Strategic Information Management vs. Strategic Business Management


The following paper was submitted and presented at the Australasian Conference on Information Systems, held in Hobart, Tasmania, Australia December 11th through 13th, 1996 by:
Bela J. Berci
Principal
Advanced Information Concepts


ABSTRACT

Strategic Information Management is a common phrase used by Information Technology practitioners. At the same time, the acceptance of the concepts implied by the terminology is not attaining much credence in the world of management and executives.

There are both real and philosophical reasons why a focus on Strategic Information Management as a solution to alleviating an enterprise's challenges is not garnering enthusiastic acceptance. To understand why this is there is a need to explore the concept in terms of what is really being proposed, what it means, and what it is trying to achieve.

The most effective manner of dealing with a complex and dynamic scenario is to be able to model it and explore its interdependencies. This paper provides an overview of a model and explores why and how enterprises operate the way they do. The paper will then continue with identifying the contextual role of strategy, information, and management. This provides a way to evaluate Strategic Information Management, from various perspectives. The focus at this time will be on technological operations, operational management and enterprise executives. The analysis of the model, provides insight into the dynamics of enterprises and how technology supports an enterprise's needs.


INTRODUCTION

Strategic management, is an overused and largely misunderstood terminology, that is often used with little understanding of either what strategy is or what it will deliver. Information technology utilizes this terminology with the expectation of achieving some level of respectability and priority from decision makers. Often these concepts are lost on these same people, who are reticent in accepting strategic information management as being of value, or even understanding what it is. This is not to say that information does not have value. Nor does it imply that management of technology is not important. It does imply that management views information differently from the Information Technology specialist.

Most practitioners in Information Technology continually encounter the need to justify and rationalize their activities to management. This is a continuing effort even where the management of information is well established. Often, the rationalization for this continuing need for justification is the changing technology and the specialization of knowledge required to work in the field, making the understanding of technology directions, opportunities, and requirements difficult to understand or appreciate. Practical, real life experience seems to indicate that in most instances the real reason is that the information technology group is not seen as addressing the needs of the enterprise, or its priorities. The communication or interpretation often being lost amid technological issues and rigor based approaches.

This is a broad and all encompassing statement that will raise the ire of some and the sympathy of others. The perspective has validity if viewed from how businesses operate and how management (not technologists) addresses information technology issues. The difference in perspective is often emphasized by the ongoing management 'strategy' to hire consultants or outsiders to support management rather than the information technology group within the enterprise. Often the justification for this is the need for an unbiased perspective, or to obtain the input from an expert who has already done what is being promoted. In most cases the consultant merely repeats what the information technology group has been advocating and obtains buy-in. In rare cases the technology group is re-directed to other initiatives.

There is a difference between what the consultant and the technical group provide that has a bearing on the level of adoption of initiatives. The difference is in how the issues are presented, and in what context. This appears to be a simple solution to a difficult and complex issue. The reality is that the solution is neither simple nor obvious. In many cases what the "consultant" or expert does do, is present the recommendation of what is needed in terms the business manager or executive can relate to, in context of their concerns and priorities. The consultant will also provide direction to the information technologists to position their concerns and solutions in a manner that will achieve acceptance. The challenge is how can this be done in a continuing and consistent fashion, that will support the business needs of an enterprise on an ongoing basis. The current trend is through "Strategic Information Management". This returns to the beginning of the argument presented here. To get out of this loop, a broader perspective needs to be taken as to what is information, and how it is positioned within an enterprise.


A PERSPECTIVE ON ENTERPRISES

Utilizing standard modeling tools and techniques, and recognizing the existence of the various components of models, i.e.: entities, information, functions, organization, external entities, and purpose, it is possible to develop a generic enterprise model. Using as a framework a broad variety of models developed for diverse enterprises, and confirmed through assessment of numerous other models (including economic, environmental, and organizational models) a composite enterprise model can be formulated. This model can be used to assess what enterprises do and why. In this instance the model is used to establish a broader perspective of where information fits within an enterprise. Once defined the model provides a way to evaluate the impact and importance of information within the enterprise, and subsequently using the same model explore how various groups within the enterprise view information.

Any enterprise model displays two primary characteristics. The first is that enterprises operate with a given, definable set of components. The second is how it structures these components to make them work together as a cohesive whole. At a simplistic level this can be viewed as depicted in Diagram A:


The Components

The components are the building blocks that the enterprise uses to create and provide the products or services it offers. Anybody or any group has available or access to some set of these components that it can utilizes in order to achieve its purpose. These may be as basic as strength of personality and available time, or be an extensive and far reaching enterprise with massive resources available to it.

The extent and nature of the components can be far reaching, or they can be relatively simple. Components can be classified into three distinct types, based on the attributes of the components and how they relate to the enterprise. The classes of components are:


(a) Resources

Resources are those things that the enterprise has influence over and can utilize to achieve goals and objectives. Resources may be personal, i.e.: an individuals own skills, and time, or they may be those things that are acquired as a result of having expended skills and time. It is the utilization of Resources in some form that provides the mechanism to address and achieve purpose, goals, and objectives. In standard "system" related modeling, these resources are normally depicted as entities.

It is through the use of resources that additional resources can be acquired, assuming that they are applied in some productive manner. Or they can be applied directly to achieving some purpose. The use of resources is therefore twofold. They provide the means for more resources to be acquired, providing the means to attaining a particular purpose. The first represents a productive activity, the second an expenditure of resources. Productivity occurs where available resources are combined in such a way as to create value greater than the sum of the parts. Expenditure of resources occur where access to a resource, or its combined product is no longer available.

A simplistic representation of resources is presented by Diagram B. There is a continuum of resources an individual or enterprise controls. The resources can be classified into some basic types.

 DIAGRAM B - Resources


(b) Environment

Environment is the framework that allows resources to be utilized. These components relate to the external entities identified in enterprise models. Environment provides the context that the enterprise operates within, including how other things that it has little or no control over influence the way resources need to be dealt with. To minimize impact by other things the focus by an enterprise is to increase the extent of influence over the environment, or to position the enterprise such that there is minimal external influences. The greater the level of influence over environmental factors, the less the amount of external influences that can dictate what one must do versus what one would like to do.

Environment and Resources are tightly related, as resources are a subset of environmental factors. The Resource line as depicted in the preceding diagram, can be superimposed on the environment, providing a two dimensional perspective, as shown in Diagram C:

 DIAGRAM C - The Environment


(c) Purpose

Purpose constitutes what one wants to achieve. In modeling, purpose is reflected by goals, objectives, policies, etc. These form the rational or framework that decisions are made or guided. This does not imply that the decisions are necessarily good ones, but implies that every decision is based on an expected or desired result, real or imagined. Purpose may be self actuating, that is defined by oneself, or they may be imposed, that is dictated in some form by an outside influence.

Purpose may be explicit or implicit. Explicit statements of purpose may include published mandate statements. Implicit statements of purpose may be cultural guidelines that are adopted or enforced by the environment.

The adoption of a purpose may be explicit or implicit. Explicit adoption of purpose would constitute a formal acceptance of the purpose. An example might be a swearing of allegiance to some cause or organization, or the signing of a legally binding contract. Implicit adoption of a purpose would be the assumption of a role within society. An example might be the adoption of role as a homemaker, or breadwinner, as defined by current customs and roles within a society. Whether implicit or explicit, subsequent decisions are made based on how they effect the role being adopted.

In applying purpose to the two dimensional model identifying resources and environment, a third dimension is applied. This relates how available resources are used within a given environmental framework. Diagram D shows a depiction of how the model evolves with Purpose included.

 DIAGRAM D - Purpose


(d) How the Components Interact

The three aspects of purpose, resources, and environment all interact to form unique combinations for any individual or enterprise. Where individuals or groups do not interact with each other, that is they are not influenced or threatened they will co-exist. Where individuals or groups impact each other they must either resolve how to cooperate or one will dominate the other, or at least try to. Within a successful infrastructure, the various groups or individuals involved have resolved such conflicts, usually through some common set of rules that are used to support interactions. This may be in the form of cultural norms, laws, regulations, policies, etc. That is there is an inherent structure the group operates within, with some overlying commonly accepted purpose that is used as a reference. Note that such rules and norms may be either mutually accepted or imposed by one or the other party or even, by a third party, such as in the case of governmental legislative directives.

There is also a hierarchy of purpose that individuals use to operate within. These include purposes established at the personal, local group (communities, circles of friends, etc.), businesses, regional (city and state or provincial), national, and international levels. As the group's size becomes larger, the level of sophistication of the purpose, resources, and environment mix become more complex and formal, not only in relation to the number of components, but also in relation to the number and diversity of interactions that can and do occur.

The extent of control over resources and environment, in the context of purpose, creates a scope of influence that limits what an enterprise can do with what. This provides a frame of reference for an enterprise, or a scope of influence as is represented in Diagram E.

 DIAGRAM E: - Scope of Influence


The Structure

The structure represents the manner by which the components are combined. Structure is what holds the components together.

Implied within the discussion of the components, is the need for structure. Structure allows for the components identified to operate together in some meaningful way to achieve some identifiable purpose. These are not haphazard interactions. Unpredictable results do however occur. Depending on the complexity of the components involved, and subsequent hierarchies of structure, the result of any combination of components may not result in what was intended. That is not to imply that it was not predictable, merely that the interactions were not all known or well controlled.

The Structural forces act on the components in distinct ways in order to support the interaction of the components. These interactions ensure that each of the components has a relationship between the other components, either directly or indirectly.

Structure deals specifically with the interactions of the components. Within the context of enterprise modeling, structure can be classified into three broad areas. They are:


(a) Function

Function deals with the things that need to be done in order to achieve a desired objective. It describes the how and is dependent on the components available. Function describes not only how but the interrelationships between the steps, that is, what is required first, second, and so forth. Function in enterprise modeling is usually depicted by data-flow diagrams that link entities, external entities, and flow of data, given a set of technological and environmental factors, intended to achieve some given purpose. Function would be represented by one of the sides of the structural box identified in the model, as represented by Diagram F:

 DIAGRAM F: - Functions


(b) Organization

Organization deals with how the functional tasks are allocated. Within enterprise modeling, organization is matched against function, resources, roles and responsibilities, information needs and information generated, and as appropriate how it relates to external forces. Where there are more than one individual or group involved in how responsibilities are allocated, clear and well understood roles need to be identified in order for a successful completion of an activity. This includes not only the performance of identifiable tasks, but also ongoing decision making associated with the identified roles. This implies that each individual involved, while dealing with different aspects of an enterprise, must have a clear and agreed upon objective that fits within and reflects the overall purpose of the organization.

Roles are dependent on the individuals involved, the skill and experience of individuals, the cultural makeup of the enterprise or group, the technology available or in place, etc. While there are established organizational models, no two organizations are the same, and subsequently the allocation of functional responsibilities are equally diverse. As any of the components change the organizational structure will change as well, but not necessarily concurrently or in desirable directions.

In context of the model being developed, organization reflects a second facet of the structure of the enterprise, that can be depicted as per Diagram G:

 DIAGRAM G: - Organization


(c) Information

Information is the combination of data within a specific context, that provides support to decisions or is the outcome of decisions. Information is different from data, in that data deals with facts, such as how many, where, who, etc. Information provides an interpretation of what the data means. Information is subjective. Data is objective. This is an important distinction, because treating information as data or data as information is misleading and can result in invalid decisions. The two are often confused, either unintentionally or intentionally. In both cases leading to incorrect choices that will bias the attainment of a particular purpose. This does not mean that information cannot become data. If information is consistent and can be reproduced in a predictable fashion, and it is interpreted in the same manner by those involved, then it becomes data. Subsequently there can be developed a hierarchy of data and information, where information generated by one group, becomes data for another. It is important however that how this information is derived and in what context be well understood by the individuals using the information as data. Otherwise it can and will be used out of context, and subsequently will lead to the wrong solutions or results in further activities associated with that information.

Information, as with organization and function, provides a supportive framework to an undertaking. The type and nature of information required will be directly dependent on what is being undertaken and by whom. Whether the information will be used to support ongoing operations or administrative activities, the distribution of activities will directly influence what information is provided to whom and when. This needs to be in context of the enterprise's available components and the structural facets of organization and function.

Information provides the third facet in the model, and can be conceptualized as shown in Diagram H.

 DIAGRAM H: - Information

This model proposes that information is not a component and thereby implies it is not a resource, but a structural characteristic of an enterprise. This distinction is important, and can be more clearly explained by pursuing the dynamics of the model further.


The Dynamics of the Model

Having established a model that describes what the enterprise does or how, the model needs to be evaluated in relation to what is important and why. This requires an analysis of the interactions that occur between components and structure. This analysis focuses on establishing those criteria that are critical to achieving the enterprises mandate, given its approach and environment it must operate within. This provides a framework for establishing priorities for components based ib how sensitive the are in relation to meeting purpose at a given point in time.

The identified components and various facets of structure all interact to form a scope of influence for an individual or enterprise. There are two key attributes that distinguish the components and the structural facets.

Change happens along a path that is the easiest. The tendency is to grow, utilizing the existing structure to expand the scope of influence, rather than changing the manner in which the scope of influence is extended. Subsequently, the easiest change is through growth by the addition of more resources of a nature similar to what is already in place, where the inhering structural components of function, organization, and information do not change.

Where components are added that are inconsistent with existing components, changes need to be made in some or all of the functions, organization, or information. This is difficult because the existing relationships between the components and structure need to be re-aligned. This is made more difficult by the complexity and maturity of the structural infrastructure. Additionally any unresolved structural components forces the "old" infrastructure to re-establish itself. This means that where there is doubt as to what or how the structure should operate, the structure will migrate towards the old structure.

These forces ensure that while the enterprise can accept new and increased amounts of components, it has a tendency to utilize the resources within its established infrastructure, rather than evolving the infrastructure to take advantage of any new or different components. In certain cases, the tendency is to use new or different components as a replacement for existing components, rather than as an opportunity to change the way things work. Where changes are too dramatic for the infrastructure the existing structure may neutralize those components that are contradicting the current infrastructure.


MAKING USE OF THE MODEL

Having established the model, and how it works, the next step is to see what relevance this has on strategic information management vs. strategic business management.

The model implies that because information is a structural facet of an enterprise, it is difficult to change. This can be observed by the amount of effort required not only to generate such things as new reports based on existing data, but also the amount of time needed for management and staff to interpret what the data means or how it should be used in its new context. In reality there is a whole set of knowledge based experts we know as statisticians and analyst of all types, whose sole job is to evaluate data in different ways in order to extract new information, or even the same information from other data. Strategic information management attempts to address this.

Changes in how information is handled and managed causes two distinct but related effects within enterprises.

The first is the difficulties that arise in changing how data is gathered, manipulated, and presented as information. As the model implies that information is contextual, changing the context of the data it contains, even slightly, may have different meaning to the viewer of the new presentation. This can be a critical issue to a manager who looks at data in a very specific manner in order to make decisions and compares data over time. Where a change has occurred in how the data is presented or processed, the comparability of the data becomes difficult.

This leads to the second effect, requiring managers to re-learn what the data is and what it means. In most cases, managers and system developers go to extremes in ensuring that the new set of procedures and format of data presentation, means the same thing as the old way of doing things. As a rule these "proofs" tend to be only marginally successful, and most systems go through a lengthy process of post-implementation adjustments and change. In the final outcome, the most interesting thing that happens, is that the end results are not equitable to what was in place prior to the change. This is because the evolution of testing, investigation, analysis of trying to identify similarities and differences, and resolving their interpretation, leads to a new understanding of what the data means in its new context. The manager then proceeds forward with this new understanding and having firmly "understood" what the data now means, proceeds with assigned responsibilities. Long term difficulties and shortcomings, that are usually identified because of incorrect decisions, are addressed through further adjustments to how things are done. These may lead to new system initiatives.

Strategic information management attempts to identify and deal with how data is and should be handled, in a proactive manner. This is difficult to achieve for two reasons. Information is something that is based on the interpretation of data in some context. (Definition: Information - communicated knowledge; knowledge acquired by study; knowledge of some special event, or occasion; ...Webster's). As such, managing data to arrive at a specific result is counterproductive, in that it reinforces the result, rather than validates the result.

The second reason strategic information management is difficult, is that strategy deals with what to do with something or, how to make use of a thing in order to achieve something. (Definition: Strategy - a device or scheme for achieving something - Webster's) Information is the end result of strategy, so strategy can apply to the process of attaining information, but not be the strategy itself, unless the information itself is used to attain a result. This creates a manipulative scenario, intentionally or not, loosing the value of information because the results are deterministic.


CONCLUSIONS

From a managers or executives perspective, who must maintain direction, focus, and manipulate resources, strategies are for managing components in order to achieve desired goals and objectives. These are reflected by how the enterprise is structured, how it undertakes to achieve its mandate, and the type of information it requires to support itself. Suggesting that there is a separate or different strategy for managing information is problematic because one cannot do one thing without the other. For example, one cannot manage an organizational entity without managing the functions associated with it or the information it needs to operate with. At the same time, where information is strategically managed, it implies that what it conveys is predictable, and if so, it looses its value, because it does not tell the manager that something different has occurred and requires their attention. Of course managers are not always in a position to pragmatically define this, but their day to day activities, provide an intuition and experience that says, in effect, 'what you are saying doesn't make sense. Prove to me that this is necessary or required distinct form what I am already doing.' This leads to the opening argument of why Strategic Information Management ideas and concepts are so difficult to sell. By combining the words strategy and management with the word information there is an implied level of activity that is detrimental to the overall enterprise's needs.

As systems professionals, whether academic or practitioners, it is up to us to provide a useful and relevant framework for enterprises to operate effectively. We as a rule do not need to impress on enterprises the need for and usefulness of data in the production of information. In most cases we do not have to convince management that information is important. They would not be where they are if they did not use data and information in effective ways. Our role is or should be to help manage the way data is gathered, manipulated, stored, and presented. Technology can provide a framework to do this with the purpose to use technology in a beneficial manner to the enterprise. The focus is to strategically manage how technology and data is integrated into an enterprise. This has implications on how the enterprise operates, and by implication, what it does. The impact of technology on the goals, objectives, and priorities of the enterprise need to be addressed by the systems professional. Strategic management is applicable in the positioning of technology within the enterprise. Information, and access to information, when and as required is one of the results, and what managers expect.

The key to this is that as systems professional, we must:

Having a great solution is not relevant, if it is not addressing some desire of management. Strategic Information Management, is not a desire of management. The management to identified goals and objectives of the enterprise is the focus of management, where information is only one integrated aspect of the enterprise. Hence negative impressions, bad feelings, and ongoing battles to try and sell ideas and concepts that rationalize technology initiatives but not necessarily business needs. This rationalization creates the need to develop concepts and ideas that management can relate to, if only to get their attention, if only to allow the information technology group to proceed with what they know as being the "right thing to do". Concepts like Strategic Information Management is an example of such endeavors that is poorly accepted by the very individuals and groups that they are attempting to support.

Management needs and wants support from technology in order to achieve their goals and objectives. They understand the potential, even though they may not know how to go about implementing the technology. As a rule they understand the implications of if not the effort required. They do also know the level they are willing to effect the enterprise. It is up to the information technology professional to manage to those expectations and to manage the expectations to achieve success for the enterprise.


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