Key Findings
- CEOs know that better information can provide competitive advantage, but the majority are unable to articulate what they need and why.
- IT has traditionally been focused on managing technology (applications and infrastructure). The increased business demand for information will drive a shift in IT focus from technology to information.
- CIOs are not well-positioned to meet the CEO's information needs, and they have trouble asking the right questions to determine what those needs are.
- New methods of valuing information and its contribution to business success will have a multiplier effect on the creation of new information management roles.
Recommendations
- To apply information – especially new and unique information – to innovation, CIOs must team with innovation leaders in the business to create a strategy for innovating with information or around new information types.
- For the CIO: Acquire the new skills and methodologies you need to become a strategic information advisor, and to understand and quantify the value of information and its contribution to the business.
- For the CIO and IT managers: Determine what new roles will be needed, and begin to train or acquire the information skills needed to use information strategically.
- For others in IT: Identify yourself as an information professional, and obtain the necessary training and certification to advance your career.
What You Need to Know
It's time to enter the second half of the Information Age. The first half involved building the infrastructure, creating the software and setting up the pipelines that would get the data flowing. But now that the data is surging, what will the second half of the Information Age bring? To put their companies on top, CIOs must reposition IT as a strategic value creation function that is fueled by information.
Strategic Planning Assumptions
Through 2015, more than 90% of business leaders will identify information as a strategic asset, yet fewer than 10% will quantify its economic value.
Through 2015, the demand for information professionals will increase by 50% year over year.
Analysis
In a recent CEO and senior business executive survey (see Note 1), only 60% of the respondents could provide a specific answer when asked, "What new type of information do you think will be the most disruptive in your industry in the next five years?" Herein lies the next wave of opportunities for information leaders. The message is that CEOs do not even know the right questions to ask when it comes to strategic future information needs or information innovation.
CIOs must learn how to link strategic information management to business outcomes and communicate this to senior business management. They must develop the right skills needed to ask the right questions of stakeholders that will lead to new ways information can be delivered, managed and deployed for competitive advantage. For the CIO, this is an important divergence from "business as usual." Our current model of delivering technology projects to meet the often ill-defined needs of stakeholder groups within the company is not strategic. IT organizations must work with stakeholders to help them identify the information they need or to shape the very questions they ask. This is a subtle but important difference to how we do business now.
Transformation Through Information: Strategic Information Management
Strategic information management is the purposeful application of superior and distinctive information in the product or business model for competitive advantage.
Superior information has always been used by industry leaders to stay ahead of the competition. Through a cycle of strategic information management stages, they can stay one step ahead. Gaining exclusive control over a key source of information can sometimes lead to moderately competitive advantage. Where exclusivity cannot be attained, or after it is eventually lost, introducing different quality levels, changing the cost of acquisition and other tactics can be used to extend the life of the opportunity.
The strategic value IT has brought to companies during the past two decades has usually come as change programs that introduced new capabilities, such as dynamic supply chain management, CRM or e-commerce. These have typically required deep and complex technology-based business infrastructure installations. The period of the Information Age in which infrastructure installations dominate is now drawing to a close. Slowly but surely, the technology itself becomes more of a provided service and less of an infrastructure install for most corporations. Technology infrastructure – hardware and software – does not confer differentiation or strategic advantage in and of itself. Indeed, it is slowly becoming a commodity service. This means that the historic focus of the CIO and the IT organization must change in order to survive and thrive.
There is already a major shift in the way corporate transformation programs are best operated. In the first half of the Information Age, business process change was the primary mechanism through which new value was created. Change programs started with a management intent to create a different process view – for example, actively managing supply chains end to end via more-dynamic ordering processes. The most difficult part of changing the organization was agreeing on and instilling the new processes.
Today, business leaders are discovering that changing and agreeing on the information around which the business model operates (the corporate data model) is the most important and difficult task. It can no longer be left until later in the sequence – because complex, expensive multiyear programs will likely be framed incorrectly, make illusory progress for a couple of years and then get derailed. Strategic information management is difficult, but necessary, because competitive advantage requires unique information or the deployment of conventional data in unique ways or both. This is information innovation.
CIOs must spend far more of their personal time on this method of supporting business innovation and growth via strategic information management.
Action: Create a high level (four- or five-page) five-year information outlook – a board-level outlook on the kinds, types and qualities of information that will be needed, or will arrive and disrupt. Work with the innovation leaders within your business to strategize about ways to use information as a driver of business innovation.
The CIO as an Information Leader
Strategic information is all well and good. The problem is that most CEOs do not know what strategic information they need. That is not bad news. It is an opportunity for the information leader CIO (see Note 2).
Even though CEOs indicated that they know exactly what their 2012 priorities are, that sense of executive certainty eroded quickly when CEOs were asked about their future information needs. We asked CEOs, "What new type of information do you think will be the most disruptive in your industry in the next five years?" In this instance, only 60% of CEOs provided a clear answer from among the 21 distinct response categories, and the remaining CEOs appeared certain that they did not have an answer. Even though CEOs are increasingly asking for new information and new types of information, this is not at the top of the CIO's priority list. CIOs are more focused on infrastructure than they are on information.
There is a solution to the long-standing and persistent "information gap" problem. The information leader CIO must learn to approach strategic interactions with a diagnostic mind-set. Diagnosis is the pivotal cognitive process for a wide range of professions, from doctors to avionics engineers. Approaching your organization's stated requests for information as a set of symptoms with underlying causes, rather than at face value, will constitute a profound shift to current approaches to solving IT problems or providing business information. Rather than accepting statements made by business leaders at face value, CIOs must guide CEOs and executive staff on how they should think about information by asking diagnostic questions. These diagnostic questions must be guided by an understanding of the value of information and the strategic direction of the business. Gartner is frequently asked by its CIO clients how they can contribute to business innovation by using technology. Although three-quarters of CEOs claim to have a structured approach to innovation management, it is usually not the CIO who is leading this effort. Another aspect of learning to ask the right questions about what information is needed for strategic advantage is to ask these questions of the right person.
Action: Practice deflecting requests for technology into discussions of the change in the kinds or qualities of information that are being sought. For example, when a vice president of sales says, "My people need iPads," follow up with a question such as, "What will iPads allow your salespeople to do that they can't do now?" Then it is up to the two (or more) of you to figure out what information needs to be managed differently to let the salespeople do what they need to do. That may or may not involve iPads or other devices.
Creating a New IT Function With New Information Skills
To achieve the goal of becoming a strategic partner to the CEO, the information leader CIO must create a new kind of IT organization – an information-focused one. Several new kinds of information professionals will staff this organization. Table 1 lists some of the emerging job titles in the new information organization.
The skills required to perform these roles generally do not exist in organizations today, which will result in a market shortfall for these positions, because, through 2015, the demand for information professionals will increase by 50% year over year. A number of training programs should be considered. AIIM has created a certification program for information professionals (see Note 3).
Action: With your internal IT team, identify, create staff for and train information-focused job roles.
Information as an Asset: Infonomics and Information Valuation
In our interactions with clients regarding the value of information and the implementation of information governance programs, many seem to have no idea how to prioritize information management initiatives, because they don't know what information to focus on, or even what information to keep and what to throw away.
To measure the outcome of the application of information to business strategies, as well as to carry out information governance programs, organizations need some way to measure the value of information and its contribution to business success. The development of methodologies that will support the capability to make strong decisions about filtering valuable information from what adds to cost is in its infancy. We must develop supporting disciplines that enable us to determine the real value — or estimate the risk — of information assets. For this, we must develop and use methodologies that can be adopted by a community of practitioners. Through 2015, more than 90% of business leaders will identify information as a strategic asset, yet fewer than 10% will quantify its economic value.
Information valuation and infonomics are concepts that you may not have heard of, but they will be essential if you are to understand how to manage information for competitive advantage, and reduce the amounts you keep for cost control and risk management purposes. These new methodologies will serve the same purpose as accounting and financial planning disciplines do now, by quantifying the value of an asset and understanding how to best invest that asset (see Note 4).
Infonomics is a concept that Gartner is introducing and will be writing more about in the future, but which we will summarize very briefly here. We define it as:
Infonomics is the economic theory of information as a new asset class, and the discipline of accounting for and managing information as any other enterprise asset.
The principles of infonomics are that:
- Information is an actual asset (if not a recognized asset class).
- Information has potential and realized value.
- Information's value can be quantified.
- Information should be accounted for as an asset (internally).
- Information's realized value should be maximized.
- Information's value should be used to help budget IT and business initiatives.
- Information should be managed as an asset.
Although it is not a principle of infonomics, it is inherent in the definition of an asset that anything that is classified as an asset can also be a liability, which is a place where governance discussions usually start.
Information valuation (see Note 5) is a more limited concept, but useful nevertheless. It is a method by which information can be valued in a specific context. The objective of information valuation is to help companies devise a means of linking information to intermediate determinants of long-term value creation, such as client retention, customer profitability, innovation pipelines and marketing forecasts. A number of principles can be applied to any information asset class to help make this determination. The value of information is a key input into how it should be governed.
Action: With your executive team, evolve an information governance model. Who is responsible for (broad, internal and relative) information valuation, so that proper cost trade-offs can be made? Who is responsible for an information policy regarding how, when and why information can be accessed and deployed for a value purpose?
Note 1
2012 CEO Survey
CEOs can name the companies they admire for competitiveness in applying technology — and can ascribe specific aspects of IT-enabled competitiveness that make the difference — but they hardly ever name their own company as an industry leader. Their responses point to some role confusion, which creates a potential blind spot in the way they assign innovation leadership versus strategy leadership. Meanwhile, the scope, position and role of CIOs look too weak to deliver the progress they need — a factor that requires developmental attention.
Note 2
CEOs Do Not Understand Strategic Information Needs
In the most recent Gartner CEO survey, more than half of the respondents did not know what strategic information to ask for or, worse yet, they named a technology, rather than information. Management thinking at this "information as strategy" level is not yet well-practiced (just as business model thinking wasn't mainstream and well-rehearsed a decade ago).
Note 3
AIIM's Mission
AIIM has been an advocate and supporter of information professionals for nearly 70 years. The association's mission is to ensure that information professionals understand the current and future challenges of managing information assets in an era of social, mobile, cloud and big data. Founded in 1943, AIIM builds on a strong heritage of research and member service. Today, AIIM is a global, nonprofit organization that provides independent research, education and certification programs to information professionals. AIIM represents the entire information management community, with programs and content for practitioners, technology suppliers, integrators and consultants.
Note 4
Operationalizing Infonomics and Information Valuation With Objectives
To increase an understanding of infonomics and information valuation in your enterprise, consider the following potential objectives:
- Improve organizational awareness and appreciation of information as a corporate asset.
- Identify issues with, and opportunities to improve, the supply, management and delivery of information.
- Measure the gap between information's actual and potential business/economic value.
- Identify opportunities for expanding information's role in driving business performance, decision making and transformation.
- Identify opportunities for enriching information assets to improve their value.
- Assess and recommend data governance precepts and practices.
Note 5
Information Valuation
"Principles of Information Valuation" contains a more detailed treatment of the basic ideas of how to value information. Whether you agree with Gartner's rendering of these concepts, the message for information leaders remains the same. Unless you have a methodological approach for relating information to economic or business value, you will not be able to have conversations about its strategic application.
Source: Gartner Research G00229462, D. Logan, M. Raskino, 9 May 2012
