Information as an Asset

There's Never Enough Time in the Day

If you're a small business owner, you're likely putting in a sixty hour work week to manage your business and, well, sixty hours? Yeah, that's probably a conservative figure. There's customers to appease, employees to manage, vendors to pay, and - somehow - you need to squeeze in more marketing and networking to help it grow. There's never enough time in your day. Managing technology is the last thing on your mind.

And it should be! You've got enough to worry about. Technology is a utility. It's like the lights, an elevator, or the HVAC system, or an appliance. You turn up the thermostat and it gets warmer; you flip on the air conditioner and it gets cooler; you flip on the lights and they illuminate a room; you open up the fridge and it's cold. Always. Always, always, always! This stuff is usually so rock-solid that we barely consciously think about them.

Good Data is the Byproduct of Automation

Predictability is the promise of technology and the benefit of automation to your business. You invested in computers to automate your business processes and make things faster, more accurate, and more reliable (you guys remember my blog post about that earlier this week, right?). Everything should always be humming along, providing the right stuff to the right people at the right time, and you shouldn't have to think about it.

Source: chris-kimble.com.

That predictability and automation creates the foundation of the Transaction Processing System (TPS) - the lowest layer of information systems theory. This is where we're trying to reduce the influence of manual labor and produce the most accurate forms of data we can. It's the first place I start when coaching small business owners on managing their information as an asset: Their data is an invaluable byproduct of their operations.

Data is invaluable because of its influence on the Management Information System (MIS), the second tier of information system theory. This is the reporting and tactical analysis layer. It sits above the TPS and completely relies upon it. A great example of the MIS layer is a bank statement that summarizes the thousands of transactions that occurred in an account over the period of a month. The bank statement gives you a quick picture of deposits, withdrawals, and balances - without having to add and subtract the thousands of those little niggly transactions that took place over time - and allows you to make a decision.

Garbage In, Garbage Out - The GIGO Effect

How dependent is the MIS layer on the TPS layer? Watch the causality here:

  • If I run a report on bad data ...
  • I'm going to get bad or inaccurate information ...
  • Which leads me to make incorrect decisions ...
  • That eventually costs the firm in real waste, lost efficiency, or lost opportunity.

Garbage In, Garbage Out, right? Now, imagine doing that, over and over and over again. Automation's great, but if we don't treat information as an asset - that it's important to get the data right and accurate every single time - our business will chronically be making bad decisions and wasting money, except repetitively faster! Over and over again, we'll make the same dumb decisions based on the conclusions of errant data.

The Big Picture

Now, you are a business owner and likely don't have a lot of time to think about really abstract information theory stuff like TPS and MIS layers. I get it. That's my job. But here's the big take-away that I'd like to give you as a manager:

  • How is your organization treating information as an asset? How much time and attention are you paying to make the TPS layer the most accurate it can be to get the greatest value out of the MIS layer?
     
  • What is your organization doing to verify and challenge the results in the MIS layer? Not all data can be accurate; not all MIS layer conclusions should be relied upon. Do you challenge the assumption of TPS accuracy?
     
  • Is the reporting found in the MIS layer the right report? For the right people? Is it providing the right information to the right people to help them do their job most effectively? Are there more reports, better reports, that could be used to solve an ongoing problem?

Now You're Thinking Strategically!

If you can start thinking about your IT spend in this way, you're just broaching the problem of strategically managing your information system. You're thinking proactively about the effect of automation, the data byproduct, and the expectations of efficiency. Kudos, dude: you're managing the problem. You're treating your information system as an asset.

Next time: core competencies and intellectual property.

R