored through reports generated by the ERP system.
Organizations at this stage implement transactional systems to automate their manual processes and operations, and their information needs are not very complex. The information needed to run the business shifts from the entrepreneur's head and becomes the data within the ERP system.
The Reactionary Organization
As the volume and complexity of activities continue to grow, managing operations requires greater monitoring and analysis. This often requires data to be extracted and manipulated from ERP and other transactional systems to fulfill information requests. Continuing with the example of the bakery, as it expands its operations and capabilities to service a larger geographic region, more complex business questions, such as aligning production runs with product sales by geographic region and seasonal trends, need to be addressed. Managing the organization now requires integrated information sets to assist management in their ability to monitor, measure and choose a course of action.
At this stage, organizations automate their business processes through the use of transactional systems and extract data from those systems to fulfill information requests. Standard reports from the ERP system do not suffice. The extracted data is manipulated using spreadsheets or relational database management systems (RDBMSs), to integrate and transform the data into the information that is needed. By using an RDBMS, the organization may also dabble in data warehousing by creating denormalized or aggregated tables for reporting purposes, but it may not yet have created a true data warehouse.
The Data Organization
At this stage of information appreciation, a significant shift occurs within the organization. The focus on collecting and processing data about its activities becomes subservient to the desire for a greater understanding of the business. As the demand for data and information increases, so does the need to create scalable information solutions. Most organizations turn to BI and DW technologies to address their increased information needs. In the case of the bakery, the business has an ERP system that sufficiently allows it to enter and process transactions. However, growing the business into a national manufacturer and distributor of premium baked goods requires management to correctly interpret market conditions and to execute their strategic and tactical plans. To do this, individuals need comprehensive information about their customers, products and operations.
Organizations at this stage implement a data warehouse or create subject-matter-specific data marts. BI applications are deployed to individuals throughout the organization. The available information is logically grouped by business function or subject area.
The Information Enterprise
Management views BI and DW technologies as enablers of the business. Decisions are based upon information instead of "gut reaction" and are monitored to determine effectiveness. Business questions often span business processes and functions. For the bakery that's grown into a national manufacturer and distributor of premium baked goods, an information infrastructure is created that enables analysis to ensure operational efficiencies, continued financial viability, customer satisfaction and product innovation. With the information now available, conventional thoughts are challenged and the business model shifts to capitalize on new opportunities.
Organizations at this stage build an information infrastructure based upon the corporate information factory or dimensional warehousing approaches. They quickly respond to requests for information and changes to the business. Information is integrated and enables cross-functional analysis.
An organization's stage of information appreciation directly corresponds to its information architecture, the sophistication of its management team and its executives' desire to have relevant, timely and accurate information at its disposal for monitoring, analysis, reporting and decision-making purposes. The movement from one information appreciation stage to the next comes from a probable combination of enlightenment due to increased information, management epiphany and new members of the management team who are advocates of BI and DW. It is these organizations that achieve the greatest measures of long-term success. Which type of organization do you work for?
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