Tag Archives: United States

The value of information

We all know that data is valuable; without it it would be somewhat difficult to bill customers and stay in business. Some companies have accumulated masses of data in a data warehouse which they’ve used to drive organizational efficiencies or performance improvements. But do we ever ask ourselves when is the data most valuable?

Billing is important, but if we get the data earlier then we might be able to deal with a problem—a business exception—more efficiently. Resolving a short pick, for example, before the customer notices. Or perhaps even predicting a stock-out. And in the current hyper-competitive business environment where everyone is good, having data and the insight that comes with it just a little bit sooner might be enough to give us an edge.

A good friend of mine often talks about the value of information in a meter. This makes more sense when you know that he’s a utility/energy guru who’s up to his elbows in the U.S. smart metering roll out. Information is a useful thing when you’re putting together systems to manage distributed networks of assets worth billions of dollars. While the data will still be used to drive billing in the end, the sooner we receive the data the more we can do with it.

One of the factors driving the configuration of smart meter networks is the potential uses for the information the meters will generate. A simple approach is to view smart meters as a way to reduce the cost of meter reading; have meters automatically phone readings home rather than drive past each customer’s premisses in a truck and eyeball each meter. We might even used this reduced cost to read the meters more frequently, shrinking our billing cycle, and the revenue outstanding with it. However, the information we’re working from will still be months, or even quarters, old.

If we’re smart (and our meter has the right instrumentation) then we will know exactly which and how many houses have been affected by a fault. Vegetation management (tree trimming) could become proactive by analyzing electrical noise on the power lines that the smart meters can see, and determine where along a power line we need to trim the trees. This lets us go directly to where work needs to be done, rather than driving past every every power line on a schedule—a significant cost and time saving, not to mention an opportunity to engage customers more closely and service them better.

If our information is a bit younger (days or weeks rather than months) then we can use it too schedule just-in-time maintenance. The same meters can watch for power fluctuations coming out of transformers, motors and so on, looking for the tell tail signs of imminent failure. Teams rush out and replace the asset just before it fails, rather than working to a program of scheduled maintenance (maintenance which might be causing some of the failures).

When the information is only minutes old we can consider demand shaping. By turning off hot water heaters and letting them coast we can avoid spinning up more generators.

If we get at or below seconds we can start using the information for load balancing across the network, managing faults and responding to disasters.

I think we, outside the energy industry, are missing a trick. We tend to use a narrow, operational view of the information we can derive from our IT estate. Data is either considered transactional or historical; we’re either using it in an active transaction or we’re using it to generate reports well after the event. We typically don’t consider what other uses we might put the information to if it were available in shorter time frames.

I like to think of information availability in terms of a time continuum, rather than a simple transactional/historical split. The earlier we use the information, the more potential value we can wring from it.

The value of data
The value of data decreases rapidly with age

There’s no end of useful purposes we can turn our information too between the billing and transactional timeframes. Operational excellence and business intelligence allow us to tune business processes to follow monthly or seasonal cycles. Sales and logistics are tuned on a weekly basis to adjust for the dynamics of the current holiday. Days old information would allow us to respond in days, calling a client when we haven’t received their regular order (a non-event). Operations can use hours old information for capacity planning, watching for something trending in the wrong direction and responding before everything falls overs.

If we can use trending data—predicting stock-outs and watching trends in real time—then we can identify opportunities or head off business exceptions before they become exceptional. BAM (business activity monitoring) and real-time data warehouses take on new meaning when viewed in this light.

In a world where we are all good, being smart about the information we can harvest from our business environment (both inside and outside our organization) has the potential to make us exceptional.

Update: Andy Mulholland has a nice build on this idea over at Capgemini‘s CTO blog: Have we really understood what Business Intelligence means?

Innovation [2009-06-15]

Another week and another collection of interesting ideas from around the internet.

As always, thoughts and/or comments are greatly appreciated.

This issue:

  • Powering Ideas [Review of Australia’s Innovation System]
    Australia’s innovation agenda for the 21st century. Well worth the read
  • Who Drives Software Innovation? The “Best-of-Breed vs. Giants” Debate [SmartData Collective]
    Is it the industry giants or the smaller, and more agile, best-of-breed players that drive innovation in our industry?
  • The Future of the Workplace [Monocle]
    In the first edition of Monocle’s Design Dialogues, an intimate series of discussions on key design issues, they throw the spotlight on the future of the workplace.
  • How Twitter will change the way we live [Time]
    Are tools like Twitter changing the dynamics of innovation? Traditionally we have used metrics to measure innovation which capture the inputs to the productization process; numbers like volume of patents generated or size of R&D spend. As Steven Johnson says toward the end of this article, “if you measure global innovation in terms of actual lifestyle-changing hit products and not just grad students, the U.S. has been lapping the field for the past 20 years”. What should we measure (as what’s measure is what gets done) if we want to innovate like Twitter?

Innovation [2009-06-01]

Another week and another collection of interesting ideas from around the internet.

As always, thoughts and/or comments are greatly appreciated.

This issue:

  • The Disruption Talk [A VC]
    Fred Wilson (a VC in New York) partly crowd-sourced a presentation on disruption, presented at Google, recorded and stashed on YouTube.
  • In-N-Out Burger’s six secrets for out-and-out success [Daily Finance]
    On the heels of mounting cynicism generated by Wall Street bailouts and the perception that corporate leaders are gaming the system to make a profit, at least one American company is proving that businesses can survive and even thrive while sticking to traditional values.
  • Farmers Didn’t Invent Tractors. They Were Busy Farming. [Ben Casnocha]
    There’s a cliche in innovation / entrepreneurship which says, “Scratch your own itch.” That is, solve problems that you know really well. This is not always so.
  • Obama’s Seven Lessons for Radical Innovators [Harvard Business]
    Barak Obama’s presidential bid succeeded was a research lab for using social media in a political campaign. It differs from yesterday’s political organizations as much as Google and Threadless differ from yesterday’s corporations: all are a tiny handful of truly new, 21st century institutions in the world today. Here are the seven rules his campaign lived by.

The rules of the game are changing

Can China beat the U.S.A. at customer service? Not quite yet according to The Economist, but they do seem to be getting there. If Chinese businesses can start to out perform the West in front office processes then China would start to be the front line seller, not the back office producer. And China has a massive, and rapidly maturing, domestic market to experiment on as it tries to get these processes right.

The Economist’s article provides us with a real sense of the shift in global business that that the current financial crises only seems to be accelerating. I’m a big believer that there’s nothing particularly special about the people in any particular country. I’ve been lucky enough to work on most of the continents and with a diverse enough range of nationalities to understand that we’re all equally intelligent, creative and innovative given half a chance. If we’re all as smart as each other then ultimately success (or not) of a country will come down to the size of its talent pool (population) and the willingness of its businesses to invest. China and India, with their massive populations, and drive to modernize are well positioned to tip the balance in their favor, if they can sort their domestic markets out. This appears to be happening.

Our current assumptions seem to be that the East (China and India) will manufacture products designed in the West (the U.S.A. and Europe) and which are sold to western customers. Most of the value is generated and captured in the West. This makes sense at the moment as the West (and the US in particular) is the largest, homogenous and rich market in the world. Western companies have the advantage of a large domestic market, and overseas companies all target the West as it offers the largest potential to grow their businesses.

However, China’s move into the front office has the potential to flip the entire balance. Western companies could be manufacturing Chinese designs for western domestic markets, with the cash generated in the West and value captured in the East. With its huge internal population Chinese business will have access to the talent it needs to invent and design new products and services. It has have a large domestic population to grow a business and tune its offering. As costs rise and the advantages of labour arbitrage are eroded, manufacturing will slowly migrate from East to West to be close to the client where it avoids currency risk (similar to how various Japanese car companies established factories in the American south).

The question on all of our lips, though, is “How does this effect me?”

The world is a more complex place than we first assumed. Not only is the business cycle accelerating, but globalization and the global financial crisis seem to be changing the underlying rules which drive the business cycle. Global supply chains are becoming yet more complex, and we’re even more tightly integrated into the global village. Plowing the same farrow as last year is no longer a viable strategy if we want to survive. We all need to think quite carefully about not just how we’re going to create good businesses in our local market, but what is going to provide out businesses with the originality they need to survive in a global market as we come under increasing pressure from competitors from all around the globe.

Suddenly it seems like The World is Flat  only scratched the tip of the iceberg.

Innovation [2008-11-03]

Another week and another collection of interesting ideas from around the Internet.

As always, thoughts and/or comments are greatly appreciated.

This issue: