Saturday, November 30, 2013

Do we under-stand-n-dice?

Data interoperability is rooted in understandability and lineage, which is founded on a common agreed language, or in other words - in standards. Now, unfortunately while standards need a technical specification, this is only the beginning. Standards remain the shadows of our data if not implemented and governed properly.

Let's go down to basics. Take the ISO 8601 for example (most commonly known as yyyy-mm-dd date format). While this is an excellent standard (in my humble opinion), it shadows our data since it is only partially adopted globally. Of course in some scopes it is fully adopted, and in others it seems to be none-existent. This type of standard reaches every aspect of our lives, and will take time to be adopted world-wide. The point is that it is still to resolve all our problems today relating to date representation.

There is a spectrum of data standards adoption, and this stems from the implicit cost and benefit to the business. Why adopt a standard if it will cost too much to implement? This is probably the single, biggest question people ask when it comes to standards. We do not, and should not standardize just because it sounds like the right thing, but we should also not discount the potential benefits. We need to carefully evaluate the strategic impact of this type of governance. There is an ongoing cost for having standards and there are risks and occurrences of cost relating to the lack of standardization.

While we do standardize a lot, I think we tend to standardize our standardization. We do it too broadly and hence at time apply standards which are too shallow, and at times we over-standardizing others. In other words - we can and should - optimize this practice.

Supporting the business is all about managing risk and resources. Hence the practice of standardizing should be driven out of an understanding the business impact of adoption (or not adopting) standards. This should be quantified in terms of business relevant risk and of course - money.

So don't let your business play with the under-standardizing dice. Help them choose which standards to evolve, and which ones to let go. This, I think, should be the standard approach. Don't you?

Friday, November 15, 2013

Be Mindful of Data Arbitrage

Arbitrage is a term often used in economics and finance to describe the practice of taking advantage of a price difference between markets [Wikipedia]. This then leads to the opportunity to make profit without taking any real risk. As a result, arbitrage is usually very short lived and leads to a natural re-balancing of the price differences.

People also refer to arbitrage when they talk about using enhanced amount of information to improve marketing and sales, or to use some unique piece of information to keep you ahead of competition.

In a system with high information transparency, or an effective information feedback, arbitrage is a self-regulating control mechanism for the system. However, this is not true where the feedback system is broken. In these situations, the arbitrage becomes the power of knowledge, as one holder of information stands at the advantage point from another party.

This happens across all areas of life, and in particular where any type bargaining is concerned. Whilst it is true that you might be willing to pay for convenience or a brand, you may not always have the ability or the right to know what is the real value of the deal for the other side.

So, while the arbitrage in data is broken, and feedback loops are dysfunctional - knowledge remains power. However, once standardization and governance kicks-in - balance is restored.

Therefore be careful with your information strategy, and be critical of the competitive advantage out of your information assets. Consider how the maturity of industry standards and governance, demands from regulators and technological capabilities might impact the value you derive out of your information assets.

In the meantime, it might help to acknowledge that information arbitrage is all around us and take decisive actions to master or surrender to information management gaps where it specifically benefits and aligns with your business strategy.