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George M. Scott

A Data Base forYour Company?

In recent years a long procession of new manage-ment information systems concepts and tech-niques has been paraded before managers. Onefrom the not too distant past is that of totalinformation systems, an oversold idea now laidto rest with the epitaph "fallacious in all but itsmost moderate forms."More recent and still current is the notion ofmanagement information systems (MIS), a lessambitious relative of the total systems concept.MIS perhaps does not capture th e imagination tothe ex tent that total systems did, bu t it is prov-ing to be an achievable goal with a worthwhilepayoff for many com panies. MIS is not all ornothing; it is a matter of degree. While it is nomore possible to define MIS precisely than todefine management precisely, it is possible topoin t to a few companies and say, "They have anBut technology in computer information sys-tems races ahead, and an innovation called "database" is being trumpeted in the literature and incorporate circles even before most companieshave fully digested the idea of MIS. Nolan cap-tures the time compression of this technologyand imparts a note of urgency in his title, "Com-puter Data Bases: The Futu re is Now."^While data bases are not a panacea for any cor-porate malaise, they do represent a significant

technological advance, their implementation isfeasible now, and they can provide great benefitsfor many companies. Whether or not a data baseshould be in your company's future depends ona number of considerations, including manage-ment style and the present status of the informa-tion system.What is a data base and how does it relate to anMIS? Does your company need a data base? Isyou r company prepared for a data base? What isthe structure of a data base? What should beyour company's data base strategy? What ismanagement's concern and role in data basedevelopment? Let's begin with the firstquestion.WhatbaDataBase?In literal fact, a data base is the data on which acompany bases its activities and decisions. Assuch, every company has one. But the currentmeaning attributed to the phrase data base(often called a common data base) far tran-scends this literal interpretation. For the pur-poses here, a data base is:Computer files of data structured to enable efficient up-dating, maintenance, reporting, arid storage of data andto enable rapid retrieval of all stored data that must bebrought together for a particular operation or manageriapurpose.

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This definition has two major dimensions: thefirst relates to structuring of data files to enableefficient updating, maintenance, reporting andstorage of data. Data bases are first a technicalachievement, for data-base structuring involves avery complex data-file design and date-retrievaltechnolojgy. Although still in its infancy, thistechnolojgy provides the technical basis for thecurrent impetus toward data bases. The tech-nical aspects of data bases are of primary inter-est to data-processing personnel. For these per-sons, technical reasons are often sufficient tojustify the acquisition of a data base, since itbrings about certain processing efficiencies andeconomies, is the latest technology, and presentsdata processing w ith a continuing challenge.This article does not examine the technical intri-cacies of data bases; the literature with this per-spective is voluminous. A caution will besounded here, however. Data-processing person-nel often tend to be so engrossed with the tech-nical asi)ects of the creation of a data base(which ^hey will indeed find challenging) thatthe data base itself becomes the exclusive focusof their attention. General managers must makecertain chat the purpose of the data base assupport to management is kept uppermost inmind by the technicians who create it.Th e secc nd part of the definition, enabling rapidretrieval of all stored data that must be broughttogether for a particular operation o r managerialpurpose, represents the management dimensionof the data base. Managers must understand thispart of Ihe data-base revolution. They will reapthe beni,;fits here and they must specify theirdata netids for each operation and purpose sothat datit relationships can be structured into theda ta basi,;.This managerial aspect of the definition alsosuggests the relationship of data base and MIS.An MIS may be succinctly defined for the pur-pose he -e as a set of computer-based informa-tion sub!;ystems which articulate with each oth er

George M. Scott is Associate Professor of Accounting atthe University of Texas at Austin. He has consulted ex-tensive > in the systems area and has authored severalarticles. Tne authpr thanks the Resource Center, Institutd'Adm nistration des Enterprises, U niversite d'Aix-Mar-seille, I'rance, for financial support during the preparationof this ctrticle.

to provide the information from storage neededat all operating and m

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The focus has now shifted toward viewing dataas a resource independent of specific computerprograms. Data systems are increasingly viewedas a resource in much the same way as are in-ventory, cash, and other tangible resources. Withthis perspective it becomes clear that data mustbe managed as are other resources. The turntoward viewing data as a resource thereforemeans a concomitant surge of managerial inter-est in data bases as systems to manage data.Does Y our Company N eed a Data Base?A technically sophisticated data base structuredwith a managerial perspective enables an MIS tobe developed to a higher level of sophistication.If your company needs a sophisticated MIS, italso needs a sophisticated data base. The natureof the industry, the product lines and the com-petition, the management style of the com-pany's executives, and a host of othe r factorsdetemiine the extent to which a data base wouldbe useful to a company. A company in a stableindustry with only a few stable products thathave readily pred ictable sales volumes and with amanagement style that utilizes a low volume ofinformation would probably not find the bene-fits of a sophisticated data base worth its cost.But a company in a rapidly changing industry orin several industries, with a great many relativelycomplex products for which fluctuating con-sumer demand and competition make pricingand production planning difficult, and withmanagers who utilize extensive amounts of in-formation and who often needs special reportson a crash basis, would find a data base in-valuable.Of coui-se, many gradations exist between thesetwo extremes, and there are also various degreesof data-base sophistication. Many companies willprefer to establish a partial data base whichserves only their more dynamic fvinctions oronly those areas where special information-intensive problems occur frequently. Companiesthat do extensive market, production, and finan-cial planning in highly uncertain environmentswill find data bases especially valuable as thefeed-forward link between opera tions and plan-ning.A data base makes data more readily accessiblefor the ad hoc reports required in dynam ic situa-

tions. In the past, computer applications pro-grams have been written for a specific purposeto serve a particular file of data. As a conse-quence a large proportion of corporate data re-mains locked up in existing computer programs;a major effort is required on the part of dataprocessing to write new programs to access datafor other than routine reports. Data elements aretied to specific computer applications programsby the embedding of unique data names andother descriptive or data definitional character-istics into those programs. This effectivelymakes the data conveniently available only tothe few (often only one) applications programsspecifically written to access the particular datatile.The data-base approach emphasizes the indepen-dence of programs and data. Data names andother descriptions of content and data formatare removed from the programs and placed withthe data. These data, now neutral with respectto any specific programs and organized in data-base form, become readily available to all pro-grams that are given access rights to the database. The neutrality of the data base also enablesit to be more efficiently updated and accessed.Managers, previously constrained by the neces-sity to wait until after the end of the period forperiodic reports or for special reports that re-quire special programming, can now receiveroutine reports on an on-call basis if desired andad hoc reports with a minimum of programmingeffort and delay.The full implications for management of thisdata-base approach are not yet clear, but itseems likely that over the next several years thisapproach will contribute to the emergence ofdramatically different styles of management incompanies with data bases. This emergence willbe so gradual, however, that it will not appear tobe dramatic. Perhaps five years after a data baseis implemented the changes in mode of manage-ment will be noticeable to all. After a decade ofutilizing a common data base, management willprobably be able to look back and say, "Yes, theincreased information availability with databases has changed the way we conduct opera-tions and manage the company." It seems plau-sible that the managers who understand how toutilize the data base fully will have a distinct

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advantage with respect to managerial efficiencyand effectiveness.One infivience of data bases may be to acceleratean evolution of companies toward "coordinativemanagement." A hypothesis of the author isthat many large and complex companies areevolving toward a form of management thatemphasizes within-company coordination ofactivities as opposed to, for example, indepen-dence of divisions.^ Extensive coordination re-quires rapid adaptability on an ad hoc basis,which in turn depends on ready availability ofinformation. Data bases provide this ready avail-ability of information.Nevertheless, data bases will doubtless prove tobe unsuccessful for many companies, perhapsbecause they are implemented by companieswithout need for a data base because they arenot properly implemiented, or because they arenot utilized by managers, once implemented. Astechnology continues to improve, the costs ofdata bases will decline and a body of knowledgefor their implem entation will emerge. Data basescan be eiiipected to become worthwhile for morefirms and to become more successful in the com-panies in which they are installed.

I s Your C ompany Prepared fo r a Data Base?This is actually four questions. First, has yourcomputer group completed the necessarygroundwork? Second, does your company havethe technical expertise? Third, can your com-puter support a data base? Fourth, are yourmanager;; ready for a data base?The creation of a data base is a long-term projectthat should begin by first "putting the data-processing house in orde r" to facilitate this tran-sition. 1^0 an extent, this house cleaning issimply catching up on activities that should becompleted anyway, and to an extent it is to ini-tiate the strict data discipline procedures thatare absolutely necessary in a data-base environ-ment. (These categories are not mutually exclu-sive.) Programs should be set into motion toestablish rigorous standards for data definitions,and accounting and programming codes. Com-mon dcta input/output formats should beadopted by all departments. Strict program-change controls must be installed if not already

present since program changes cannot be per-mitted to violate the independence of programsand data. Documentation of existing programsshould also be brought up to date since anunderstanding of their logic is essential ^o crea-tion of the new programs. IMany of the old programs can be systeniaticallyrewritten during noirmal program mair^^enanceso that data-related information is remov^ fromthe programs and made a part of the dAa base.All programs originating after a decision hasbeen made to acquire a data base shoifld con-form to the new data^base standards eventhough acquisition of the tiata base mayj still beseveral years away. ; >In most companies the data-processing group hasbeen in more or less contjnual crisis as i; installsthe latest generation of ct)mputers, addjs equip-ment, and hustles to me^t accelerating! user re-quests. Many of the ca^ch-up and d^cipline-initiating activities may have been planned buthave been deferred until ijhe situation s^bilizes.If the last crisis in youil company's cojnputergroup was less than threq years ago, these mat-ters probably require attention. A reminder todata processing may be in order, eve|i if oneresult is a fatter budget request for programmingand other personnel.Thus, before direct workor a particular section ofress can be made in that

is begun in a 4ata baseit, a great dealiirection by lirldertak-of prog-ing such projects. All iire prerequisites for a database, and many also improve present cjperatingefficiency and economy^ Calculation^ of theexpected cost of the dat^ base should j excludethis preliminary activity to the exten|: that itprovides benefits even witjiout a data babe.With respect to availabjlity of techjiical ex-pertise, most companies do not havequate reservoir of data-bas an ade-md evenexperience,:some large companies hcive no personnel withthe requisite technical alnlities. Data-fase spe-cialists are among the scarcest of techi|icians atthe present time, and this shortage cai be ex-pected to continue for berhaps five }most companies, data-bftse developrri ears. Inwilleither be slowed because of the need ttt) acquireor train technicians or the data base witless efficiently and less r^sponsively asquence of using technicians without t

operate4 conse-requi-

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site skills. Companies will often find it advanta-geous to seek technical consultants to provideguidance in structuring the data basethe generalmanagers must still make the important deci-sions of go/no-go, project scope, and imple-men tation p riorities.The third question pertains to the availability ofthe necessary hardware and systems software foryour company's computer system. Since databases require large amounts of memory, a me-dium or large com puter is required. Also, if yourcompany expects the data base to be readilyaccessible from several different locations, asmost companies do, it is essential that the com-puter have adequate hardware and softwarecommunications capability.Finally, all data bases require a data base man-agement system (DBMS) which, somewhat over-simplified, is an extension of the computeroperating system designed to manipulate thedata in the data base and serve as the interfacebetween the user and the data base. Most majorcomputer manufacturers have a DBMS availableas an extra option, but not for all of their com-puter models. Generalized DBMS's are commer-cially available but must be adapted, often atconsiderable expense, to specific computers. Toacquire the DBMS suited to the needs of yourcompany's operations, it may prove cost-effec-tive to acquire a new computer that has a DBMSas an option. This expense, of course, is a majordeterrent to data-base acquisition.It is not uncommon to find companies that lackone or all of the preceding requisites. In onecase, the controller wanted his company to be apioneer in data bases. After an intensive surveyit became apparent that the company's com-puter did not have the necessary communica-tions capab ility and that no DBMS was readilyavailable for the machine. Three years later thecompany is now replacing its computer and acompleted data base is within sight in the nexttwo or three years. During the interim, dataprocessing has been profitably occupied in sys-tematically initiating companywide computingstandards and establishing data and program in-dependence in preparation for the time whenthere will be a data base.The final and perhaps crucial consideration as towhether your company is ready for a data base

pertains to the status of your present informa-tion system and the attitudes of your managerstoward change and information use. Informa-tion-system development is evolutionary andtypically passes through several stages.'* To at-tempt too much change by severely short-circuiting a natural and orderly evolution mayintroduce so much shock into the organizationthat the new system cannot be implemented orwill not be used by the managers. To implementa data base for managers who still manage "bythe seat of their pants" would be folly. Movingdirectly to a data base with computer personnelwhose technical backgrounds and orientationsstill reflect second-generation computers orsmall-scale com puting would also be a mistake.In both situations, the magnitude of the changewould be overwhelming.Since data bases are technically sophisticated, itis necessary that managers be sophisticated andinformation-oriented and that computing tech-nicians be sufficiently close to the present stateof the art in computing to make the transition anatural one for them. Additionally, both groupsmust be favorably disposed toward change, andthe managers must acknowledge informationneeds that cannot be readily met without a database. Of course, it is possible to accelerate thetempo of change for both groups by a judiciousprogram of personnel recruitment and prqmo-tion, executive development programs, and soforth.Structure of the Data Baseand Key Activity Information NeedsThe most elementary perspective of the struc-ture of a data base is a common pool of data, asshown in Figure 1one monolithic file thatsomehow knows what data are needed by man-agers and instantly provides it. A data base is infact usually composed of several linked files ofdata; Figure 2 recreates the data-base portion ofFigure 1 to show this. Each file contains most ofthe data necessary for a key operation or mana-geiial activity. The linkages between the filespermit extraction of related data from adjacentfileis. The linkages within and between files areestablished with program instructions, andpointers and other mechanisms included in thedata base. Each file has a specific format for thestorage of its data, and the organization of the

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Figure 1. Simplified MIS .COMPUTER SYSTEM UNSTRUCTURED & INFORMAL

IINFOFIMATION JSub-Systems

[lnventory[ Payroll | Corporate Planning [E tc

DataInput

ManagerialA-:tions,

data in each file greatly infiuences the efficiencyand flexibility of these linkages. A variety ofdata file structures are available; many arespecial-pmrpose, and the one chosen for a partic-ular file depends on the data-processing needsfor that file. For example, certain organizationsof data provide a more efficient search capabil-ity for random search and retrieval, while othersprovide tnore efficient data output for routinereport preparation.During tbe design of the data base the majorseparable activities must be identified at eachlevel in company, so that the data base can bestructured to accommodate best each of theseprimary activities. Many of these activities relateto specii'ic managerial decisions made at eachlevel, wbich tends to give the data base a deci-sion orientation. To the extent that data relatedto the same activity can be grouped in the samefile, processing will be more efficient and un-usual rec|uests for information can be accommo-dated wi:h less additional programming.Three general levels of the corporate hierarchyare utiliiied here to illustrate a framework forsegregation of key activities; these are the opera-tions, iranagerial, and strategic levels. (Manycompanies will be able to identify four or fivelevels of distinctly different key activities.)Major ac tivities at the operations level are pay-roll, accounts payable, accounts receivable, costaccounting, and so forth. The cross-functionallinkages at this level can be handled by the data-base des gn technicians and other computer per-sonnel vith little or no managerial involvement.These linkages involve interactions such as usingboth payroll and personnel data for payroll

preparation.At the next level, that of managerial activities,the major tasks include manpower planriing, in-ventory planning, cash nianagement, md thelike. At this level, the tasks typically I requiresummarized or aggregated data from the lower-level data files and often demand the cojnbiningof data from two or more lower-level files. As anexample, manpower planning may require thatsummary information pertaining to job experi-ence of existing employees and summary fore-casts of personnel needs by all divisions bebrought together to facilitate creation of a planfor recruiting and job transfers. The siammarystatistics and other data needed for tdis taskmay be placed in a manpower-planning file inthe data base. This file wi|ll be updated is neces-sary and made available so that computer pro-grams can automatically extract the relevantdata and prepare reports for the manpower-planning activity.Key activities at the strategic level inctasks of market penetration andplanning, investment decisions, andplanning, along with others. At thisformation is used that i is summarizimiddle-level managerial Activities; forforecasts of results in $everal profitHowever, this infoiTnaticjn must usuallated to information frotji the environ:the key activities at the! strategic levtimes computerized models are used toand process the data. National econonmation and industry statistics are exaenvironmental informatioji that can be sis quantifiable, is not unduly perishab

lotig-ude theprodiict-line;-range3yel, in-d fromi|stance.Centers,y be re-rtent forli; some-cpmbineinfor-rfples ofspecified,d, and is

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Figure 2. A Data Base Consisting of Several Data Files.PROCESSING

Payrolldata I incorporateplanningdataLINKAGES

often readily available in computer-readableform from commercial sources. An environ-mental data base to support strategic-level activi-ties is generally constructed and maintainedmore or less separately from the other compo-nents of the corporate data base.A complex pattern of key activities and informa-tion linkage emerges. Lower-level activities useinformation which fiows horizontally. At themiddle level summaries and aggregations fromlower-level data-base files are used; and at thetop level differently summarized and aggregateddata are needed. As previously noted, groupingdata by key activities increases processing effi-ciency. The intricate pattern of key activities atthe various levels makes these groupings verycomplex. An ideal grouping for one activity willmean that the data for another cannot be opti-mally grouped unless a partially redundant database is to resu lt. Th us, data-base s tructure is amatter of balancing key activity data files, byassessing the relative importance of processingefficiency, data availability needs, and data re-dundancy. A modicum of data redundancyoften increases efficiency or reduces overallcosts. To achieve the best trade-off, the data-base designers should be aware during the initialdesign phases of the key activities at each leveland their data needs.

Within the general level of managerial activity,key activities can be classified by the nature ofdemands on the information system and on thedata base. These classifications are as follows.Activities requiring only limited informationfrom storage. Here a data base is not necessary.As an example, dealing with interpersonal prob-lems is certainly an important managerial re-

sponsibility at every level, yet this type of activity typically does not draw heavily on a database.Monitoring activities. Most managers at everylevel "keep tabs" on a process, an operation, oa particular result of operations on a more oless continuous basis. Usually they receive periodic reports, exception reports, or both. A database facilitates such monitoring in two wayssince data can be easily retrieved and kept continuously up to date the reports can be morefrequent or even on deman d; and th e necessarydata relationships can be structured into thedata base so that all information required tomonitor a particular activity is automatically re-trieved and appears on the same report. For example, cash infiow and outfiow for all bankaccounts at all company locations could belinked in the data base to provide an automaticdaily report of the net cash fiow for an entirecorporate system for the preceding day. Nocomputer personnel effort would be involvedafter the initial stmcturing of the data base.The data-base approach permits all key corporate status and progress indicators and rela-tionships such as cash po sit ion -to be monitored on a daily basis if desired, but these indicators must first be identified and provided for inthe data base. This capability of daily perfor-mance indicators may prove to be one of themost important features of data bases; yet therehas been only the barest suggestion of this po-tential benefit in the literature.Cyclical or periodic activities. Financial statement preparation and budgeting are exampleshere. Many of these activities follow a naturalrhythm determined by seasonal factors, tax orregulatory reporting requirements, or other ex-ternal infiuences. Others are detennined by data-processing scheduling or cost of reporting con-straints. A data base will often greatly reducethe lag time between the end of the period andreport preparation and distribution; permit in-creased frequency of reporting where desirablewithout greatly increasing the total cost of re-porting; and permit inquiries at any time, obviating the necessity of waiting until the end of aperiod.Ad hoc activities. These activities generally involve irregular, nonrecurring and unstructured

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problems, many of which are among the mostimportant of a company's problems. In contrastto the routine key activities, usually neither theproblem nor the information it will require canbe accurately anticipated; this contrast is shownin Figure 3.Figure 3. The Match Between Key Activities and DataBase File Structure.Anticipated Data Needs(Routine Key Activities) Anticipated UnanticipatedGeneral Class Needsof NeedsA

Decreasing ability to tailor the data baseto the specific activity or problem.As suggested by Figure 3, data-base files can betailored to routine key activities such as thosealready described. As the ability to anticipate aproblem and the information needs for its reso-lution decreases, however, the difficulty of con-structing a data-base file specifically for thatpartic ular prob lem activity increases. If the gen-eral class of problems can be anticipated eventhough the specific problem within the class can-not (point B in Figure 3), i t may be worthwhilefor important problem areas where the cost ofdelay is hjgh to construct a generalized data fileone that contams all data relevant to the gen-eral class qf problems. Much of the data in thisfile will never be used, and the average cost perdata access will be high. The computer programsto access such a contingency file will usuallyhave to b? written after the precise nature of theproblem ind its information needs are known.But the jvailability of all relevant data in onefile, struc tured to perm it m axim um search andretrieval lex ibility, will usually reduc e program -ming timi; to a few hours.For instance, if a company's managers are meet-ing with government regulatory officials forseveral dfiys to plead the case for a price increasefor a price-regulated product, it will not be pos-sible to anticipate precisely the officials' on-the-spot inquiries. The general category of questionscan be anticipated (perhaps years in advance)and a data base can be established with this inmind. A few hours of programming might pro-vide, on ia same-day o r nex t-day ba sis, the dat aneeded to respond to an official 's questions, say.

abo ut com pany financial stm ctu re or assetcomposit ion.Even for unanticipated problems, which pannotbe provided for at all by a special d a 4 b ase(po int C in Figu re 3), a datahbase mod e ofjopera-tions can be very useful. Because of thej rigor-ously maintained inde;pend^ce of prograips anddata in a data base, and beqause of the existenceof a data-base dictionar:^ d^cribing the locationqf all data in the base, prcjgranis to accdjss dataneeded for such ad hoc pifirposes can often bewritte n within tw o or thre6 days, as opppsed toweeks or even months foil a systemi wiljhout adata base. \ \In addition to the preceding four types of activi-ties, modeling, while notj a direct managerialactivity, can be viewed as I an extension of theinform ation system whichj provides a dditiona linfor ma tion to managers.! Models musjt drawup on da ta bases for theijr data needs.! Som emodels have their own l^ase of data, [usuallycollected with great effort and time delajy fromdata that have originially b^en utilized fqjr otherpurposes and then specifically classified andcoded for the model. Oth^r models accd^t datadirectly from the basic company files; ij^e pro-grams associated with the jnodel access tjlie database to retrieve the data Aeeded by thejmodel.For the latter models (vi^hicfh are sometin|es onlyadapted versions of the farmer), care rpust betaken to structure the d^ta base so tHjat dataneed ed are available to thje -model and so t ha tthe data formats of the mc^del and the d|ita baseare compatible. Even for r^iodels with thpir owndata b ase, a com pany data] base structui | ;d withthe model in mind can greatly reduce th 5 acqui-sition effort and delay for data to be usec by themodel . IData-Base Strategy jIf the time is ripe to begirj work on a d^ta basefor your company, v/ha| strategy sh(|uld beused? T he ke y t o da ta-b^se design an(| imple-mentation is careful plajtming. This planningmust be a coordinated effort between tljlie data-processing technicians changed with theijrespon-sibility for the hardware arjd technical aspects ofsoftware design and the managers who mustidentify their key activities and comrnilnicatetheir inform ation needs ^s well as the relativeimportance of these to the technician! Since

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general managers and computer technicians sel-dom communicate well with each other, thisjoint planning requirement is particularly diffi-cult to fulfill. The onus is often placed by de-fault on the data processors to determine whatwill be stored in the data base. But for data-processing personnel to attempt to determineinformation needs and relationships for themiddle and upper levels in a company is likelooking up from underwaterthe view is trans-lucent at best.Indeed, there has been relatively little experi-ence to date with structuring sophisticated databases for use by middle and upper levels ofmanagement. A cautious approach to data-basedevelopment therefore seems warranted. Until agreater body of knowledge about the managerialaspects of data bases is developed, the proba-bility of serious errors in data-base developmentwill be high. Perhaps the best precaution is toinvolve higher-level managers deeply in the de-velopment process.The data-base project will be a long oneper-haps three to six years, or even longer. Thisconveniently places the data base in the sametemporal range as corporate long-range formalplans, and so the project should be related to thegoals, strategies, and specific objectives of thecompany's plan. This will help to determine theproper scope and implementation priorities forthe data base, as well as how the firm will use it.The information availability expected from adata base may even serve to alter somewhat thestrategies and goals contained in the p lan.The data base should be planned and imple-mented on a project basis. A steering committeeor its equivalent should provide overall projectguidancethe same steering committee whichoversees all data processing resources if one is inexistence. The project should have a full-timedirector who is a data-base technician with astrong management orientation or vice versa,since data bases require a melding of computertechnology and management information needs.This director should work with the steeringcommittee and with other managers to create amaster plan that establishes the project's scope,the broad outlines of the several data files, andthe priorities for implementation. The directorshould also supervise day-to-day activities during

the entire project.The data base should be detail-designed and implemented in modules, avoiding simultaneousimplementation of the entire project. Eachmodule implemented should provide immediatebenefits. A quick payoff helps to sell the projectto managers whose cooperation will be neededin the future and helps to keep enthusiasm forthe project high. In general, it is preferable toimplement the data-base modules at the opera-tions level (such as payroll) first; these usuallyprovide summary data as input for the higher-level, key-activity data bases. While no conclu-sive body of knowledge exists to support thisbuild-from-the-bottom approach, most compa-nies have begun development of data bases fromthe bottom.

The Role of ManagemientManagers play several important roles in data-base development. First, the initial impetus for adata base is likely to come from managers andoften from top management. Next, managersassume crucial roles on the steering committeethey guide the development of the master plan,study and approve or reject the recommenda-tions of the project director at each stage, andultimately assess the success or failure of theproject.Managers at high levels both on and off thesteering committee must also communicate theirenthusiasm and support for the project to theentire organization. If there is widespread suspi-cion that management's interest is only luke-warm, the forces opposed to change will over-whelm the project. Best of all are senior man-agers who actively champion a data base.The role of managers in the specification of theirinformation needs merits examination. Managersare often so wrapped up in the present circum-stances of their activities that they will not fullyappreciate that information not now convenient-ly available or available only at certain intervalswill be readily at hand on demand. Conse-quently, to ask a manager to define his tasks(which may be altered somewhat because of thedata base) and his information needs may evokeonly a conditioned response seeking much thesame information as now received.

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as high as the level of vice president. This up-ward movement will refiect the continuing rec-ognition of data as an important corporate re-source that must be centrally coordinated. Suchan evolutionary pattern will be similar to that ofother functions, such as personnel and dataprocessing itself, which typically originated inthe depths of organizations.In most companies data-base administration be-gins de facto within the comp uter programminggroup. Accordingly, it is not surprising to find inmany companies that when data administrationfirst becomes a separate function the data-baseadministrator reports directly to the seniormanager within the computer department and ison a par with the programming manager. Thisarrangement has much to its advantage, at leastinitially, in that data-base development and data

processing can be closely coordinated. Its majordisadvantage is that the data-base administratormay lack sufficient suasion to achieve datastandardization in the face of data originatorsand user groups that may not appreciate thenecessity for standardization.An alternative arrangement is placing the dataadministrator, with a small staff, outside thedata-processing group and having him report to ahigher level. This may help elicit cooperationfrom data-base users, and it accents the emphasison data as a resource apart from the computersystem. However, such an arrangement ignoresthe reality that the initial data-administrationpersonnel are usually former computer program-mers who are likely to have difficulty establish-ing an identity and a credibility apart fromcomputer processing. The assignment of a stronggeneral manager as data-base'administrator mayovercome this difficulty and greatly acceleratedata-^base development. If a strong manager withat least a modicum of data-base credentials isnot available, it may be preferable to postponethe divorce of the new function from data proc-essing until data administration has passed be-yond the embryonic stage and is clearly viableby itself.Management is also likely to become involvedwith the problem of acquisition of data-baseexpertise. As suggested previously, data-baseexpertise is a prized and rare commodity. Thedata-processing group can be expected to try tosatisfy a need for more data-base expertise byhiring persons with this expertise; extensively

training present personnel; hiring an outsidconsultant with file organization and other technical data-base expertise; or some combinationof the above, which is the most likely circumstance. Management should accord requests fomore data-base expertise a sympathetic hearingTo this point, discussion has implicitly assumeda geographically centralized data base, bucompany computing is often geographicallydispersed, with computers unconnected to eachother (decentralized processing) or connectedinto a network by telecommunications so thathey interact to share the processing load (dis-tributed processing). Decentralized or distrib-uted processing introduces another complexityrequiring management consideration. A database for a centralized system is, in general, theeasiest to create. The first decision is whetherthis relative ease impels centralization of all thecompany's data processing. If the answer is nothen a decision must be made as to which ismost efficient: a centralized data base despitedecentralized or distributed processing; geo-graphically separated but electronically linkeddata bases in two or more locations; or de-centralized and unlinked data bases. Of coursecombinations are also possible. These are complex questions which involve many trade-offs,and additional complexity is introduced if dataprocessing also takes place at locations in foreigncountries. In sum, data-processing personnel willcertainly expend a great deal of energy analyzinga spectrum of alternative general configurations,and they will need guidance about the mana-gerial aspects of the alternatives.REFERENCES

1. See, for example, Terrance Hanold, "The ExecutiveView of M I S , " Dafamaf/on (November, 1972).2. R. L. Nolan, "Computer Data Bases: The Future isNow," Harvard Business Review (September-October1973).3. See G. Scott, "Information Systems and Coordina-tion in Multinational Enteipiises," International Journalof Accounting Education and Research (Fall, 1974).4. C. F. Gibson and R. L. Nolan, "Managing the FourStages of Computer Growth," Harvard Business Review(January-February, 1974).5 . The use of Delphi technique for data-base design inlarge organizations is pioneered by Ronald Bush in hisunpublished Ph.D. dissertation, "Influence of CognitiveStyle in a Methodology for Data Base Design," GraduateSchool of Business, The University of Texas at Austin.

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