It's An Information Business

One of the things that I like about my job is that I get a fairly deep look at different industries, and -- more importantly -- how they think about information.

And, to be sure, there are important lessons that different industries could learn from each other in this regard.  That point was driven home this week -- bigtime.

Tumultuous Times

I'm traveling this week, and every time I see a newscast, the global economic turmoil is headline news. 

Trillions of dollars in net worth lost.  Trillions more pumped into the financial system globally.  And trillions of dollars of debt in question, and essentially frozen in the world's financial system.

Different sectors of the economy react to this in very different ways.  If you sell things to consumers, you're battening down the hatches.  If you sell things to businesses, you're thinking it might be a long winter.

One sector seems mostly unaffected, though -- oil and gas.

Oil Exploration and Production -- An Information Business?

I spoke at an industry forum this week largely attended by IT professionals in the oil and gas business. 

Yes, they've got their problems to wrestle with just like everyone else, but lack of demand for their product isn't really one of them.

As I sat through various sessions, it became clear that this was essentially an information business: information about where the oil might be, how best to get to it, the current and future state of underground reserves, and so on.

Such large amounts of money are involved, the more data they gather -- and the more they can put it to use -- the better.  And if you've got any familiarity with this business, the sheer volumes of information they gather, save and use are simply staggering. 

And growing faster than most industries that I'm familiar with.

Financial Investing -- An Information Business?

I juxtapose this experience with a recent post by Tasso Agyros of AsterData, who basically characterized the recent financial meltdown as resulting from poor information about the current state of a particular class of asset: mortgage-backed securities.

He argues persuasively that there was plenty of information of available about the current state of sub-prime mortgages, the current credit status of their owners, and the real-time value of the underlying asset pool.

But -- he states -- available information wasn't used intelligently and acted upon, and we're all living with the result as we speak.  Sure, he works for a data warehouse vendor, and there are lots of other factors involved -- but the guy made a point that stuck with me.

Especially when I was watching an entirely different industry invest billions of dollars to track the real-time status of their most important asset on the balance sheet: oil reserves.

I can't say whether this intense focus has always been there, or had been made more acute in recent times by very public re-statements of proven oil reserves downwards by a few companies, and the predictable reaction from shareholders and regulators alike.

Regardless, the geek in me enjoyed watching the sophistication in how information was gathered, how it was modeled, and how it was used to characterize and assess the real-time value of their most important asset -- oil in the ground.

I just have to wonder if we'll see the same slavish attention paid to financial assets in the future.

I can only hope so.  I'm not comfortable with the idea of working until I'm 85.

Courteous comments welcome as always.

Comments

[puff65537]

I think you're missing the psychological dimension of information. Quite a few people knew quite a bit about bank exposure years ago, but nobody wanted to be the party pooper. Everybody willfully ignored any negative information, and not spending on IT infrastructure was an easy way to maintain bliss. The best explanation I have seen for this is here: http://www.atimes.com/atimes/Global_Economy/JE20Dj05.html

[Chuck Hollis]

Good point -- thanks!