Information Glut Costs Australia AU$3bn Each Year

Growth and Mismanagement of Digital Information Is a Fundamental Inhibitor to National Productivity, According to Research from Hitachi Data Systems

SYDNEY — November 29, 2011 — Two new reports show a growing information glutis reaching crisis levels for Australian and New Zealand organisations, with corporate inaction creating significant regulatory and reputational headaches, not to mention a AU$3bn drag on the Australian economy per year.

This diagnosis comes from Hitachi Data Systems Corporation, a wholly owned subsidiary of Hitachi, Ltd. (NYSE: HIT / TSE: 6501) following independent studies from research houses AMR and Deloitte Access Economics, tracking the impact of information on organisational performance.

Two years after the first report, The Great Information Glut was released, today’s data show a further five percent of companies now suffer from information mismanagement, but feel incapable of finding a digital cure.

Hitachi defines the ‘information glut’ as the effect of an unmanageable rise in information in an organisation. It results in rising costs, process inefficiency and organisational inflexibility. Almost every respondent (95 percent) admitted they experienced some degree of glut, with a quarter reporting significant impact on organisational performance. Key symptoms include:

• Increased operational expenditure (49 percent)
• Inability to recover key files or data (38 percent)
• Struggle to meet reporting requirements (22 percent)
• Losing sales or failing to win business (17 percent)
• Reputational damage (11 percent)

While there has been a little improvement, with a drop from 82 percent in 2009 to 71 percent in 2011 of organisations putting their email retention strategy in the hands of their employees, the problem is still significant. Forty percent of organisations are unable to recover files from backup tape and a quarter of those surveyed would not be able to easily respond to a court ordered discovery audit for emails sent and received 18 months ago, creating a serious and unnecessary risk for these organisations.

Commenting on the results, Neville Vincent, vice president and general manager, Hitachi Data Systems Australia New Zealand, said:

"Last time around our research quantified the glut, this time it’s showed the rut – the fact that even more businesses are finding it hard to manage through the growth in information that is being generated, captured and shared throughout the workplace. We know senior IT decision makers are aware of the problem – since the first information glut report, understanding of the importance of managing digital information growth and costs have both grown significantly – but in many cases they are bravely limping on rather than taking stock. This is a classic prevention versus cure debate, and now for the first time we have the hard numbers which show the cost of not finding that cure –at least AU$3bn a year."

Hitachi Data Systems commissioned Deloitte Access Economics to assess the extent to which information glut was impeding business productivity, and the benefit of improved information management on performance and the broader economy. The author of the resulting white paper, Dr Ric Simes, director, Deloitte Access Economics, added:

"Chronic information glut is likely to turn into a far more acute disorder unless companies can find a way to control their data diet. Without effective organisation of data, the technology used to make sense of the data is likely to produce just more data: undermining the very relationships with partners and customers it was originally meant to support. Our modelling exercise shows that the ability to effectively manage the inexorable growth in digital information can significantly lift national productivity."

Since the first research was undertaken, the explosion of social media has contributed to information glut, compounding the problems faced by the many firms who complain of inadequate information storage, inadequate information storage architecture and an inadequate IT budget.

"While the volume of data is growingacross the board, we’re seeing its nature change as new, less structured information from multiple sources is collected or used in business processes – for example intelligence captured through portals and consumer-driven social channels. Here the trends are worrying: while more than 50 percent of the businesses we spoke to had some kind of social media presence, 40 percent do not have a formal information strategy for their official social media presence to manage the content they generate through these new channels," Mr Vincent continued.

While nine out of ten Australian businesses acknowledge the amount of information they have to manage has increased, the proportion who report they have a sufficient IT budget to cater for future expansion has dropped 13 percent to 50 percent, and 11 percent are under-resourced to cope with current challenges. Meanwhile, only one in five (19 percent) are intending to actively pursue new technology, with one-third preferring to see how others are using new technology before investing in it themselves.

"If we’re to manage the growth of the glut we can no longer afford to be a nation of business bystanders, sitting on the fence until our competitors overtake us. Australian and New Zealand organisations need to act now and start what we have called an ‘information intervention’. This means taking a big picture look at existing systems and strategically aligning information management with business imperatives," Mr. Vincent said. "This is not necessarily about spending more money on hardware; rather understanding how existing infrastructure can be leveraged for the best return on investment."

Hitachi Data Systems is working to help customers solve the challenges of managing the ever growing volume of data by reviewing, consolidating and indexing information into a single virtualised pool that can deliver a 30 percent cost saving, freeing up resources to digest, interpret and then pursue smarter business decisions.

About the research: AMR
Hitachi Data Systems commissioned Ogilvy Illumination and AMR to conduct a survey of senior IT decision-makers familiar with the ICT operations of their organisations in August-September 2011. Four hundred and two confidential phone interviews were undertaken in Australia (301) and New Zealand (101). The survey includes a wide variety of sectors and business sizes.

This was the second wave of the study initially undertaken in July 2009. While the majority of issues covered and the questions asked are the same as in 2009, new topic areas were covered in the 2011 survey including the use of cloud storage technology and social media.

About the research: Deloitte Access Economics
Hitachi commissioned Deloitte Access Economics to analyse information mismanagement and the ‘information glut’ in Australia. This study provides an assessment of how information mismanagement is impeding businesses, and undertakes an economic impact analysis of how improved information management could facilitate improvements to business productivity and the broader economy.

About Hitachi Data Systems
Hitachi Data Systems provides best-in-class information technologies, services and solutions that deliver compelling customer ROI, unmatched return on assets (ROA) and demonstrable business impact. With a vision that IT must be virtualized, automated, cloud-ready and sustainable, Hitachi Data Systems offers solutions that improve IT costs and agility. With more than 5,300 employees worldwide, Hitachi Data Systems does business in more than 100 countries and regions. Hitachi Data Systems products, services and solutions are trusted by the world’s leading enterprises, including more than 70 percent of the Fortune 100 and more than 80 percent of the Fortune Global 100. Hitachi Data Systems believes that data drives our world – and information is the new currency. To learn more, visit: http://www.hds.com.

About Hitachi, Ltd.
Hitachi, Ltd., (NYSE: HIT / TSE: 6501), headquartered in Tokyo, Japan, is a leading global electronics company with approximately 360,000 employees worldwide. Fiscal 2010 (ended March 31, 2011) consolidated revenues totaled 9,315 billion yen (US$112.2 billion). Hitachi will focus more than ever on the Social Innovation Business, which includes information and telecommunication systems, power systems, environmental, industrial and transportation systems, and social and urban systems, as well as the sophisticated materials and key devices that support them. For more information on Hitachi, please visit the company's website at http://www.hitachi.com.

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