Information is the catalyst of the digital economy

1 | P a g e | I n f o r m a t i o n i s t h e C a t a l y s t o f t h e D i g i t a l E c o n o m y

Information is the Catalyst of the Digital Economy

Introduction

As we enter the digital economy, companies will find the business climate to be significantly more

volatile than they have in the past, and at the forefront of this volatility is information enabling market

participants that is shepherding in a wave of changes at an unprecedented pace. This rate of change

translates to the rate in which the viability of information organized in a specific way to meet the needs

of the organization losing its adhesion rather quickly. Understanding exactly what information will serve

the needs of the organization and how it will be combined to serve both the marketplace and those who

wield information in the marketplace despite the highly volatile digital economy is critical for the

survival of organizations.

Continuous innovation has received a fair amount of attention recently, which equates to delivering

information based products in the digital economy which provide benefits to the market participants in

ways not previously achievable. Understanding past uses of information, what processes will be

required to manage the disruption and measure the effects of the disruption are all key to monetizing

the results of any specific innovation.

To others whose processes have been marginalized through innovations being introduced into the

marketplace, their view of these specific innovations will be a disruption to their business models and

practices. These disruptions can be a permanently lowered unit cost delivered through enhanced

customer service operations, extending competitive information to the marketplace as a means of

achieving referral income or any other service which is borne from recombination of information which

can be monetized.

To understand how to manage this view of innovations and disruptions, it is important to understand

how value is obtained, how it maps back to processes and how information consumed by processes

serves as the catalyst to derive a new trajectory as a result of the innovation or disruption.

This writing will go through an explanation of how information is used through the management of

innovations and disruptions.

A primer on value

Information is made available to an organization in one of four ways:

It can be captured from someone else in the marketplace.

Existing value can be extended through cross sell and up sell opportunities.

It can be protected, in which an attempt to capture value by others is thwarted.

It can be innovated, which to others in the marketplace appears as a disruption.


What makes this period very different than the past is that information is now the catalyst to obtaining

value. In this way, the very role of information changes, and the methods to manage information should

change accordingly, to manage it as a catalyst with the specific purpose of positively influencing the net

value captured, extended, protected or innovated by the organization.

Figure 1 | Information’s role in capturing, extending, protecting and creating value for the organization, InfoSight Partners, 2016

The Four Phases of the Industrial Revolution

In the earlier articles of this series, it was discussed that information is the enabler in the digital

economy, and that information is worth more when it is used to achieve a value proposition in times

other than those characterized as business as usual. Fortunately for those organizations who have

figured out how to measure information value and treat it as an asset, we can expect a highly disruptive

business climate for the next several generations, which will favor those organizations who can wield

their information assets to derive organizational value. Information is worth more in periods of

disruption because it shapes bigger, more consequential decisions, but only if it is positioned for

consumption.


Figure 2 | The four phases of the Industrial Revolution, InfoSight Partners, 2016, The fourth Industrial Revolution, Schwab, 2016

In the digital economy, the ability for anyone to create a disruption which will impact the equilibrium of

a marketplace is heightened, and it becomes incumbent for market participants to retune their products

and services on a more regular basis because the rate of change in the marketplace is increasing. All the

information to react to this rate of change is buried in the information available to organizations, but

rarely will it be found in the portfolio of applications managed by the organization. The cycle to publish

information for the internal systems portfolio and then replatform it for analysis just takes too long.

And in today’s world, the business stakeholder is required to figure out how to stitch the data together

to be ready for consumption by a business process. That will never work in an economy where

disruption is the norm rather than the exception.

As shown in figures 2 and 3, we are at the start of the change to a digital economy and are all feeling the

influences of the digital economy in everything we do. Organizations who prepare for this digital

economy will be prepared to survive for the next several generations.

Figure 3| The growth of the digital economy in Britain, the Economist, 2016


Figure 4 | Disruptive Innovation, December, 2015, Harvard Business Review

In the digital economy, innovations will occur in one of three ways:

Iterations, or innovations that do not introduce exceptions to the assumptions of value

propositions nor change the status quo (remains business as usual)

Innovations, or business scenarios that introduce exceptions to the assumptions imbedded in

value propositions but do not significantly change the way value propositions are achieved (non‐

business as usual)

Disruptions, or business scenarios that introduce significant challenges to the assumptions

imbedded in value propositions and make some or all the processes executed to achieve a value

proposition obsolete (disruptions)

Information that serves as the catalyst provides insight into whether an innovation has registered in the

marketplace as an iteration, an innovation or a disruption, and triggers off appropriate processes

accordingly.


Examples of Disruptions

Figure 5 | Four examples of disruptions, Harvard Business Review, 2014

For the purpose of this article, four disruptions have been picked. Each of these disruptions has altered

the trajectory of the market forever and has changed the landscape of the companies participating in

these markets. An analysis of four disruptions occurring in the past several years have been included in

this analysis (the iPad from Apple, Skype currently from Microsoft, Google Apps from Google and

Pandora from Pandora).

Apple introduced the iPad as an alternative to the PC. The iPad is now being disrupted by the

phone, which has grown in size and the tablet PC, which has more capabilities than the iPad.

Skype has disrupted the telecommunications industry by providing a free messaging service

which also allows greatly discounted phone calls. Skype has been recently acquired by

Microsoft.

Google Apps has disrupted the desktop applications market (word processing, spreadsheet, etc.)

with a free alternative to the desktop that better promotes document sharing.

Pandora has disrupted the music business by injecting fewer advertisements into their free

music feed and allows for listeners to extend the offering to Pandora’s premium services as

opposed to other music broadcast services.

The technologies that are expected to deliver disruptive blows early in 2017 are those that provide

market participants an assurance of a safe digital presence through advances in the security of their

digital footprints, namely those that improve identity protection through biometrics, federated


identities and tokenization (Juniper research, February, 2016). Recent security lapses lend credence to

this prediction.

Positioning information as the catalyst to obtaining value Information is the catalyst to obtaining value, however, most organizations do not manage information

in such a way that it can be positioned to serve as the catalyst to capturing, protecting, extending and

innovating value. It is because there is not a direct linkage between the processes that consume

information and the organization of information that information is not properly positioned in many

organizations. By understanding how to position information, organizations will improve the use of

information as a catalyst to obtaining information. There are several activities required of organizations

to be able to position information accordingly.

Traditionally, there has been a framework used which managed information based on its sourcing and

created a data store (data warehouse, mart or operational data store) which was specifically devised to

meet the needs of many consumers. Few companies enjoy using information in disruptive times

because it is up to the consumer to determine how to combine information in a way that fits the needs

of the business process. This takes time, no wonder that in recent studies it has been found that data

scientists, the members of the process teams who are the experts at understanding how to wield

information for specific analyses supporting business processes, spend almost 80% of their time

identifying, organizing and ensuring the validity of information used in their analyses.

Figure 6 |Data Scientists don’t spend most of their time analyzing data, Forbes, March 2016

The problem is that information was always managed by the source of information and published in a

way that would serve the most business stakeholders with a wide net. This was fine until information

became the catalyst for value. Today, businesses with a digital presence find the ability to build a better

mousetrap takes less time in the digital ecosphere because the machinery is also digital. This demands

that organizations that thrive will be prepared to pounce on these disruptions with a well‐orchestrated

response to the disruption engrained in information.


Figure 7| Traditional approach to publishing data for analytics, InfoSight Partners, 2016

The next gen approach to publishing information has at its heart a directory of how information is

consumed by business processes and aligns sources to this consumption based model as opposed to the

more traditional source based model in place in many organizations.

Figure 8| Conceptual Framework to position information as the value catalyst, InfoSight Partners, 2016

The conceptual framework required to position information as the catalyst for obtaining organizational

value must include information collected through:


A facility that integrates data through some level of transformation services performed through

a scripting language. Typically, this is an ETL (Extract, Transform & Load) environment but can

be accommodated by an organization in a variety of means. What is important for the mapping

of information to process is understanding what the outputs of these processes are, which are

all potentially consumable information by the processes of the organization.

A facility that is aware of the content available in a portal or some other facility which can be

used as context for the information used by the processes of the organization.

A facility that is aware of the streamed data and logs available to the processes of the

organization.

A series of management workbenches to manage the information available to processes, map

the information to processes and facilitate the recording of information consumed by processes.

An orchestrated, repeatable process used to compute the value of information.

It is important to note that much of the information utilized as the catalyst for obtaining organizational

value is not housed in the operational systems of an organization, but rather in social media, log centric

activity made available and other streaming information used to identify non‐business as usual and

disruptive situations that need to be dealt with by an organization. It is these uses of information where

the catalytic value of information is most prevalent.

The roadmap to enabling information as the catalyst to obtaining value To utilize information as a catalyst to obtaining organizational value, seven things must be in place all of

which play a role in realigning the vision of how information is managed. These are:

1. Organize to manage information as a non‐depleting but expiring asset of the organization as

opposed to the most common way of managing information practiced today.

The more prevalent practice today is managing data in alignment to its sources and

publishing information to meet the needs of as many processes as possible with a single

well devised data model.

For information to be consumable at the rate of business in the digital economy, is

greatly hampered without a tight alignment of information to the process consumption

patterns, thereby eliminating the time data scientists spend identifying and reorganizing

information for the specific needs of processes (currently almost 80% of their time is

spend doing this).

2. Implement the framework that is used to measure the value of information through a

repeatable, orchestrated process that could withstand the scrutiny of an audit. This framework

must accommodate information commonly available in internal data warehouses, often limited

to that which is generated by systems of the organization as well as streaming sources, log

centric sources of information (web logs, mobile logs, Internet of things (IOT) logs, security logs,

etc.) and information commonly not suitable for representation in a tabular framework (Figure 3

contains a pictorial view of the framework, which is a technical framework to be implemented

or acquired by each organization).


3. Ensure the availability of an orchestration layer, which is utilized to record information available

to business processes and record the use of information, which is then aggregated to record

information value. This orchestration layer must be repeatable and capable of withstanding the

scrutiny of an audit.

4. Assign accountabilities to engineer the shift to focus on managing consumable information

products and away from managing data sources. The major roles are:

Role Current Accountability Nextgen Accountability

Chief Data Officer Champion Data Assets Elevate Information Asset Valuations

Chief Analytics Officer Drive Business Analytics Encapsulate Business Analytics

Chief Risk Officer Eradicate Operational Risks + CyberRisks

Data Governance Council

Improve Data Assets Eliminate Information Use Resistance

Chief Information Officer

Manage Data Assets Manage Information Machinery

Data Asset Manager N/A Manage Information Inventories

Data Steward Business Rep for Data Assets Bus Rep for Information Assets

Business Stakeholder Interfaces Stewards Interfaces CDO Figure 9| Conceptual Depiction of the Value of Information, InfoSight Partners, 2016

The Chief Data Officer, who is the architect of the map that depicts which information is

made available for consumption by business processes and negotiates the valuation

split made available for information (the royalty computation).

The Data Asset Manager, who is a new role and is responsible for managing the data

and information assets of the organization.

The Chief Risk Officer, who is responsible for identifying and assuring the eradication of

risks to obtaining organization value through information. This includes the

identification and eradication of cybersecurity risks.

The Chief Information Officer, who is responsible for managing the machinery used to

transform data into information.

The Chief Analytic Officer, who is responsible for creating models and algorithms and

encapsulating repeatable models and algorithms used to create organizational value.

The Data Governance Council, who is accountable for eradicating resistance to using

information.

5. Develop processes to capture business model and strategic intent changes that will trigger

changes to the information – process map. Some of these facilities are depictions of business

models (e.g., the business model canvas, Strategym), Potential Market Disruptions (e.g.,

visioning of market disruptions, InfoSight Partners), the value proposition vision (Vision

Storytelling Canvas, InfoSight Partners and an understanding of the collaboration points for

business processes (design thinking and collaboration canvas, InfoSight Partners).


6. Measure the potentially consumed and consumed information by usage scenario (marginally

aligned or reports, business as usual scenarios, non‐business as usual scenarios and disruptive

scenarios).

7. Devise metrics to manage the transformation from a source aligned information management

organization to a consumption aligned information management organization and communicate

the metrics which includes the potentially consumed, consumed and resistance measurements

on a regular basis.

Figure 10| Roadmap checklist to enable the use of information as the catalyst for obtaining value, InfoSight Partners, 2016

About the Author Mark Albala is the President of InfoSight Partners, LLC, a business consultancy which provides financial and technology advisory services devised to facilitate focus into the value of information assets. InfoSight Partners is led by Mark Albala, who has served in technology and thought leadership roles and serves as an advisor to analyst organizations. Mark can be reached at [email protected].