Managing data in a deregulated environment

By Mark Knight

March 12, 2002 — Managing data is something that companies do every day but what is it that we need to do with data? There are a couple of old adages that spring to mind.

The first is that there are three things we need to do with data namely (1) acquire it, (2) store it and (3) access it. While preparing this piece I read an article by a former colleague who said there are actually four things that we need to do with data, and he includes using the data as the fourth.

This is really just a specific instance of accessing the data since you need to access the data in order to use it but the point being made by treating this as a separate action is well taken. After all, what is the point in investing in systems to efficiently manage data if you are not going to take advantage of this to find new ways in which to
use the data?

This brings me to the second adage, which is that data is just data until it is arranged in a meaningful way to create information. Data is useful and necessary to any business but it is information that provides strategic value. That information in turn depends on how the data is managed and used. So how is this different between regulated and unregulated environments? The transition for a company or for part of a company from a regulated environment to an unregulated environment impacts each of the three activities associated with managing data and the result of this has a direct impact on how the data is used.

Two factors that have an impact on data management during regulatory changes are (1) changes to processes and systems, and (2) code of conduct and access rights changes. In the case of both of these examples, the impact is directly felt on the processes of acquiring and accessing the data, but care must also be given to considering how the data will be stored, especially when introducing new systems.

Over time the systems in a regulated environment, as in other businesses, tend to become tightly coupled and tailored for specific tasks. These systems are often not flexible enough to deal with regulatory changes which has led to a componentized approach being adopted by many companies through the introduction of integration technologies.

Whilst the logical separation of systems into components makes it easier to replace individual components, it does not change the logical flow of data required to perform existing tasks. While the physical flow may now pass through a central hub, the logical source and sink for that data flow still exist as before. Componentization also makes physical separation easier to implement when systems are split between regulated and unregulated affiliates.

If you take a business process and examine the data it uses, then follow the path of that data back through the different systems it has passed through, back to its point of origin you can determine each place where the data gets modified and which other processes also use the data or its derivatives. Pretty soon it is possible to end up with a data flow that looks like a drunk ink covered spider has been walking over a piece of paper.

Problems arise when the flow of data between regulated and unregulated affiliates is restricted. If the path that your data needs to take crosses one of these boundaries what are you expected to do? Similar issues arise where data required by different affiliates are stored in the same system, but where one affiliate is allowed access to all the data but the other affiliate is only permitted access to a subset of the data.

If the design of the data architecture and its supported systems are not able to support this type of requirement it can result in one affiliate losing direct access to potentially important data.

This article describes the type of problems that can face a company in its transition from a regulated environment to a deregulated environment and for a company that is deregulating a part of its business. There is not enough space here to address these problems in detail but I will look at some more of the ways that this can be an issue another time.

Mark Knight has been involved in electricity market restructuring since 1989, helping companies to adapt to competitive, regulatory and data management pressures caused by deregulation. Formerly Knight worked for Cap Gemini Ernst & Young, Logica, and Andersen Consulting. For more information contact Knight at mark.knight@ic4life.net


(c) Copyright 2002 Mark Knight. All rights reserved.

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