|
Over the years, your organization has accumulated a portfolio of information systems (IS) to meet various business needs. These systems are now critical business assets that contain crucial corporate data and information and incorporate programs that implement various business processes. The data, information, and programs in these systems are your knowledge assets.
Organizations are increasingly relying on IS to seek strategic value for the business as a whole. Investing in the IS assets to meet your changing needs, managing to reduce IS operations risks, and above all, harnessing these assets for competitive advantage is the primary function of your IS department. Your IS department must not only exploit these assets to improve business process efficiency, but also to improve IS effectiveness in executing the business strategy.
Understanding Your Assets
To derive the maximum value, you must understand the nature of your IS assets and how they link to your business and to other information assets. In this column, I will show one way of analyzing these information assets.
You can divide current IS portfolios into three categories: institutional systems (including ERPs), groupware systems, and personal productivity systems. This categorization is based on the criteria of usage level, data volume, application complexity, depth and breadth of organizational knowledge about the application, and the overall management support provided for the application. This categorization is important from the knowledge management (KM) perspective as it determines the extent of application knowledge deepening within the organization and correlates it to the resources your organization consumes.
Institutional systems have high transaction and data volumes with a large number of users. These systems typically perform low-order processes, such as accounting or operational processes. A centralized IS department maintains the systems, and the data models and program behavior are widely understood across the organization. From a KM perspective, this centralized maintenance and widespread "know how" make institutional systems well managed.
Groupware systems perform higher order processes than institutional systems, such as project planning or product design management. Groups or teams - not the entire organization - understand the data models and program behavior of these systems, and the central IS department mainly supports the systems' technology and integrity (their availability and reliability). Although some IS departments also build capabilities such as skills and know how in developing groupware applications centrally, they primarily cater to ad hoc application needs and do not use a common framework or methodology. From a KM viewpoint, therefore, groupware systems are not managed as well as institutional systems.
Personal productivity systems perform the highest order processes, such as pricing models, sales models, risks models, benchmarks, and so forth. Typically, one or two individuals highly proficient in a particular process model develop these systems, and only a few individuals understand the data models and program behavior. The IS department's support for these systems is purely confined to "off-the-shelf" technology know how. The IS department is unaware of the existence of these systems, except for generic types such as the spreadsheets. From a KM perspective, these systems are poorly managed.
I did not include a separate category for departmental systems because ERP systems have subsumed the departmental systems of the past. In contrast, groupware systems have proliferated across the organization. In addition, the older departmental systems, confined to departments or business units within organizations, were largely function oriented and based on structured data. Groupware systems are not only function oriented, but can also be project or issue oriented. They also use unstructured data and span across different departments and, in some cases, different organizations.
Repercussions
Does it really matter if personal productivity systems fair poorly from a KM perspective? After all, these systems incorporate higher order processes that need not be widely known. They typically support an organization's decision making and strategy management, which is the domain of senior management. Furthermore, unlike institutional information systems, personal productivity systems do not need to be reusable.
These arguments, although valid, do not provide enough justification to neglect examining these systems from a KM standpoint. First, take a look at the amount of resources used for the support. Organizations typically use the most IT resources on help desk support for personal productivity tools, less on groupware systems, and the least on institutional systems. (See Figure 1.)
But even more important, the higher order processes performed by the groupware systems and personal productivity are necessary for managing competitiveness. An organization's business strategic value lies more in these systems than in the institutional transaction systems. For example, a few years ago, a major European airline wanted to purchase aircraft from a U.S. manufacturer at future delivery dates. They wanted to minimize the risk in exchange rate changes at the delivery time as compared to the purchase agreement date. They therefore bought additional protection (or in other words, hedged future aircraft purchase transactions for exchange rate risk). As it turned out, the corporation did not need to buy the additional protection (hedge the transaction) as the bulk of its airline operations business was already conducted in U.S. dollars. It lost money in the additional protection costs by not knowing its overall risk exposure.
Even today, many corporations do not know their aggregate risk exposure, because many risk models are built in isolation to each another, in separate spreadsheets or specialized analytic tools. Given the state of these models, I wonder if such a correlation across the models could be spotted with existing IS alone.
This example illustrates the link between different systems, such as those designed for risk management and for financial accounting. As mentioned before, the former is typically found in spreadsheet forms, while the latter is part of the ERP system. IS, which spans your business processes, has many such links. If you don't identify and understand these connections, you not only lose opportunities to exploit the value of IS, but also increase your risk exposure.
  
|
|
|
|
| |||||||||||||||||||||||||||||||
