The Case for BPI (Part One – The Information Explosion)

  Rollin Ford, Wal-Mart’s CIO, earlier this year stated “Every day I wake up and ask….how can I flow data better, manage data better, analyze data better”. Not surprising when you consider that Wal-Mart processes over 1 million client business transactions every hour, and manages databases over 170 times the size of the entire Library of Congress (the largest library in the world). However, Wal-Mart is not an isolated phenomenon. We are in an era that has been referred to as the “Industrial Revolution of Data” - The Economist calls it the “Data Deluge” and describes data as “the new raw material of business, on a par with capital and labor”.

  In 2005, mankind generated 150 billion gigabytes (or 150 exabytes) of information, and here in 2010 we are expected to generate a whopping 1,200 billion gigabytes (or 1,200 exabytes). Digital data is increasing at a compounded growth rate of 60% per year, and this growth rate is expected to increase dramatically, not decrease. Google now manages 35,000 queries each second, and processes more data in half a day than the US Postal Service is expected to manage and deliver all year (about 5 petabytes worth, or 5 million gigabytes).

  Corporate America is expected to archive 27 billion gigabytes (or 27 exabytes) of data this year alone. However, in 2007, the amount of data being generated started to exceed global storage capacity. So, we are now learning to prioritize what we need to store versus disregard. For example, experiments at the large hadron collider at CERN (Europe’s particle-physics laboratory), generate 40 terabytes every second - orders of magnitude more than can be stored or analyzed, so scientists collect what they can and let the rest dissipate into the ether.

  A significant percentage of information being generated is also being shared. Cisco predicts that by 2013 the amount of traffic flowing over the internet annually will read 667 billion gigabytes (or 667 exabytes). It is already increasing at a rate that is faster than the ability of global networks to manage and keep pace.

  

  These vast sizes and growth rates in data being generated, archived, managed and exchanged is now so huge it is almost too hard to comprehend, and it has already begun to transform all aspects of business, government, and our daily lives (in a future blog posting I will provide examples, and examine how this data deluge can be both potentially great and not without its pitfalls).

  This information growth places an ever increasing burden on our systems, resources, and processes, and the urgency to mitigate errors and re-work. How we manage this information explosion, and our ability to extract the “nuggets of gold” hidden from under these “mountains of data”, cannot be underestimated. Providing decision makers and decision influencers with timely, reliable, aggregated, collaborative information assembled across all domains, so that they can appropriate  important, timely, and strategic business decisions, is what ultimately separates leading organizations from the pack.

  The power, potential and significance of Information Management have not gone unnoticed in the Technology Industry. It already generates $100 billion dollars a year in revenue and is increasing at a 10% annual growth rate.

  Organizations worldwide conduct business today at a far greater pace than ever before and yet they are expected to respond and adapt to change almost instantaneously. With so much more information at their fingertips, the quantity of data to deal with is driving the necessity for greater reliability and quality. So there is even more pressure than ever for us to be agile, operate more efficiently and to collaborative with our demand and supply chain trading partners and customers, thus driving the need for business process improvement and business process integration. 

  Figures from industry groups and analysts confirm that those of us that buy into the BPI program will reap the rewards and benefits. For example, in 2007 and 2008, the average total return for companies in AMR Research’s “Supply Chain Top 25” was between 5% and 11% higher than those companies comprising the Dow Jones Industrial Average and the Standard and Poor’s 500 index. Other studies by leading global business and strategy firms (such as Bain & Company) demonstrate that companies employing sophisticated BPI programs and supply chain methods enjoy 12 times greater profit than those companies with no, or unsophisticated, BPI programs and supply chain methods.

  Only 74 companies of the original S&P 500 were still on the list 40 years later, which equates to a mortality rate of about 10 companies per year. The average life span of an S&P company has now decreased from 50 years to 25 years, and only one third of today’s major corporations are projected to survive as significant businesses over the next quarter of a century.  

  Which companies will innovate and modernize to stay the course of time? And which will stagnate with a “maintain the status quo” mindset and inevitably traverse the well-worn roadmap to the global garbage heap? Only time will tell. So, if you and your business are not contemplating Business Process Improvement and Business Process Integration, then the chances are either your trading partners are, or your competition is – or both.