Archive for the 'Information Capital Management' topic

Our Chief Information Officers (CIOs) have a problem, since one person is required to have many capabilities to manage diverse capital. The CIO has to have professional capabilities with management strategy, technology, equipment and network operations, information system logic, business organizations, and business processes. The CIO also needs to have capabilities with all types of enterprise information capital data, knowledge, records, and intelligence.The solution to the CIO problem lies in the organization of corporate capital to define capital as specific capital solutions, apply the distinct human capabilities needed to manage, develop, and support the capital solutions, and to manage the performance of capital solutions in utilization. The solution is provided by Result-performance Management (R-pM).

The CIO and IT manage diverse capital as technology

The CIO problem extends down from the CIO into the Information Technology (IT) function. IT has to have capabilities with the various capital as well. All the enterprises have problems somewhere or another, because organization and management structures are laid over the business, and IT does not have the capability to handle all of its capital support responsibilities.

We have such examples as:

• Many organization and management structures such as maps and plans, processes, accounts, activities, projects, functions, and scorecards are laid over the business requiring excessive IT resources to process
• Application systems are managed as technology and laid over the business rather than being integrated with the business process as part of the business
• Much high worth capital is labeled as “intangible assets” and is not defined or managed at all
• Each information system defines the enterprise differently creating information complexity and producing much conflicting information on enterprise operations and development
• The information complexity problems is addressed by more IT investments in data reconciliation, enterprise information management, and IT architectures
• The analysis of business improvement needs is separated from the business into IT, and needs are satisfied by technology rather than precisely-defined business improvements
• Business change is then often stuck in the technical IT backlog
• Users assistance is restricted to how to use technology per se and is no help in using technology to solve business problems
• Information is managed as technology, not as capital to be utilized
• Stress on data and records with little support capability for knowledge or intelligence
• System utilization is managed as availability or a service level, rather than supporting utilization of the system to create value

So, how do we solve the CIO problem and the problems faced by IT?

We now propose a Chief Technology Officer (CTO) to handle information and communication technology needs. The idea of splitting out management of our capital based on professional capabilities required is valid, but we must do it right.< [more...]

20^th century management lays reporting structures over the business

Since the business is not organized or managed the actual business cannot be reported. Management reporting is against the myriad of organization, management, administrative, and other structures laid over the business. Each structure employs its own terminology and information systems to produce reports on the structure. This produces a myriad of unrelated management reports for plans, business processing, resource planning and utilization, manufacturing, supply chains, customer relationships, accounting, quality control, financial management, human resource management, information technology management and on and on. The reporting possibilities create information complexity with no specific framework to relate all the reporting. Despite all the reports and complexity, there is no direct reporting on the actual business.

We try to bring together information from the diverse structures by adding special 20^th century reporting structures, such as:

• Performance management: Control panels, dashboards, scorecards and various other structures to capture and report information
• Strategic enterprise management: Structures to consolidate defined information from specific information systems
• Data reconciliation: Structures to gather and redefine inconsistent data from diverse systems
• Decision support and drill down: Structures to allow management to search and find information in diverse systems
• Categorization: Structures laid over information to reconcile and restructure information and to manage records, documents, reports, content, and other information sub-sets

These various reporting structures and supporting information systems constitute a large overhead and contribute to rather than solving information and business complexity problems. Management information produced is inconsistent, inaccurate, and incomplete in terms of what is actually happening in the business.

Business management reporting must be against the current and planned business

In order to report the business the actual business must be organized, planned, directed, and controlled as explained in previous articles. Actual business reporting is provided by Result-performance Management (R-pM) by reporting the three components of the business:

• Results: The economic outputs of value and quality produced across the business
• Capital: The investments in capital as specific solutions that must be acquired and developed to provide the capability to produce future results and that must be utilized in business performance to produce actual results
• Performance: The deployment and utilization of a specific capital solution to incur costs and provide effectiveness in producing a specific result in a performance domain

The business can be reported only by organizing the actual business as current results produced, invested capital available to the business, and performance in the utilization of the capital to produce results. [more...].

The typical corporation has enormous IT overheads, but still has no system to manage the business

The typical corporation spends enormous sums on Information Technology and has a large IT overhead with many complex information systems. But with all this, the corporation still does not have the one information system really needed to manage the actual business. Information systems lay additional structures over the business or manage other structures laid over the business. This produces enormous business and information complexity. Corporations invest in additional systems for data reconciliation and information management, rather than simplifying information to one consistent set that reports the actual business.

The corporation has much capital administered as Information Technology instead of being managed for corporate benefit, and has much information administered as technology instead of being managed to provide information solutions for business and management results. There are no unifying business entities to be referenced to control all information in, entering, or leaving the enterprise, including emails, Internet downloads, and file transmissions.

Result-performance Management (R-pM) manages the business as one integrated information system

Result-performance Management (R-pM) uses IT to manage the actual business as one simplified Result-performance Management System. R-pM manages other simplified application programs as performance solutions integrated with the business process, where needed, to produce a specific result.

R-pM eliminates overlaid 20^th century business information systems and the need for a large IT overhead. Information technology capital, support, and capabilities are no longer managed separately as “Information Technology”, but are integrated as part of normal capital management. R-pM references all information to the actual business and integrates all information as capital in one Business Information Base to produce data, knowledge, record, and intelligence solutions needed to produce specific business results.

R-pM enables simplified information systems, integrated capital management, and integrated information capital solutions

Result-performance Management eliminates the Corporate IT Empire and the complex information systems laid over the business by organizing and managing the actual business with one simplified system, by simplifying applications to produce specific results, and by properly managing information technology and capital as capital.

IT capital is organized with similar business, facility, and management capital to be managed by professionals. IT systems needed by the business are integrated with the business process to produce specific results. One set of complete, consistent, and accurate management information is reported against the actual current and strategic business, including measured performance costs, result value and value-added, capital worth, and return on capital investments that cannot be measured today.

IT systems and overheads not needed for the business are eliminated. New IT investments are restricted to Result-performance Management Systems to manage actual business results. IT expenditures and investments are reduced dramatically to only those needed to support and manage the actual business.

Learn more in the article “IT Empires and Systems that do not manage the actual Business“, which explains the problems with 20^th century information systems and the administration of high-worth enterprise capital as “information technology”. .

Structures laid over the business produce enormous information complexity

20^th century management does not manage the actual business, but manages the enterprise using a multitude of organization, process, account, performance, system, administration, etc structures laid over the business. The structures are rigid and do not change with actual business change. No structure captures consistent, complete, and accurate business data. The various structures use different names for the same entity and different definitions for the same part of the enterprise. Information systems computerize the various structures producing enormous amounts of incomplete, inconsistent, and inaccurate information. This causes the exploding information complexity and information management problems enterprises are experiencing today.

Information generally is not organized and managed as capital

Information capital management is not well organized. Accounting is responsible for financial records, information technology may perform data management and record retention, there may be a function for knowledge management, record management, or business or management intelligence. Even with this, there is little management of information for application to improve the business. There is no structure to relate information directly to the business and no data is collected on the actual business as a related set.

The explosion in enterprise information problems and investments demands a basic rethink

These problems are aggravated by the proliferation of IT use for email, Internet information storage and downloads, information exchanges, imaged documents, etc. New corporate governance requirements demand a solution to these problems. [more...]s.

Corporate Governance is one of the top 10 problems of 20^th century management!

Corporate Governance problems are “solved” my more imposed governance

We have all heard of the recurring crisis in cooperate governance. Governing the corporation is a big problem because we cannot manage the corporate business. We overlay a myriad of contrived structures on the business to organize and manage various entities like units, functions, activities, processes, objects, jobs, etc. Corporate governance itself may be through a contrived corporate governance structure laid over the business to extract and reconcile information from other overlaid structures.

Corporate governances problems are “solved” by adding to the problems with more stringent and costly requirements for outdated 20^th century accounting, auditing, and compliance reporting.

Corporate governance problems must be solved through governance of the actual corporate business

Corporations will be governed effectively only after corporation businesses are organized and managed. The strategic corporate business must be defined as strategic results and the new and improved performance solutions to produce the strategic results. Result goals and performance expectations must be established period by period to the strategic horizon. Corporate governance can then manage actual result value creation against goals and strategic estimates, corporate responsibility for actual business practices, and corporate information capital as part the actual business. The solution to the corporate governance problem is Result-performance Management (R-pM) to organize the corporate business for 21^st Century Management. Review the article “Seeking Good Corporate Governance by strengthening Bad Governance” at Result-performance-Management.com.

Corporate Governance Problem

We overlay structures on the corporate business, and fail to organize the business

We do not organize the business. Instead, we lay many structures over the business for organization, strategy, planning and budgeting, business processes, information systems, performance management, accounts, administration, etc. We gather data on all the entities used and compile a wide variety of management and statutory reporting, but we cannot capture actual business data. Each overlaid structure creates business and information complexity, obscures the view of the business, and compounds the problem of corporate governance. [more...].

Information Technology is one of the top 10 problems of 20^th century management!

Information Technology incorporates a wide variety of unsolvable problems

Information Technology (IT) employed today has many inherent problems that many expensive solutions have never been able to solve:

• Information technology is managed as technology, rather than as capital preventing integration with the business
• Information technology employs large monolithic information systems that are laid over the business, instead of information processing solutions that are utilized by the business
• Information Technology defines different architectures to define and align the business, systems, hardware and networks, and data and information, rather than integrating each with the business
• Different categories of information capital are mixed in many systems using different entity names and definitions producing information complexity and preventing proper information capital management
• Since the business is not organized, information systems manage information related to structures laid over the business and do not capture, process, or report actual business data and management information
• Information Technology is difficult to manage because it mixes business, facility, and management capital that require diverse management and operating capabilities
• It is difficult to manage return on IT investments since the investments are lumped together and do not produce direct measured business improvements
• Information Technology has grown into a large expensive empire that involves much unnecessary processing, extensive overheads, and unsolvable problems

These problems can never be solved with 20^th century management that tries to improve the enterprise by laying new or improved structures over the business.

Information Technology problems disappear when using R-pM to organize the business for 21^st Century Management

The only way to eliminate the Information Technology problems is by organizing the business with Result-performance Management (R-pM) to enable 21^st Century Management. R-pM integrates information technology in the business as capital defined as specific performance solutions utilized to produce specific business results. R-pM provides the following measures to eliminate the unsolvable Information Technology problem:

• R-pM organizes the actual business as specific performance solutions, including IT solutions, to produce specific business results
• Information system solutions are defined and integrated with the business process as modules to produce a specific result or a chain of results
• Information systems focus on managing actual business data in result value and quality, performance cost and effectiveness, capital worth, and return on capital investments that is not processed today
• Information Technology is defined and organized as capital, with other capital of the same category, for proper capital management by those with the professional capability
• Information capital is defined and managed as business data, human knowledge, facility records, and management intelligence to produce information solutions needed by the business
• Enterprise information is integrated by performance solution utilized, result produced, supplier, customer, time period, business transaction, etc in an enterprise Business Information Base for one set of complete and accurate business information
• Information systems and processing devoted to managing arbitrary structures laid over the business and special systems to address problems in data reconciliation, information integration and extraction, and management reporting are discontinued, if not directly needed by the business
• New information system implementation integrates business and information processing with other performance solutions to produce specific output results needed by the business
• The business is organized for a new generation of 21^st Century Management systems and business-information process modules, to process the actual business result by result, and provide one set of consistently-defined management information

Using R-pM to manage information technology as capital utilized by the actual business eliminates the unsolvable IT problems in business alignment, information complexity, data reconciliation, unknown costs and value, unknown capital worth and returns, CIO and IT management capabilities, data integration and control, and on and on.

The Information Technology Problem

Enterprise information systems include a wide variety of systems that are laid over the business

Since the business is not organized, different management structures must by laid over the business to manage the enterprise. [more...]

20^th century management cannot capture and report essential business management information

20^th century management lays separate structures over the business for management organization, planning, direction, control, and reporting, such as:

• Organization charts, reporting relationships, and job descriptions for organization
• Strategy, corporate plan, investment, and budget structures for planning
• Work flow, function, project, process, and system structures for direction
• Financial and statistical accounting, activity and project costing, and quality structures for control
• Financial statements, performance management, and strategic enterprise management structures for reporting

Each structure defines inconsistent and conflicting entities like business unit, department, center, function, activity, project, responsibility, etc. The overlaid structures can produce enormous amounts of information producing business and information complexity. But 20^th century management cannot capture and report essential business management information.

20^th century management does not define the entities that contain cost, value, worth, and return

In order to capture data and report information about an entity, the entity must be defined and recorded. 20^th century management attempts to report cost, value, worth, and return without defining the entities that contain cost, value, worth, and return.

Costs are attributed to some known tangible assets and collected against contrived entities like activity, project, and accounts that were not produced by the costs. Numbers for value are produced by certain contrived methods and formulas to lay value chains over the business, without defining and managing the entity that contains value. Worth is defined by arbitrary depreciation formulas for fixed assets, but ignored for human and other capital. Much high-worth capital is labeled as “intangible assets” and not accounted for or managed. Capital development does not identify the precise capital items that are being acquired and developed or the planned utilization of the capital in the business to provide return on investments. [more...].

Capital Management is the management of enterprise capital in performance solutions to produce results of value needed by the enterprise. Capital management is an important part of 21^st Century Management.

Capital is not managed in 20^th century management

20^th century management does not manage capital. 20^th century management provides administration functions like finance, accounting, human resource administration, purchasing, information technology, and corporate planning to administer selected tangible capital. Most capital is not identified or managed by the enterprise. Much capital is created and used in the enterprise, but is known only in the department that keeps it. Much enterprise capital is assigned to a responsibility center and managed no further. The capital in administrative units is administered rather than managed to provide solutions, control costs, create value, and increase in worth.

Capital investments are not managed to develop specific capital to produce value in results

Enterprises invest significant sums in the capital used, but these investments are not managed to provide the specific returns. The tangible capital is normally developed as a lump sum for an asset or a project. [more...]

The business must be integrated from several perspectives

The business must be integrated for proper organization and management from several perspectives:

• Management phases for organization, planning, directing, and controlling must be integrated to use the same structure and set of information
• Operations and development must be integrated as one continuum to fit development as part of the strategy and to properly utilize developed solutions
• Capital utilized by the business must be integrated as one set to manage the commonalities of all capital utilized, to organize capital for support, and organize capital again for utilization
• Results produced by the business must be integrated as one set to manage the commonalities of all results and to manage relationships between results
• Business processing must be integrated to utilize managed capital in processing to produce managed results in one integrated business structure
• Information must be integrated to capture actual business data and to integrate information capital to produce information solutions and to integrate the information capital solutions to produce results

The business can be properly organized and managed only through one integrated business structure that is utilized for integrated organization, management, operations, and development through all management phases.

20^th century management cannot integrate the business or business entities

The 20^th century business today is not integrated. 20^th century management lays incompatible structures for organization, planning, management, and accounting over the business. These overlaid structures prevent actual business management and business integration.

Therefore, the current 20^th century enterprise is unable to integrate management, operations and development, business processing, capital utilized, results produced, and information capital and solutions. Overlaid organizations, strategies, business processes, information systems, charts of accounts, control panels and scorecards, etc. cannot even be aligned, much less integrated into one consistent structure.

Capital that is labeled as “intangible assets” and is not defined as performance solutions cannot be integrated. Economic output results that are randomly identified as other entities and not managed as results cannot be integrated or inter-related, or integrated with performance to integrate the business. Information that is managed as technology and related to poorly-defined contrived overlaid entities, rather than built up from actual business data, cannot be integrated.< [more...].

Chief Information Officers (CIOs) face a difficult situation

Much is written about the “CIO Problem”. Often it written to appear that the problem is with the CIOs, when the problem lies with the organization and management of Information Technology (IT). The main problems with normal corporate IT are:

• Information Technology has become a difficult to manage mixture of capital that is administered as technology, rather than being managed as capital
• The mixture of capital requires many basic human capabilities that no one individual can hope to possess
• Information systems have become very complex and difficult to maintain and manage
• The corporate data base maintains mostly information that is irrelevant to managing the actual business, creating information complexity and management difficulties
• The IT architecture, equipment, and networks are managed separately from other corporate infrastructure and is generally unwieldy
• Information capital in data, knowledge, and intelligence is managed as technology
• Information Technology is separate from the rest of the corporate business creating alignment difficulties
• Information Technology is administered rather than managed as capital to provide the solutions needed to produce other enterprise results
• The “technology” is no longer so specialized, or is sub-specialized in pockets, and is no longer a valid reason to group diverse capital together
• There is no business framework for managing Information Technology, making it difficult to plan and manage the specific results to be produced

These problems make it difficult for anyone as a CIO or Information Technology Manager to manage the scope and environment of information technology today.

Result-performance Management (R-pM) organizes Information Technology as capital

Result-performance Management (R-pM) organizes the business for 21^st Century Management. If you are not familiar with R-pM, review the posts under Learn the Basics of R-pM for the orientation you need.

R-pM has been accused of doing away with IT and the CIO position. R-pM does away with administration and Information Technology Units in order to organize enterprise capital to be properly managed by those with the specific basic capability. CIOs and IT managers accept substantial responsibilities for the management of the capital for which they are best suited.

R-pM organizes the capital involved in 20^th century Information Technology as follows:

• Business systems and data are business capital, used to produce a specific result, that must be organized and managed as business process, and business data capital
• IT architecture, equipment, and networks are facility equipment that must be managed together with communication networks and other enterprise infrastructure
• IT strategy is management strategy capital that must be managed together as a strategic business structure
• Information capital must be separately managed as business data, human knowledge, facility records, and management intelligence to provide needed information solutions to produce results

R-pM organizes business, human, facility, and management capital units to produce capital and performance management results.

Current information systems do not manage the business

Current information systems are large contrived systems that do not manage the actual business. [more...].