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William McKnight

Hello and welcome to my blog!

I will periodically be sharing my thoughts and observations on information management here in the blog. I am passionate about the effective creation, management and distribution of information for the benefit of company goals, and I'm thrilled to be a part of my clients' growth plans and connect what the industry provides to those goals. I have played many roles, but the perspective I come from is benefit to the end client. I hope the entries can be of some modest benefit to that goal. Please share your thoughts and input to the topics.

About the author >

William is the president of McKnight Consulting Group, a firm focused on delivering business value and solving business challenges utilizing proven, streamlined approaches in data warehousing, master data management and business intelligence, all with a focus on data quality and scalable architectures. William functions as strategist, information architect and program manager for complex, high-volume, full life-cycle implementations worldwide. William is a Southwest Entrepreneur of the Year finalist, a frequent best-practices judge, has authored hundreds of articles and white papers, and given hundreds of international keynotes and public seminars. His team's implementations from both IT and consultant positions have won Best Practices awards. He is a former IT Vice President of a Fortune company, a former software engineer, and holds an MBA. William is author of the book 90 Days to Success in Consulting. Contact William at wmcknight@mcknightcg.com.

Editor's Note: More articles and resources are available in William's BeyeNETWORK Expert Channel. Be sure to visit today!

I have received some questions on my article "Information Management and the Financial Meltdown" so I thought I'd address them here. The article was written in September, after the meltdown of Fannie Mae and Freddie Mac and Lehman Brothers filing for bankruptcy. AIG had suffered a liquidity crisis, but had not received the government loans yet to come. Goldman Sachs and Morgan Stanley had yet to be converted to bank holding companies, Washington Mutual yet to be seized, Wachovia acquired, etc., etc. And now we see it spreading to the auto industry and probably eventually the airline industry will be front and center. In other words, it was and continues to be a moving target.

It is really difficult to tell the depth of the deleveraging and decoupling that the world economy will go through. The economy is wound up pretty tight and must let out the built up pressure. Questions remain about the approach and the timing, but there is no avoiding that pain has, and will, occur.

One point I made is that financial companies were motivated to get mortgages out the door and that they sold their toxicity. This was true, but why were they motivated as such? Some point to the Community Reinvestment Act of 1977, which required institutions to loan to those less qualified. 1994's Riegle-Neal act compounded the CRA's effect by rewarding banks with high CRA scores to bank across state lines. And then more ability to compound behavior was possible in 1999 with Gramm-Leach-Bliley, which allowed banks to combine investment and commercial operations.

There was also incentive to take undue risks with the dilution of executive accountability once the firms went public and the executives became more minority interests in the entities. This started with Salomon Brothers, important in Citi's heritage, going public in 1981. While I'm at it, the rating agencies' presentation of their business intelligence left some things to be desired. And over 100% home equity loans, combined with a real estate downturn, tossed more toxicity on the fire.

Another point is that the mortgages were put into complex packaging, which business intelligence did not keep up with. So, in context of business intelligence, did the financial companies know what they were buying? I think business intelligence has some room to grow in terms of that, as pointed out in the article. A better question may be did they care? In some respects they did, but in other respects business intelligence was relegated to secondary consideration given that the institutions were not incented purely by profitability and good business. As I said "full visibility into exposure and liquidity is going to be a must." Visibility and rewarding only good business are part of the "executive sponsorship" I mention that is required.

I had an MBA professor who went through some of the early lineage above with his students and predicted a dire outcome. I took his notes (early 1990's) and extrapolated the more recent events for this entry. Many probably could have seen this coming, but when times were going well, nobody wants to stop the music. Executive sponsorship and business intelligence will be critical to mend the markets as painlessly as possible.

What are your thoughts?

Technorati tags: data, Business Intelligence, financial crisis, Information Management,Community Reinvestment Act, Gramm Leach Bliley


Posted November 30, 2008 5:34 PM
Permalink | 4 Comments |

4 Comments

The more businesses need to act in a pure business sense, the more information plays a key role.

Business intelligence should be able to take the nuance of regulation into consideration as well. The problem becomes, as the post pointed out, that the business got ahead of BI and kept going.

The toxicity for sale, from the post, was valued by rating agencies, which may be where the real BI is lacking.

For all the gloom and doom, there is another side of the picture. There are industries that are continuing to grow and prosper. Media, while facing its own challenges, is finding ways to reach customers and deliver pertinent, relevant and compelling messages and entertainment. Advertising is seeking a new future where addressable messages are delivered across platforms in an informed manner.

We are seeing a vertical tear in the economy. If you are on the side that is declining, it is a catastrophe and can feel like the world is ending as you know it. If you are on the side that is ascending, the general picture sounds frightening, but your piece of the world can look pretty sunny.

What does all this mean for DW/BI? It means we can help both sides. For those working to find their way in a new and uncertain economy, DW/BI provides a way to look at the new reality and reshape their operations to fit into the new world.

Those that are growing can use the collection of technologies, techniques, experience and expertise that our sector has amassed over the past 20+ years to grow faster and to invest for better and more efficient operations.

DW and BI technologies are more relevant and more needed than every before. Welcome to a new phase of opportunity and growth.

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