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Data Management Is No Longer A Back Office Function

A front office as defined by Wikipedia is “a business term that refers to a company’s departments that come in contact with clients, including the marketing, sales, and service departments” while a back office is “tasks dedicated to running the company….without being seen by customers.”  Wikipedia goes on to say that “Back office functions can be outsourced to consultants and contractors, including ones in other countries.” Data Management was once a back office activity but in recent years it has moved to the front office.  What changed?

There are two major paradigm shifts to account for the change.  For centuries, the business of business was about providing customers with some sort of product or service. As businesses grew larger and more complex, data was needed to effectively manage and plan the business, but the data itself was a side-effect of the main business functions of creating, selling, and delivering products and services. As the information economy has matured over the past few decades, data has begun to take on a life of its own and has become a first-class business asset rather than a by-product of other activities. Marge Breya has called Information the “Killer App” and as Tom Peters said in 2001:

“Organizations that do not understand the overwhelming importance of managing data and information as tangible assets in the new economy will not survive.”

The second paradigm shift was the adoption of data management technologies by customers. It started first with business customers demanding and requiring that their suppliers communicate with them electronically.  Then, with the advent of the internet and personal computing devices, individual consumers have become embroiled in data management activities including things like “how many GB of storage is each app on my smart phone consuming and do I have enough capacity in my cloud service to back it up.” For example, I can’t function effectively without the database of things on my iPhone such as flight and hotel reservations, meeting schedules, contacts, or investment portfolio.

In short, data is now clearly (1) an asset in its own right, and (2) something businesses need to manage because their clients demand high quality, timely, relevant, and secure information. Whether we call this capability Information Asset Management (IAM), Enterprise Information Management (EIM), or some other buzzword, it remains a shared responsibility between IT and the business.   There are two important take-aways here:

  • Overall responsibility must be a function of the front-office and simply cannot be relegated to a back-office technical function alone.  Your back-office staff will know the technical information about your data but only your front office staff knows the full business context, in particular, what defines good data and what is the impact of bad data in a given business situation.
  • Outsourcing commodity IT services or external SaaS capabilities are rational strategies, but data management certainly should not be outsourced. Data is your competitive advantage and only your front-office staff fully appreciates and understands its potential value.

Does anyone disagree?

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This entry was posted in Business Impact / Benefits, Business/IT Collaboration, CIO, Data Governance, Enterprise Data Management, Integration Competency Centers, Master Data Management and tagged , , , , . Bookmark the permalink.

2 Responses to Data Management Is No Longer A Back Office Function

  1. David Eddy says:

    I argue “asset” is an unfortunate choice of words.

    How about “valuable resource?”

    Assets are on the balance sheet & by the rules of FASB 86 (pretty sure that’s the one) spending on information systems is largely expensed.

  2. John Schmidt says:

    Thanks for your comment David. It is in fact possible to put information assets on the balance sheet, but you’re right that it’s rarely done. The only time I’ve seen it (although I haven’t really looked too hard) is in conjunction with an acquisition.

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