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November 10, 2011

The Relevance of Data Governance; Why the 'I' is more Important than the 'T'

It is always interesting to see that in most enterprises the T in IT is considered most important or at least it gets the better part of the IT department’s budget. This is probably due to the fact that the T is always changing. In fact in order to keep the competitive edge, enterprises need to adopt new technologies, they need to embrace new technologies. Competitive edge becomes cutting edge becomes bleeding edge.
In addition, enterprise need to keep investing in the T because their T vendors have clearly defined end-of-life dates and when the T is not supported, the enterprise is risking its continuity.
The T is a moving target and requires a constant stream of budget in order for the enterprise to keep up with the competition. In order to control the constant stream of budget and being able to manage the changes in the enterprise due to new and improved T’s we define projects to migrate from one T to another, to stay up to date with our T and to assess our maturity with respect to the T.



I think most people understand the T more than the I as well.

In many enterprises the T is treated as an asset, it is considered a business’ capital, where it is only a tool. But we forget about this. Because it is so dynamic, so hard to capture, to restrain and harness it keeps us preoccupied and we forget about the I in IT. Whereas the I is the asset. Without the I there would be no IT.
More interestingly, the I should typically not change at all, there is no end-of-life for the I. Where the T will have to change constantly, the I cannot be allowed to change. Once it is fixed and considered correct, we need to keep it fixed in order to keep it being correct. And where we do whatever we can to change the T, where we spend as much as possible to change the T to keep up with the competition, we spend close to nothing to maintain the I, to keep the I stable, fixed and correct. All the new T we introduce in our enterprise, is directly or indirectly harming the integrity of the I, yet we fail to prevent the T from impacting the I. The T is no longer there to improve the I, to enrich the I, to make the I the added value of the enterprise. In many enterprises the T transcended from the means to the end.
We have become so dependent on the T that every change in the T is controlled, the T is governed by processes, forms, people and standards in varying orders of importance depending on the maturity of the enterprise.

It is ironic that the T was once introduced for the I to benefit from. Enterprises were all about the I in those days, but the T took over, it’s dynamic nature made it more interesting, less boring than the I. Its dynamic nature made us govern its changes. It became our object of expenditure. The I was forgotten, a second class citizen in the enterprise. But it is the dynamic nature of the T that makes it less of an asset in the enterprise, every investment in the T is by its very nature not a long term investment. All of a sudden a short ROI is important for every change in the T, because it is not an asset. The T is an opportunity, one that depreciates more and more rapidly as we are more and more dependent on the T to keep the competitive edge.
The I is hardly changing at all. It is growing in size and forms, but once it’s here, it’s here to stay. The I never changes, it’s location may change but the I itself doesn’t change, the I therefore is an asset must be considered an asset. The I is long term planning and as with all long term planning in order to make sense, in order to be fruitful it requires to be well thought through, to be looked at from any angle and it needs to be handled with great care. It needs to be governed.

Back to reality.

I've been most of my professional life contracted or employed by financial institutions and I think that over the last 2000 years the way banks operate hasn’t drastically changed. The advancements in technologies has made banking more efficient and has provided us with more and more ways to get in touch with customers but the essence of banking hasn’t changed. People trust banks with their money and they trust others with this money. Banks have invented interest and interest rates in order to implement a viable business.
When one looks closely at the different banks all over the globe they mainly differentiate by the level of service offered to their customers and where it is relevant the reputation of the bank in the market it operates in, be it a geographical market or a business market.
The advancements in technology in the last decade have turned financial systems into commodities, where software companies can develop generic solutions for financial markets in a far more cost effective way than these financial institutions can. Due to this commoditization of technology in the financial sector, it becomes more and more difficult for enterprises in this market to differentiate by the level of service without exclusivity. Nowadays every bank has an online presence and the maturity of the bank defines the diversity of its online presence (internet, phone, mobile, smart-phone apps, etc). Because of this, the technology they have at their disposal does no longer provide a means to differentiate them from their competition. It no longer can provide them with a competitive edge, it can merely streamline their processes and polish their image.
These days they have to differentiate from competitors by the amount of information they have about their customers in the context of the customer’s world. The customer wants to know his complete financial situation. He wants to know his exact position, but also the bandwidth of his credit. And he also wants to know this in the context of his current situation. For example, he is abroad and needs to pay a hotel bill, he will not be interested in the amount of money in his savings account, but he will be interested in the limits of his credit cards. But when this same customer is back from vacation he will be less interested in his credit limits, but will be more interested in his expenses for each of his methods of payments. He will be interested in what is paid by which credit card, what is paid for by debit card, when and where does he use an ATM and how much did he take from the ATM. He will want to know what bills are being paid and how much each bill was. What are recurring payments and is there in trend in the amounts of these payments.
It is not technology that he wants from his bank, but information. As a bank, people traditionally trust them with their money and in an ever more digitized world, they trust banks with their data about their financial situation. It is up to banks to turn this data into relevant information for their customers. In order to do this efficiently and to provide the services to their customers efficiently they need technology. The competitive edge is in the fact that a bank can turn this data into information for their customers that is relevant in different situations.
Meanwhile, the same data is used to streamline the internal processes and allow for better analysis of the financial markets and the general business a bank is in. Customer data is the micro level information that is important in understanding macro level economies as long as it is in abundance. After all the financial business is more than anything else a business of people and their trust. And accurate information is the cornerstone of this trust.

4 comments:

  1. Dear Iwan,

    Everytime I read your posts I do really enjoy them, you took me in a journey to understand alot of things behind software engineering philosphy. It is obvious that you are doing a big effort to write such professional and solid posts. I took some time before starting any argument, but finally I decide to share my opinion with you in regards of importance of "I" and "T".

    In the begining I need to clarify the difference between Information "I" and Data "D", so let me explain it using an example:

    If we have a class marks in mathematics as follow:
    * Jhon 10/10
    * Dan 8/10
    * Peter 10/10
    * Lisa 0/10

    the above mentioned records are considered as a Data "D" (These are not information). Then if we need to process these data to get some important information we should use a Technology "T" to get below Information "I":
    * The average mark = 7
    * Number of passed students = 3
    * Number of failed students = 1

    Now you got my point in the difference between "I" and "D", there is no "I" without "T" and by selecting the appropriate "T" you will be able to process and extract accurate "I" from static organization data "D".

    Thanks & Kind regards,
    Muhammad Zaky

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  2. Iwan,

    I just read the paragraphs following to "Back to reality", ... I totally agree with you.

    Did you modified the post, I read it before but this part wasn't there?

    BTW: Thank you for it

    Kind regards,
    Muhammad Zaky

    ReplyDelete
  3. Hi Zaky,

    No I didn't change the post or added anything, it was always like this.

    Iwan

    ReplyDelete
  4. Hi Zaky,

    Actually there are 3 levels:

    1) Data
    2) Information
    3) Knowledge

    Although there are many ways to define each and to relate one to another, I always thought of it like this:

    Data: just raw data that in itself is of no use. It it data collected through all kinds of different means.

    Information: data that is of value. It is used in decision taking or any other way. Information is always explicitly related to data. You cannot have information without the data.

    Knowledge: information that is not based on data. It is implied by relations between pieces of information, these relations can be exist or not. Knowledge is the result of the synergy that happens when you combine 2 or more pieces of information.

    Arguably, data does not need technology to become information. When you just sit next to a road and you note down the various types of cars (sedan, coupe, mini bus, pickup truck, truck, etc) on a piece of paper, that would be data. No technology required only pencil and paper (this you could consider technology, but I don't). Now when you look at your data and you decide that the location to cross the road is not here but to look for a bridge or tunnel, because there are only fast motorized vehicles passing than this data has become information. Without any technology involved. Now when you see a pattern that trucks are always passing in batches of at least 3 and coupes are only passing at the end of you monitoring cycle and mini busses are passing throughout the day. And you conclude that truck drivers probably like to drive together, possibly because this is safe, like a convoy, than this is knowledge, it is based on non-existing relations between your pieces of infoamtion. No technology involved.

    All this is easier with technology involved, and that is precisely the point. Technology makes it possible to do more in less time, or safer, or more accurate. But we are not doing a lot very different than before the arrival of computers. That what we are doing more, we can do because things can be done faster.

    We can do complex calculations nowadays in real time, not because we now know how to do these calculations, but because we can do them faster.

    The bottomline is that in IT there is an I and a T, but we tend to focus on the T primarily where as it is the I that is more important because that is where the money's at.

    Iwan

    ReplyDelete