The Other SIM

Susan AndreSurvival Strategy Column

A smart strategic information management (SIM) program will allow a company's management to discover how best to embrace changes in the market.

Today there is a fundamental business need to gain competitive advantage. This is built through far-reaching strategic thinking, and supported by a smart strategic information management (SIM) program.

It pays

"Having better knowledge about a business and the development of superior business strategies is the first payoff from information management."

The essence of SIM is giving management the power to figure out how best to embrace changes in the market. To continuously, or abruptly, change business direction requires adept judgement and knowledge.

Companies need to compete intelligently and one way of achieving this is to improve their information management and use it more effectively. Information provides deep understanding, flexibility and knowledge about a business and its markets.

Having better knowledge about a business and the development of superior business strategies is the first payoff from information management. The real value of information is realised when, through exercising a SIM program, it leads companies to regularly win in the market, with every customer, and with every sale.

A sound SIM program includes: Specifying and collecting information that will support the organisation's strategic goals and objectives; and Mapping out which information should and could be used, how it will be used, who will be using it and when it will be used.

Making information work

Having access to data is one thing, but taking full advantage of it is another. Information overload in the workplace could be due to over-collection of information that does not add value to the decision-making process.

The main reasons for collecting data are to: Improve efficiency of core business; Strengthen relationships with customers and partners; Extend business in new ways; and Develop better service and new products.

If one is not collecting data for the above reasons, then the data should not be collected or stored. Once it has been determined what data should be collected, then it is important to categorise or profile the data in support of business objectives. This is done by examining the business processes and to pull from them the required data to be stored.

Bear in mind that it is important to seek the smallest, most granular replicable unit, such as: Analysing processes into the smallest measurable components; Re-engineering processes to capture the required details (data) at the micro level; Automating the procedure; and Linking automated processes to market-based feedback systems that provide up-to-date or continuous quality measurements, and which allow mixing and matching of data in new ways to create greater value-add for customers.

To be able to trace interaction with their most valuable asset, their customers, companies need to get a complete picture of customers' interaction with their organisation. This requires the combining of data from multiple sources such as a company's sales order or customer claims systems.

By integrating data it becomes possible to track all interactions a company has with each customer – from a customer's first inquiry, through the terms of his purchase, all the way through any other service interactions he had with the company. This makes it possible for managers to have answers to questions such as: "Is there a correlation between where a customer buys our product and the amount typically spent in supporting that customer?"

Another aspect of effective business analysis is that it frequently requires trend and seasonal analysis. To support this, companies need access to many years of data. For full exploitation of business opportunities, companies also need access to information about events as soon as possible after their occurrence.

For instance, with sales analysis a company must determine "the moment in time" product sales to make vital pricing and distribution decisions. They need to analyse past product sales to determine success or failure attributes. Then they need to evaluate successful products, determine key success factors and use corporate data to understand the margin as well as the revenue implications of a decision. They also need to be able to rapidly identify a preferred customer profile based on revenue and margin, isolate past preferred customers who no longer buy, daily identify if the product is in the manufacturing or distribution pipeline, and determine which salespeople are meeting their sales objectives.

Advantages of SIM

Having greater access to information not only reduces costs; it should also be used to increase revenue and the following questions should be asked in this regard: Will the new business process generate new customers and what is the estimated value? (State the estimated profit from purchases by new customers generated by the new process.) Will the new business process increase the buying propensity of existing customers and by how much? Is the new process necessary to ensure the competition doesn't offer a demanded service that a company cannot match? What costs of current systems will be eliminated? Is the new process intended to make some operations more efficient? If so, how and what is the monetary value?

Companies must also realise that an effective SIM initiative will result in improved data quality, and will deliver the most widely used information at the right time. This can include making near real-time financial analysis, interactive financial statements and cash flows possible.

Similarly on the HR side, they must make it possible to evaluate trends in the use of a benefit programme, identify the wage and benefits costs to determine company-wide variation, and review compliance levels of regulated activities.

Other areas of a business could draw benefits from having detailed transactional analysis available such as logistics, inventory and purchasing.

Calculating return on investment

As the return on IT investment is derived from the processes that the technology enables, it is not feasible to calculate the ROI on IT. Instead the return should be calculated on new business processes that are enabled by IT.

Companies must realise the importance of information. However, this information must be managed, stored and measured .The more knowledge workers have access to more relevant information, the greater the strategic leverage companies will receive from their SIM initiative. Access to a collection of relevant, integrated data permits them to compete continuously. It allows them to learn from the past, adapt to the present, and position for the future.

In conclusion, better knowledge about a business and the development of superior business strategies are the ultimate payoffs of having the right information available at the right time.