Information Rich Data Poor

Topics: Management, Productivity, Strategic management Pages: 7 (2305 words) Published: August 18, 2008
It has been said that many organizations today find themselves DATA RICH → INFORMATION POOR → KNOWLEDGE STARVED
It can be said today that many businesses are “data rich”, meaning that they have more raw data than they know what to do with. Most data rich businesses also find themselves “information poor”, meaning that they are not getting any useful information or value from their data. This in turn leads to organization’s becoming “knowledge starved”. In today’s competitive business environment this has many negative effects on organizations. It is vital for organizations to process as much useful information needed to be able to react to their environment and make good business decisions. How could this happen when so many information technology products (software, hardware, ect...) are being sold as solution to business’s problems with the promise that increased productivity will quickly pay for such investments in IT?

It is hard to believe that so many organizations are in this position, considering the vast amount of information technology products that are being sold as solutions to business’s problems. Companies offering these products are quick to promise a good return on investment on their products but this will not be a reality for some businesses and is more of a strong marketing technique used by suppliers. Marketers and salespeople want organizations to believe they will generate a good return on investment to generate sales on their product. Why wouldn’t organizations invest in IT if it would provide greater returns than the expenses incurred?

In reality a lot of the products on the market promising good return on investments actually can if the proper system is purchased and implemented to maximize the possible value created by the system. Many systems are specific to their functions while business processes and information required can vary greatly between organizations. Therefore the right system with the proper components has to be implemented to provide the organization with the information that they need. Once the proper product is selected the organization must plan the implementation so the new system will support the organization’s business strategy. They must also have the proper tools available to retrieve the information. Such tools such as data warehouses and using data mining may provide the organization with information necessary to help make better business decisions and increase productivity.

There are other reasons that can help explain why productivity increases are not being realized. These explanations point to shortcomings in research completed to calculate productivity after new technologies have been implemented. The true amounts of inputs and outputs needed to calculate productivity can be difficult to obtain and are often unreliable. When measuring output for an organization, factors such as price adjustments for inflation, being able to account for increased quality of products or services, and extra value granted to customers by new IT products has to be considered. Inputs can also be difficult to measure. For example, IT products may improve the quality of life for workers by making their duties easier. This could, in theory, suggest that proportionally lower wages can be paid, which in turn could slow down the growth in clerical wages, reducing expenses. With this said, productivity increases may actually have been realized by investments in IT but due to the difficulty of measuring productivity it is being undetected.

Another explanation undetected productivity increases is that it can take several years for gains from IT investments to appear on the bottom-line. It is not uncommon for businesses not to receive immediate benefits from IT investments. It may take anywhere from two to five years to see the benefits start to be realized. It usually takes time for users to get experienced with and be able to use the new product proficiently. This amount of time will...

Bibliography: “Data Rich, Information Poor?”. Improve Your Business. 20 Feb. 2006.
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Krigsman, Michael. “Customer blames bankruptcy on IBM IT failure”. CNET Networks.

Brynjolfsson, Erik. “The Productivity Paradox of Information Technology: Review and Assessment”. MIT Sloan School of Management. Sep. 1992.
Laudon, Kenneth C., Laudon, Jane P., and Brabston, Mary Elizabeth. Management Information Systems: Managing the Digital Firm. Toronto: Pearson Education Canada, 2009
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