Monday, June 14, 2010

How fast do you really need your information?

Tom Davemport published two good posts in his blog at Harvard Business Review, based in a research project with Jim Hagemann Snabe, co-CEO of SAP, about what kind of information managers need and how quickly they need it delivered. In the first post, called Are You Getting the Information You Need When You Need It?, he told on the need for speed in information delivery, and in the second post, called How Do You Speed Up Information Delivery?, he described what organizations can do to speed up the information that really matters.

They interviewed both senior executives (15 current or former CEOs and business unit heads) as well as managers who are charged with information delivery. Tom and Jim also surveyed 302 senior executives at large U.S. companies about the speed with which they get the information they need and their desires for faster information delivery.

They said that the executives wanted their information faster. But there were major variations in which specific types of information they wanted at a faster pace and under what business conditions it was essential to have more speed. There is an obvious need for greater flexibility.

He commented about the influence of the state of the economy in the organizations' information needs. In a down economy, executives want information on receivables and payables more quickly (50% mentioned this type) as well as on budgets, spending, and costs (also 50%), cash flow (47%), strategic and operational risk (40%), and employee performance and productivity (36%), he said, And in a growing economy, executives said they want information more quickly on employee satisfaction (27%), market share (13%), inventory levels (12%), supplier and partner data (12%), and scenario plans and simulations (12%).

Some types of information are required more quickly than others, he said. In terms of what information executives currently receive, the fastest to arrive (combining real time and daily frequencies) are sales and news on competitors and customers. The slowest to arrive (i.e., the information is received annually or quarterly) are employee satisfaction, market share, customer satisfaction, and planning scenarios or simulations.

He did an interesting comment: that not everyone wants their information faster, and sometimes it is not desirable to make all information available in real time. The percentage of respondents wanting their information faster than they currently receive it ranged from lows of only 36% for inventory information and 38% for competitor news to highs of 61% for customer satisfaction information and 71% for employee satisfaction.

In the second post, he described what organizations can do to speed up the information that really matters. He commented about technical advances that can help with this problem, like "in-memory" technology, new forms of databases that allow faster data retrieval and analysis, faster microprocessors in PCs and servers that have been created for the purpose of data analysis, and easy-to-use software that allows executives to do their own queries and analyses with a few clicks of a mouse. There are also process, behavior, and management changes that can accelerate information delivery and application.

It's important to identify what information really needs to be delivered more quickly. When you know what you need and how quickly it's needed, you can redesign information-creation and delivery processes to achieve the needed speed. Because managers want information when they want it, it's better to employ pull approaches whenever possible. Alerts — not full reports, but warnings that certain information parameters have gone outside expected boundaries — are often more useful to circulate, and they help to create demand in pull-oriented processes. Analysts and user-focused IT professionals can help to train executives to use the needed tools. IT executives and professionals will need to work hard to ensure adequate data governance, integration, and currency for the information that really matters to decisions.

According him, there is the final step: improving the speed information is used to make decisions. In many cases, decision makers demand faster information only to sit on it in a slow decision process. Putting a clock on the cycle time of key decisions can help not only to speed them up but also to limit unnecessary requests for more data and analysis.

He finished with the following statement: None of these steps alone will solve the information timeliness and flexibility problem. However, together they can speed cycles of business monitoring and decision making, and can yield a more responsive, flexible management approach.

Tom and Jim really did a good study on how quickly the executives need the information delivered, with some expected results, but also with some interesting and surprising findings.

Tom Davenport wrote several books. He is co-author of the excellent book Competing on Analytics: The New Science of Winning (I did a book review on this book). His latest book is Analytics at Work: Smarter Decisions, Better Results, written with Jeanne G. Harris and Robert Morison.

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