Invest in Your Information Capital

Information is the most important untapped resource in your company. Invest in it. You probably already have the innovative, analytical thinkers, the knowledge workers who can mine the information for new profit opportunities and be the engine of higher productivity.

Many companies suffer because information is hoarded in scattered silos , fragmented by division, department, region and a host of other organizational categories. Siloed information breeds inconsistency, which in turn leads to fatal inaccuracy and hinders the execution of any strategy. Some companies hemorrhage profits every year as a result. Needless to say, this approach to information is bad for productivity. Not only that, inconsistency leads to a slow, but steady, erosion of a company s credibility among its customers, suppliers and eventually the market.

Fragmented information sources means inferior information, an insurmountable obstacle even for the best minds. When the same information is available to everyone who needs it, it represents a trusted single version of the truth. The information is usable and valuable .

Consider these three key areas of business and the strategic opportunities of effectively used information: the customer relationship, the logistics of supply chain and price management, and financial and management reporting.

Customers

Leveraging our information capital enables us to achieve a holistic view of our customers. A bank customer with a mortgage, credit card, checking account and money market account should be treated as one customer, not four. It s a win-win outcome. The customer, consciously or not, assigns a value to being known and understood . And the company realizes higher returns because it is better able to serve its customers. Understanding the total profitability picture of each customer enables us to set effective strategies to increase that profitability.

Fubon Group

Fubon Group, a major Chinese financial holding company consisting of banking, insurance, securities, direct marketing and other subsidiaries, has a five-year plan for getting closer to its customers. Fubon Group knows that seeing each of its customers as one across the company has value on the bottom line. A holistic view will enable better risk management with full portfolio analysis of customers, better wealth management, better contact management and more effective marketing.

 

Supply Chain Logistics

Information is essential to achieving a multidimensional view of our business. Knowing in real-time the detail of shipments in progress, production levels, pricing, sales and inventory will put us closer to the market. We can take control of the business process, anticipate problems before they occur and manage the future. Superior logistics adds up.

Controlling operations often means making difficult decisions quickly and adjusting strategy in real-time to avoid bleeding revenue. Continental Airlines is a model of agility.

Continental Airlines

On September 15, 2001, Continental Airlines knew that it would need to cut at least 20 percent of its workforce in order to deal with the crisis in the airline industry precipitated by the events of September 11.

Because of its mastery of its information resources, Continental was able to absorb the impact of the tragedy immediately into its business planning. The airline differentiated bookings made prior to September 11 and those made after, and applied metrics to each that calculated the possibility of a no-show. Continental management was able to integrate this data with information about where its planes were scheduled to be and where they might be more valuable. They were able to combine booking information with logistics information to gain a more complete picture of the airline s situation during the crisis.

The first week was triage to save the airline from going out of business. Then came the quick and critical decision about resource allocation. 20 percent of the schedule needed to be cut. At least 20 percent of costs had to go, too. Continental leveraged its information capital to make decisions about where to reroute planes, cancel flights and reassign employees .

The airline suffered economically, of course. But Continental s losses were a fraction of the losses suffered by its competitors . Over the long term , Continental will call on its information resources to analyze the way its business might need to change to reflect the economic climate. Continental will use its information to question everything about how people fly; even the hub and spokes model is up for review. The only thing that won t change is the basic vision of the company ”what product do people value, will they pay for and how can it be delivered profitably?

 

Financial Reporting

Financial and management strategy is a continuous process of information gathering, analysis and decision-making. Established goals, plans and strategies need to adapt to changes. Knowing what was, what is and what if means we are flexible enough to respond to the unexpected. To be dependable requires being adaptable. No question, the public trust has been eroded. CEOs are increasingly accountable for the timeliness and accuracy of their results. Better insight into our business also means better oversight. What the market trusts, the market rewards.

Each of these profit opportunities is leveraged by having a single version of the truth ”one complete view of the customer, of the supply chain, of finance and management. Current information must be linked to historical information and both must be equally accessible. History does repeat itself ”the future is the past returning through another gate. Managing the future, avoiding surprises and creating value require access to rich information from across the company and through time.

Customers are more than a series of unrelated transactions. Each is an accumulation of all the transactions they have ever had. Logistics can only be mastered when past performance and future capacity are looked at together. Financial performance is empty of meaning if it contains only one snapshot of a particular moment in time and a backward-looking metric at that.

How to unlock the value of our information capital is the most important strategic challenge facing us today. Each of these information sources is a piece of the puzzle. Integrating the information across the company is the first important step.