Managing Information Technology

96 Part I • Information Technology

Why Manage Data?

One way to view the importance of managing the data
resource is to consider the following questions:

• How much would it cost your company to not com-
  ply with Sarbanes–Oxley or other financial reporting
  laws because you failed to adequately control data
  integrity or document the source (lineage) of data in
  your financial statements?


• What would your company do if its critical business
  data, such as customer orders, product prices, account
  balances, or patient histories, were destroyed? Could
  the organization function? For how long?


• What costs would your company incur if sensitive
  customer, vendor, or employee data were stolen or
  you violated a HIPAA requirement on protecting
  health care data? What is the value of the trust you
  would lose? Can you identify fraud when customers
  return goods or make claims? Can you link all cus-
  tomer transactions together across different retail,
  online, and catalog sales channels to determine legit-
  imate and unscrupulous patterns?


• How much time does your organization spend recon-
  ciling inconsistent data? Do account balances in
  your department always agree with those in central
  accounting? What happens when these figures do
  not agree? Are there problems with providing cus-
  tom products because of different specifications by
  sales and engineering? Can you track a customer
  order all the way from receipt through production to
  shipping and billing in a consistent, logical way?
  
  
  • How difficult is it to determine what data are stored
    about the part of the business you manage? What data
    exist about customer sales in a particular market? In
    what databases do these data reside? What is the
    meaning of these data (e.g., do the data include lost
    sales, blanket orders, special orders, private label
    sales)? How can you gain access to these data, and
    who else has access to data you consider that you own?
  
  
  • Do you know all the contacts a customer has with
    your organization? Do you know how profitable a
    customer is given their purchases, customer sup-
    port, billing, and service and warranty activities,
    each with associated revenues and costs? And,
    based on profitability, can you make decisions on
    how to treat a customer whose flight is delayed,
    whose account is temporarily overdrawn, or who
    registers a complaint?
    All of these business questions have a foundation in
    managing data. Organizations win by making good decisions
    fast, and organizations cannot do so without a high-quality
    data resource. See the box “Hurricane Windfall.”
    Although managing data as a resource has many
    general business dimensions, it is also important for the
    cost-effective development and operation of information
    systems. Poor systems development productivity is fre-
    quently due to a lack of data management, and some meth-
    ods, such as prototyping, cannot work unless the source of
    data is clear and the data are available. Systems develop-
    ment time is greatly enhanced by the reuse of data and pro-
    grams as new applications are designed and built. Unless
    data are cataloged, named in standard ways, protected but
  
  
  
  

Hurricane Windfall

What do customers of one of the largest retail chains, Walmart, do as a hurricane is heading their way?

Sure, they buy flashlights, but they also buy Pop-Tarts. This was the conclusion of Walmart executives

when they studied trillions of bytes of shopping history data from prior hurricane periods as they saw

Hurricane Francis approaching the Florida Atlantic coast. Their ability to quickly react to changes that

affect customer buying patterns turns into profits.

Walmart gathers data on purchases at the POS terminals and using credit card numbers and other

means enhances this data to match sales with customer demographics, inventory, supplier, and person-

nel data to insure that each store has enough of the right products on hand to meet customer

demand—no more, no less. Even in times of emergencies.

Walmart values its nearly 500 terabytes of data so much that it will not even share sales data with

information brokers such as Information Resources, Inc., and ACNielsen, which buy data from retailers.

Data and the ability to see patterns in the data are competitive weapons that allow Walmart, for exam-

ple, to dynamically reroute trucks from suppliers to better meet anticipated demand. Walmart has been

a leader in the use of its data resource to become a leader in its marketplace.

[Based on Hays, 2004]