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TDWI Keynote: Larry English Takes on the Status Quo

Organizations that aren't managing information as a resource are wasting as much as half their IT budgets "moving data from database A to database B." This troubling perspective, from expert Larry English, kicked off this week's TDWI World Conference in Las Vegas. Here's the keynoter's advice on the right approach.
Don't the transactions intersect with every domain, as in X product purchased by Y customer? How could MDM possibly be divorced from the transactional information?

Well, it can't. That's the whole point. The master data management vendors don't seem to talk about the transactions. I have listened to a number of them. You are right in saying that the transactional data is an intersection between the events that take place in the fundamental entity types – customers, products, and the relationship between those two. In retail you have sales, in banking you have withdrawals and deposits, and in insurance you have claims and losses. That pattern is very clear, so my conclusion is that we don't need master data management, we need information resource management....

We must get back to the point where we manage the value chain horizontally across the enterprise as a single process chain, and we must manage the enterprise as a single entity. That's what Peter Drucker talked about: the symphony conductor. You have lots of departments that have different processes and different information requirements, but you have to manage them all as a whole because they are interdependent.

You've been preaching these concepts for some time, but adoption seem minimal. Do you feel like an industry seer or more like an iconoclast?

I fully believe that I have understood the principles that are required to be successful in what I will continue to call the emerging realized information age. We're by no means there. We have only the technology of the information age, but we have not understood the underlying principles that need to be applied in order to be successful and competitive.

Today, 40 percent to 50 percent of IT budgets are spent in doing scrap and rework. If you count up how many redundant databases organizations have containing their key entity types and their key transactional types, it is a horrific number. When one of my Fortune-100 clients analyzed where their application developers were spending their time in new development versus maintenance of existing applications... more than half of their IT budget for personnel was wasted on simply doing nothing more than maintaining the programs that move data from database A to database B.

So what key points would you make to those who are entrusting their information management to conventional approaches and technologies? The first thing I would do is put the "I" back into CIO. That means we can't allow the Chief Information Officer to be merely a chief technology officer. I would also put the "M" into information management, which means we need to understand the real principles of managing a resource.

If you asked a CFO, "can your managers create their own chart of accounts when they're developing a departmental budget," he or she would laugh. And how many department managers are able to create their own benefits package for their staff? None, because we know the cost would only add overhead and no value to the customer.

Right now, our organizations are overcharging customers because of all of the money we're wasting on scrap and rework, not just in the information systems area, but also by not capturing the information that peers in the next department need.

Why aren't business schools teaching these principles?

It takes a history of failure before you really get to that transition. Many of the business schools have not even come up to the point where they can talk about master data management and some of these other things. We have to start raising the awareness of the principles in ways that are implemented not only by our organizations but are implemented by the education system.

To me, it's very simple. All we need to do is look at the resource management life cycle and the components of sound management espoused by Peter Drucker and others.