The Information Management Really Needs


(Abstracted from Peter Drucker, Management Challenges for the 21st Century, Chapter 4)


His perspective


1.  Too much IT is invested in looking at operations issues and cost control.  Managers need to look past costs to the “creation of value and wealth.”


2.  Past technology improvements have been as productive or more so.  Between 1455 and 1505 the output of books went from 1200 pages/monk/year to 250,000 pages per printer/year.  Can we point to any current industry that is 200 times more productive than it was 50 years ago?


Good IT should provide managers with:


  1. Activity-based costing (includes cost of machine downtime, cost of waiting for a part, cost of inventory waiting to be shipped, cost of scrapping a defective part…)


  1. Cost of entire economic chain (e.g. cost of production, shipping, service, training…)


  1. Price-led costing vs cost-led pricing


  1. Foundation information (cash flow, receivables, sales…)


  1. Productivity information (benchmarking, economic value-added analysis (profits must be greater than the cost of capital))


  1. Competence information (measured by unexpected successes and failures, innovation levels compared to competitors (why do the others guys have all the new products?))


  1. Resource allocation Information (review of ROI and payback period and discounted present value), people performance (against set and known standards)


  1. Business intelligence –knowledge about actual and potential competitors worldwide.



at some point managers need to get out of the office and talk with customers.  There is no substitute for personal contact.