Automated vs Manual Information Systems

Manual Labor and the Impact upon an Information System

Last week, I got to writing about data and what an information system was. Today, I'm going to build upon those discussions and talk about automated versus manual information systems.

Okay, here's an exercise that's happy fun time. Let's get those hands dirty.

First, I want you to open Facebook and write down - by hand - all of the names of your friends on paper.

Next, I'd like you to re-enter those names into a spreadsheet because we're going to use that spreadsheet to conduct an email marketing campaign. Ready?

I know you're excited about doing this ... ready?!

Yah, not so thrilling, but let's examine this information system for a minute.

Duplicative, Non-Reproducible Efforts

There's a heavy labor component required in name acquisition, that is, you have to manually write down the names of your friends to a piece of paper. That activity is very time consuming for a human being. It takes a relatively long time to do that work in comparison to a computer which can do it in a matter of milliseconds.

In this process, there are two media at play:

• The information is first electronic;
• There's a manual transcription to paper that must take place;
• There's a manual transcription from paper to electronic media that must take place.

Within this one process, it's like we've purposefully created a vinyl record from an MP3, then played our vinyl record to listen to and record the sample again, and then, we copied the sound to another MP3.

Different media, same information transformed (three times!), no functional difference.

Further, once copied to electronic form the second time, the data is stale: we'd need to go back every day and do the same process by hand again.

Also, the same information has been duplicated in two places. From a security standpoint, this is more difficult to control. The paper copy is inherently without controls and cannot be audited.

Also, there's also risk of error in every transaction. With each recording of a name, the human being is prone to make mistakes, and the error rate will pass through to the email marketing campaign in one of two ways:

1. The data collected was gathered incorrectly;

2. The data transcribed into the next system was erroneous - like, a name was mistyped, for example.

And at the end of the day, the compounded errors, duplication of effort, redundant activity, and relatively slowness has cost the money significant dollars in labor cost.

Shouldn't IT Be Faster?

Okay, now, let's recall my speed, accuracy, and reliability argument from a few weeks ago. Relying on manual labor to conduct our sample business processes is inherently:

• Slow
• Error-prone
• Not reproducible
• Inconsistent
• Insecure
• Costly

As a business manager, you should be aware of how manual your business processes are. Take a good look around your shop. For a single critical business processes:

1. For that one process, how dependent are you upon labor?
2. For that one process, where is labor inserting itself where automation could do a better job?
3. For that one process, how is the impact of manual speed, accuracy, and reliability affecting your competitiveness?

What's Left is Raw Opportunity

This gap - the difference between the current, manual information system and a potentially automated information system - represents an opportunity for you.  It's the sweet spot strategy that I talked about last month (Reducing Expenses) that helps justify technology spend. It also represents a way for you to easily manage the technology problem on your hands: follow the labor.

• Where are people?
• What are they doing?
• What real value are they contributing?
• How is the impact of labor harming or helping the business model?

Next: information as an asset.

R

What is an Information System?

Are You Watching What You Really Need?

The other day, I got to talking about what data was. I explained that data was a discrete fact that, by itself, had no specific relevance. We can't contrive meaning out of things like "red", "287.83", or "Ron" unless we know how they're being used ... that they have context.

Information is data in context. It's the lens by which that we perceive data and attempt to make sense of it. If I told you that, in this case, Ron was interested in purchasing a red suitcase for $287.83, then the data is put in context and makes sense, and subconsciously, our minds are already making judgments and decisions surrounding the information that it's been fed:

• Is "red" really a good color for a suitcase? Your mind is already buzzing with long-held perceptions, images, and opinions concerning red suitcases.
  
  
• Is $287.83 really too expensive, given your judgment and past history purchasing suitcases?
  
  
• Is there a reason why Ron wants to travel?

Watch What the Mind Does!

The mind is an interesting thing. See the last one there? My mind wanted to jump to the next logical conclusion - it made this assumption that Ron would be travelling based off of known variables. Ahh assumptions! But did I make the right assumption?

Think About Your Small Business Information System

Should we look at this example as a lesson for understanding your small businesses' information system, I think we should make three points:

1. Facts. Are the facts (datum) recorded in your company's information system accurate? This goes back to my last conversation with you. If the data is bad, the information we'll get from it is bad, and the decisions we'll end up making will be wrong. If the data's bad, why is it bad? That's going to need to be fixed before anything else.
   
   
2. Information. Is the information derived from the information system relevant to your job, or, the job of your employees? Example: if this was a suitcase retailer, it'd be relevant - we see who bought what and for what price. Instead, if you're in the business of, say, carpet cleaning, how does this information help you? Is the information you're getting from your information system relevant to the decisions that need to be made? If it ain't relevant to you or your employees, what's the point? What's the value in being handed irrelevant information? 
   
   
3. Assumption. Finally, how did the information system work to dispel assumption? In this case, there were few data points and my mind was able to wander (as minds do!) and make a broad assumption about what I was seeing. That assumption - that Ron was travelling - may be entirely wrong! And you guys know what happens when people ... assume ... in your business, right? The next thing to look at: how is the information system providing relevant, factual, accurate information, that dispels assumption, and leads the user to the correct decision/answer every time? If the information system provides information that's left up to interpretation (or assumption), we'd see increased guesswork in outcomes, leading to more errors, more malfunctions, more loss.

If we were talking, I'd want to look at the reports being spit out by your information system. How do the contents of this report benefit its user? I'd ask, "What do we absolutely need to know to do THIS job?", and then look at how the information system is providing the right information to the right person at the right time make the best decision, and in a way that dispels assumption, because the more assumptions that'll be made will contribute to higher error rates and loss down the road.

Hey ... There's More?

Wow! Cool, okay, today we've covered some great information theory 101! All of this content is related to my discussion on information management strategy for the small business.

Next time we'll talk about automated versus manual information systems, and, the impacts of errors and omissions. Talk to you then.

R

What is Data?

Datum is a single fact. A simple number, a specific date, a single amount, a zero in the right place, or a one somewhere else. Datum is the singular form of data or a collection of facts.

Data is inherently chaotic. It's disorganized, jumbled, sometimes measurable and sometimes just a feeling. It's everywhere! In and of itself, data has no meaning and is practically useless.

And no, I'm not talking about him.

Here's an example.  Let's say you're a purchasing manager and you need to know what you've paid for a commodity over the last three years. A single hand-scribbled figure is delivered to you by your lead buyer:

$3.87

Okay, you'd have no idea what this means. There's no other context than the amount itself. Is it an average? Is it the last purchase price? What was the quality, quantity, or unit of measure? When was the date surrounding this transaction? As information, this is meaningless. You need more data! You need more facts to provide context and to potentially understand its meaning. 

So by itself, data has no relevance, but in IT, we're very, very obsessed with data. It's found at the very bottom of things - a foundation that is the basis of everything we do in IT. We backup data. We recover data. We analyze data. We mine data. We walk data. Our strategy for managing an Information System begins at understanding how every datum gets recorded!

Seeing its importance yet?

Take into consideration the following four pieces of data:

$3.87  $3.56   $3.78  $3.63

Only one of these is accurate. Only one of this is the right, true piece of data. Which one is it? How can you tell? Which one is the real piece of data? Which is true? Which is false?

• And if we kept the bad data and used it as a basis of reporting, wouldn't the reports be suspect? Like, the reports would be bad? Generating erroneous information?
   
• And wouldn't the decisions our employees - relying off of the reports - make be bad? Wrong? Inaccurate?
   
• Wouldn't inaccurate information - fed to our internal decision-makers - impact the expectations of our shareholders and private investors?
   
• Then won't our bad decisions lead to internal losses, missed opportunity, or disappointed customers? Who then relate their frustrations to friends and family through word-of-mouth, damaging your brand, ruining your reputation? 

GIGO, right? Garbage In, Garbage Out?

Understanding the role Information Systems plays in your business begins with thoroughly studying the first and last datum stored. Managing the information system means stepping back, all the way back through your assumptions, to see how data is being accurately captured, recorded, preserved, and maintained. Do you know this? Where your data comes from? How it's accuracy is guaranteed?

Next: What is Information?

R