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three categories. We have all heard the expression “time is money.” How many of us have stopped to consider that in the realm of resource management, information is money? Literally! For many, the information resource is literally, a financial resource. How many people receive a pay check anymore? In the information processing industry, corporate revenue depends on transaction processing or, in other words, information processing. In the credit card industry for example, the card company’s revenue comes from licensing fees and transaction processing. Its revenue is based on the numbers of transactions processed in addition to the amount of the transactions. It is easy to see that information becomes the cash cow in this case. When regarding information as a component of a business intelligence strategy, there is a hierarchy to consider. It begins with data, which is nothing more than raw figures that by themselves are meaningless. However, when you put that data into context by combining it with other data, defining and structuring it with standards and business rules, you create information that becomes a corporate resource. Further, when you include the human element, the knowledge of the individuals who gather, input and define the data, compile the information, establish the business rules for data usage, create data standards, and relate and store the information in data warehouses and data marts, you create the knowledge needed for management decision support at the strategic level. Then, at the end of this whole long chain, this knowledge is used to create reports, process queries and build intelligence that senior management taps into as the basis for making strategic decisions. Now, considering the numbers and types of information systems jobs currently outsourced offshore, there is the potential problem of knowledge loss and, consequently, capital loss. In some cases, information can be a major source of revenue generation, making it nearly as important as the capital resource on the corporate resource hierarchy. Thus, it becomes a chicken and egg sort of argument as to which comes first, the capital or the resource that gen-
erates the capital? However, when looking at the human resource aspect, personal knowledge becomes less tangible and quantifiable. For example, for every information systems professional position outsourced offshore, there is a tangible cost savings. So that would imply that there is a direct correlation between the human resource and the capital resource. The very resources that corporations are outsourcing are, in many cases, those same human resources who are processing information and are considered knowledge workers because of their expertise in gathering and processing the data, interpreting the data according to the standards and business rules, compiling the information and collecting the information for further quantification with BI tools. In other words, corporations are outsourcing the corporate knowledge base. In this case, management’s control of and planning for knowledge turnover will be affected, and the knowledge itself (not quantifiable and usually unstructured) may be lost. Further, the effects of this loss will impact BI and strategic planning. Up to this point, corporate strategy has been based largely around capital resources and consequently the information resource, because it is a primary revenue generator. However, in an effort to swell the corporate bottom line by reducing human resource costs through offshore outsourcing, corporations have inadvertently undermined their knowledge resource and, in the long term, their business intelligence. Ultimately, it is difficult to prioritise these three corporate resources when there is such a close inter-relationship between them, from which we might conclude that one is no more important than the others. So it would be wise for strategic planners to consider the knowledge management and business intelligence implications prior to outsourcing their company’s knowledge worker functions. Though a corporation may see a bottom-line savings of capital through offshore outsourcing in the near term, such action will lead to a gradual loss of knowledge that will undercut the corporate information resource and its ability to generate capital in the long run. Article Source: Information Management.com March 3, 2014