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Managing Technology P. 6

Page 12 of 15

  • When Too Much IT Knowledge Is a Dangerous Thing

    In recent years, large companies have invested a great deal of money & #8212; and faith & #8212; in process-enabling information technology, IT that facilitates the execution of entire business processes rather than individual tasks. But all too often, such investments fail to pay off: The new systems fail to live up to expectations, register a measurable financial impact, improve work processes or bring about organizational change. Technical snafus, a scarcity of good advice for managers and failure to follow such guidance are not the problems. The fundamental issue is that managers usually follow what amounts to a universal checklist, one that assumes that all implementations are basically alike. Taken as a whole, the list is merely a collection of undifferentiated findings and conclusions rather than a synthesis that would help with the particular implementation effort at hand. The executive in charge of the effort is left to discern which findings apply, under what circumstances and why. Instead of a longer or different list, this article offers a synthesis that highlights how big IT implementations differ from one another and how managers should handle the differences in order to realize the full promise of technological change.

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  • Building IT Infrastructure for Strategic Agility

    Executives make few moves more critical than their decisions about which technology-infrastructure investments will promote future strategic agility. To pinpoint best practices, three IT experts marshaled 10 years of data from 89 leading enterprises. One finding was that when companies describe their IT-infrastructure capabilities as services instead of equipment (say, the provision of a fully maintained laptop computer with access to all company systems and the Internet), they do a better job of putting a value on what they are buying. Understanding the 70 IT-infrastructure services that emerge consistently from the research can help executives identify which investments will make sense for which strategic business initiative. And understanding whether the contemplated initiative is supply-side, internally focused or demand-side can help managers decide whether to make the infrastructure investment on a business-unit level or enterprisewide. The authors find that leading companies are making regular, systematic, modular and targeted IT-infrastructure investments on the basis of overall strategic direction. If other companies can learn to recognize which IT-infrastructure capabilities are needed for which kinds of initiatives, they can have some assurance that the investments they make today will serve the strategies of tomorrow.

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  • The Dynamic Synchronization of Strategy and Information Technology

    In an often overemphasized focus on efficiency, many companies turn to packaged information-technology systems to manage business processes. University of Michigan Business School professors C.K. Prahalad and M.S. Krishnan suggest they should be more concerned about strategy & #8212; and getting line managers and IT managers to use information systems in ways that facilitate strategic change. A new applications-portfolio scorecard helps managers assess information infrastructure before making investments. Six key considerations are each IT application’s role in strategy, whether the knowledge embodied in the application (say, salaries in a payroll application) is stable or evolving, how much change will be needed, where the application will be sourced, whether the data is proprietary or public, and the application’s freedom from conformance defects. Those parameters differ for different functions. Managers may not need the latest software for a stable function. They may decide not to purchase a customized package, because it could be out of sync with the vendor’s future software. Only those companies that deeply analyze what they need from each IT application will acquire the right portfolio. The authors’ work with 500 executives revealed that few managers believed their information infrastructure was able to handle the pressures from deregulation, globalization, ubiquitous connectivity and the convergence of industries and technologies. Though fully aware their organizations lacked rapid-response capability or flexibility, the managers rarely knew how to fix the disconnection between the quality of IT infrastructures and the need for strategic change. Considering that information-infrastructure expenditures are generally 2% to 8% of companies’ revenues, new measures to address the disconnection are essential. A corresponding change in the mind-sets and the skill sets of smart line managers and IT managers also is helping improve overall competitiveness.

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  • The Future of E-Business

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  • The Evolution of the Organizational Architect

    Strategy is increasingly a moving target. And despite strategists’ and technologists’ recognition that developing a productive relationship is critical, it’s been hard to build a technology platform to support visions based on capabilities that may or may not exist. Fortunately, say researchers from the University of Oxford and the Warwick University Business School in England, a few enterprises are showing how to successfully bridge the great divide. Chris Sauer and Leslie Willcocks surveyed CEOs and CIOs at 97 companies that had moved or were moving to e-business. As the companies shrank their development and planning cycles, the gap between strategists and technologists grew. But in a few enterprises, the authors spotted inspired players they call “organizational architects.” These leaders were generally technology-smart CEOs or business-savvy CIOs who developed mechanisms to force communication between strategists and technologists. The success stories point to the value of companywide transformation, with organizational architects guiding the translation of strategy to a flexible, integrated platform. Dialogue between strategists and technologists makes it possible to define and design structures, processes, capabilities and technologies that have a greater chance of being responsive to organizational goals. In true synergy, the platform is shaped by the vision, and the vision is reshaped by the characteristics of the platform that enable the vision. How do organizational architects keep business and technology concerns united? They view technology and organization as equal influences; they standardize and centralize; they manage change intelligently; and they match capability and ambition. Companies such as Oracle, IBM, the utility Citipower and the investment bank Macquarie (the latter two in Australia) have already strengthened their business-technology alignment by applying one or more of these principles.

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  • Beyond the Business Case: New Approaches to IT Investment

    New research from MIT’s Center for Information Systems Research and others reveals that successful companies are revolutionizing the way IT investments get decided. Investments are no longer justified merely on the basis of making a functional silo more profitable. Today the strategic needs of the whole company come first. In the last 15 years, write professors Jeanne Ross of MIT’s Sloan School of Management and Cynthia Beath of the University of Texas, a tidal wave of IT-enabled initiatives has elevated the importance of investing strategically. The Internet alone has created numerous opportunities: to reengineer processes, introduce online products and services, approach new customer segments and redo business models. The opportunities seem limitless, but the resources required & #8212; capital, IT expertise, management focus and capacity for change & #8212; are not. How to choose? Traditionally, companies justified a given project by presenting a strong business case. But with IT’s growing strategic importance, companies must now weigh individual ROIs against demands for organizationwide capabilities & #8212; and must assess opportunities to leverage and improve existing systems and infrastructures, create new capabilities and test new business models. The authors recommend a new investment approach based on a framework they developed after studying the e-business initiatives and supporting IT investments of 30 enterprises. The framework encourages simultaneous investment in four kinds of IT initiative. Transformation investments are necessary if a company’s core infrastructure limits its ability to develop applications critical to long-term success. Renewal investments maintain the infrastructure’s functionality and cost-effectiveness. Process improvements allow business applications to leverage infrastructure by delivering short-term profitability. Experiments enable learning about opportunities and testing the capabilities of new technologies. The new tools are helping managers grapple with an increasingly complex world.

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  • Revving the Engines of Online Finance

    Crack the code on customer priorities and profit models first & #x2014;then digitize.

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