If CIOs are to continue to play a central role in their enterprise, helping it to grow and develop, then the focus must be on using information better. One approach is to use the ‘information value chain’, which connects customer and market needs with growth in products, services and customers.
Whether they know it or not, all enterprises already have an information value chain. Squeezing maximum business value from this chain requires all of its links to be as strong as possible.
To get these links to their peak strength management guru Tom Davenport, professor of IT and management at U.S.-based Babson College, has identified four key success factors: the right focus, the right culture, the right people and the right technology.
The right focus
Leading companies take a rigorous fact-based approach to expose customer needs and identify opportunities for customer- and market-driven solutions. Rather than a random trawl, the analysis should begin with a hypothesis, which will help expose the type of information needed.
The hypothesis needs to have a testable impact using an appropriate analytical technique. And the hypothesis needs to lead to certain outcomes. Action must be taken as a result of the analysis, so if the hypothesis is true, it should lead to behavioral change.
The right focus also requires testing opportunities with strategic experiments. There are many good opportunities. The question is: which opportunities have the greatest potential? Strategic experiments evaluate the effectiveness of these opportunities.
The right culture
There has to be a culture of information use — an information orientation.
Business executives must see information as a vital strategic ingredient and not just a way of describing the business. They must learn to use information dynamically. For many, that represents a new way of working and will take some time to learn.
Business executives must also be willing to work more closely with the CIO and IS. To succeed, both sides need to change.
The right people
A third critical success factor involves having the right people. Specialists are needed to do the analysis work — to understand the business and to use the sophisticated tools. Analysts need to be able to explain complex ideas in simple terms and have the ability to work closely with decision makers. This means recruiting individuals with the analytical muscle to be able to do the job.
The right technology
Finally, an information value chain requires the right technology.
Most companies will have a business intelligence tool in place, and managers will often use it, combined with Excel, to produce descriptive statistics. Although powerful, often these tools do not have the capability needed to predict opportunities. So many enterprises also use tools such as specialist statistics software or modeling and simulation.
But, as the saying goes, “A fool with a tool is still a fool.” The value of these tools comes from the quality of the information, analysis and interpretation of the results. A close partnership between IS and the business is needed to get the best from these tools.
To do list
Many case-study enterprises identified by Gartner research have spent years developing their information value chains. Further investigation reveals some common themes.
Have the right information management practices and processes in place.
Consider implementing a business intelligence solution.
Seek to broaden the sources of information you have access to.
Become more business aware. You must understand where the persistent business needs are and thus the opportunities for the use of information.
And work closely with business executives. For most, this means identifying executives who are willing to try new ways of using information to help them in their role.
In short, the information value chain defines new responsibilities and a new way of working for CIOs. It focuses attention on the use of information rather than the management of information.
Andrew Rowsell-Jones is vice president and research director for Gartner’s CIO Executive Programs