George wishes to thank Bob Zukis for his contributions to this article. Bob is a Partner in PricewaterhouseCoopers' Data Management practice.
It had been a difficult meeting. The CFO wanted to know why this issue hadn't been addressed earlier - when the consequences might have been less painful. After all, the four-day delay in getting this set of internal management reports out to divisional leadership had already cost the organization $3 million.
The controller's answer was frank. "We simply didn't understand the scope of the problem early enough in the process," he explained. That was true, but there was more.
Unfortunately, from the start, IT administrators had addressed the issue - and presented it to management - primarily as a technical data quality "glitch." Four months later, this little glitch's ability to bring one of the organization's most critical business processes to a grinding halt was glaringly apparent.
Situations such as this one are challenging organizations every day. Why? Because business executives are rarely presented with a clear picture of exactly how digital data flows into, through and out of their organizations.
This is a crucial point, because in order to tap into the value of data, executives must understand how this flow of data - across what represents a highly dynamic "information supply chain" - drives the creation of value across all of the critical business processes that impact their organization's performance.
When presented this way, this is a concept that is intuitively understandable to business leaders. Just as raw materials move through a physical supply chain on their way to becoming finished goods - or an equity trade is executed from the inception of trade through final payment - data moves in a very similar manner through an information supply chain on its way to becoming actionable business knowledge and insight.
How Data Enables the Achievement of Business Objectives
What is the information supply chain (ISC)? It is the full set of elements - technology-based, process-specific and organizational in nature - that are necessary to 1) collect information from discrete processes, 2) transform this information from data into knowledge, and 3) distribute this information efficiently and in a timely manner to the appropriate data consumers.
Take a look at Figure 1. Note that the top of the graphic represents the physical supply chain - the pipeline traveled by products as they move through a sequence of value-adding stages ranging from marketing, planning and acquisition to building, selling, distribution and after-market servicing.
Figure 1: What is the Information Supply Chain?
Parallel to this physical supply chain (and fundamentally integral to it) is the set of the key data production activities - in effect, discrete corporate processes - that continuously produce and consume data as it moves through one or more information supply chains on its way to becoming actionable business insight. These critical business processes include business operations, internal management reporting, external financial reporting, compliance and regulation, and policy making.
At every step, the organization's key data consumers are either pulling data from or adding data to these information supply chains. These data stakeholders or constituencies will vary from company to company and from process to process. However, these groups typically include business executives, industry analysts and IT administrators, internal management accountants, independent auditors and external regulators, data aggregators, trading partners and customers, among many others.
The Pulse of the ISC
Consumed within this structure, and operating, in essence, as the lifeblood of the ISC, data is constantly moving along five critical dimensions of the data life cycle (DLC). This data life cycle includes the processes necessary to manage data - as it is created, sustained, analyzed, reported and retired (see Figure 2).
Figure 2: The PwC Data Life Cycle - Enabling the Information Supply Chain
What are the symptoms of an ailing ISC? Precisely what you would expect: chronic problems capitalizing on any or all of the benefits of a streamlined data life cycle timeliness, integrity, completeness, compliance and security.
Knowledge is Powerful Insight is Key
Month by month and industry by industry, progress both within markets and against competitors is increasingly dependent not on the physical movement of goods but on seamless, trusted and reliable flows in information across the extended enterprise - in the form of business knowledge and insight.
In fact, among the most strategic business issues driving corporate performance and, for many entities, corporate survival is whether executive decision-makers are able to adapt to a rapidly emerging set of new business and technology rules and imperatives.
These rules require business leaders to:
- Recognize the value that data assets contribute to enabling critical business processes and creating competitive advantage;
- Acknowledge that in order to create value, data must be transformed first into information and then into knowledge;
- Understand that business process is increasingly dependent upon data process; and
- Commit dedicated resources to managing this increasingly valuable and competitive process.
Can corporations today expect to achieve effective and efficient levels of excellence in data process management?
Certainly, but it requires:
- A detailed end-to-end understanding of the information supply chain specific to your organization's most critical business processes.
- Strong skill sets in managing the data life cycle.
- A deep understanding of business and data process architecture.
For executives in almost any industry, understanding this is critical because, from here on out, information - not physical goods - will increasingly form the backbone of an organization's most valuable supply chain.