SEATTLE — Companies that want to avoid “”data paralysis”” in the coming years should consolidate their business information into a single view that is accessible not just to the CEO, but across the enterprise.
Attendees at Partners 2003, the Teradata User Group conference held last month heard
that statistics from the University of California at Berkely indicate there will be more data created in the next two years than was created in the past 40,000 years combined.
“”That means there will be a decision-making crisis,”” said Mark Hurd, NCR Corp.’s chief executive, speaking to about 2,700 conference attendees. “”The number of decisions executives will have to make daily is doubling and tripling.””
And if companies weren’t already snowed under with information about their customers and partners, it means organizations are headed for an information avalanche, forcing them to eliminate information boundaries to avoid bad decision-
“”We are going to see an information explosion like we’ve never seen before, and what will separate the winners from the losers is how they navigate the business paradox,”” said Hurd, referring to the need to manage increased amounts of data, while reducing costs and boosting revenue at the same time.
Part of the increase in information is attributed to indications the Web will touch every aspect of business, including the management of physical assets and the tracking of a complete life cycle of a product directly with Internet devices.
“”When you talk of enterprises today, roughly 30 per cent of the Global 3000 companies are positioned to have one view,”” said Hurd. The other 70 per cent have their information organized in silos. Most companies think in terms of silos.””
The challenge for the CIO is to “”connect the dots,”” something that is difficult to do when the goal is to get rid of organizational boundaries.
“”In the end, it all comes down to the leadership of a company that is willing to interrupt the status quo,”” said Hurd.
“”The CEO will always get good data, but the challenge is making it available to the masses,”” said Eric Berg, chief administrative officer and former CIO at Goodyear. “”That’s the challenge; how do you democratize decision-making?””
While technology is often touted as a means to an end, it is senior management that must decide how to best deliver one view of a company’s data.
“”Technology can’t do the driving, we have to do that ourselves,”” said Mark Lahr, manager, IT data warehouse with 3M Corp. “”As race car driver Mario Andretti once said, ‘If everything seems under control, you’re not driving fast enough.’ Today every company is an information company, but not all are prepared to deal with it.””
It wasn’t until the early ’90s 3M, a maker of products ranging from pharmaceuticals to sandpaper and Post-It notes, realized it did not have a consolidated view of its information, Lahr said.
“”We would ask a question about a customer and get several different answers,”” said Lahr. “”The first thing was to define the business goal — and that was to have one single view of the enterprise. We also had to deliver measurable ROI.””
Lahr said the result was cost reductions and money-making opportunities at the same time. To date, 3M has realized more than US$800 million in worldwide savings because of its central view initiative.
“”We couldn’t have done it without consolidating systems,”” Lahr said. “”We learned it’s important to keep the data warehouse close to the day-to-day business. Users get data in a format that is easy to use such as point of sale information, supply chain, price comparison — all online.””
Hurd also spoke about the “”enterprise paradox,”” which sees organizations dealing with double and even triple the amounts of data they dealt with previously, and at the same time increased pressure to reduce costs in terms of managing the data and creating one view of the enterprise without causing data paralysis.
“”The CIO is being hammered by the CEO about bringing down costs,”” said Hurd. “”You have to improve decision-making in an era of information explosion. CEOs and CFOs can no longer tolerate decisions based on multiple views.””
He said CEOs, CFOs and CIOs are concerned about getting an enterprise view of their organizations. Some of that concern is driven by legislation, but it is also due to the demand to lower costs and produce higher ROI.
“”To avoid data paralysis you need leadership,”” said Lahr. “”The role of corporate leadership is to set a vision and direct decision-making and that is where processes and technology come into play. If someone asks what your data warehouse does, your upper management team should be able to answer that question,”” said Lahr.
Customers gathered at Partners 2003, such as Mary-Jane Jarvis-Haig, senior manager of data warehouse with the Hudson’s Bay Company, said they are using data warehouses to better understand what customers want to buy and which stores should receive what products.
Retailers such as Hudson’s Bay and Wal-Mart are considered front-runners in using customer and supplier data to their advantage and are among those “”paranoid about their marketshare.””
Gartner Group has predicted that by the end of 2006, if companies haven’t consolidated their data into one view they will no longer be considered competitive in their market. However, Teradata executives predict “”the game will be way over by then.””