Alchemy was the "science" of turning ordinary metals into gold, which was especially popular during the Middle Ages. There's a need for some new alchemy, but this time we want to convert data into insight which will help firms be more productive and more innovative.
I've written before that most of the businesses we interact with are awash in data. Over the last ten years or so, information technology has expanded very rapidly, and we have created all types of information systems to speed transactions. I can vaguely remember when I first entered the work force that people actually wrote out or typed purchase orders (which copy do you keep? pink or golden rod?) and managed much of their business on paper. Over the years, we've automated a wide range of transactional processes and created systems that generate a lot of data. This is a blessing and a curse. The automation has clearly made some processes more efficient, but the curse is that these systems generate more and more data every day and we simply don't know what to do with it. Take a look at Network Appliance and EMC and the other large storage vendors. They are raking it in because we are all generating a ton of data with no real purpose for its use.
Here's the news flash: Data is not valuable, in fact it creates significant cost. There is a progression that must occur before a firm can get value from its data. That progression is:
I guess I should coin a new acronym: DIIA. Consider it trademarked and on it's way to a new management book near you.
Data must be converted into useable formats that people or machines can review and make sense of to be useful. That's been the whole point of business intelligence, which has been a hot topic for several years now. The BI space has been too self-serving however, in that for the most part business intelligence and other means of preparing and making sense of the data merely set the stage for someone to review the data and draw conclusions.
Once data is converted to information, there needs to be someone who gains knowledge or insight from the data. That means the data must be presented in a way that people can understand and review quickly to find trends or anomalies in the data, or be able to use the data to forecast or predict the future, which in my mind is an even more valuable use of information. But that information must be presented in a way that is easy to understand, provides real meaning to underlying trends and is "fresh".
Finally, to complete our alchemy, we need for someone to take an action. Converting data into useable formats and providing insights into the real meaning of the data is not helpful if there are not clearcut actions that should be taken after the insight is created. Someone needs to gain the insight and be willing and able to make decisions or draw conclusions and take an action, otherwise the information is useless.
One real challenge with turning data into something valuable is that there is a set of steps or processes that need to be completed, and the value of the data can be ignored or missed in any of these steps. Even if the IT team gets it exactly right and provides meaningful, easy to use information that is easy to understand and easy to access, if no one is willing to take an action, why do we keep all that data?
In other words, this is not just an IT problem. The problems rest with IT until the data is presented in a fashion that creates real insight. After that, the problem is a cultural and decision making problem that rests in the business functions.
Unlike alchemy from the middle ages, we can convert base materials into gold. There's an easy, four step process to get it done. What stands in the way most probably is the understanding of what information is needed to make decisions and the will to use the data once it is presented.