NEW ZEALAND INFOTECH WEEKLY

Issue no. 346

 By Dave King

The benefits of information technology are being squandered by senior executives who really do not know how to use it properly.

And their ignorance could result in their companies going under, according to Larry English, a pioneer of quality data management in the United States.

The root cause of the problem is a lack of understanding that Information is a strategic enterprise business resource, he says.

And the big issue is the quality of information, says Mr. English, who recently visited Auckland.

Bad information is a problem in the United States, New Zealand, and everywhere else in the world information, technology is used in business, he says.

Australian studies, for example, reveal that poor quality information costs more than 10 percent of a company's revenue, he says. It causes 60 per cent of data warehouse projects to fail.

Mr. English, founder and president of Information Impact, a Nashville, Tennessee, information management consultancy, has received wide acclaim for his studies on quality data management.

"When we have quality of information it can significantly add value in helping us to understand our customers, our products and their performance, and provide new ways of exploiting and creating value in business."

Companies must understand that, or they may not survive, says Mr. English. He believes that some senior executives think of information technology in terms of the Industrial Age.

"There is a failure to recognise that information is now a key business resource," he says. In the Information Age, business processes should be managed, and applications should not be developed in isolation. "I believe what's happening today is we're beginning to understand the real principles of the Information Age."

Meanwhile, however, poor quality data continues to cause problems. Mr. English cites the case of a health insurance company in the United States where 80 per cent of claims were made on the basis that customers had broken their legs.

It was revealed that claims officers received incentives for processing claims quickly. The default in the absence of proper injury diagnosis was a fractured leg. The system

accepted it as a valid diagnosis. Bad information of that sort is absolutely fatal when used in risk analysis, he says.

In the United States barcode readers in supermarkets and stores have been blamed for over-charging shoppers and businesses are being fined heavily for ripping off customers.

In fact there is nothing wrong with the barcode readers, says Mr. English. What happens is that retail companies are overlooking the need to update their pricing databases when selling advertised specials.

It is costing companies hundreds of millions of dollars and a very large retail chain almost went bankrupt because of the problem, he says.

The Year 2000 bug is the most visible data quality problem of all, according to Mr. English. The use of a two-digit year code years ago was the result of expediency. Now it is causing a lot of trouble as the Year 2000 approaches.

Mr. English says there's no quick fix, silver bullet, or panacea, that can solved the on-going problem of low quality data.

"But there's hope," he says, "in introducing a quality mindset with respect to information products."