Technological Bang for the Buck

How big is yours?

The range of practical possibilities that technology opens up for organisations is greater than ever. IT spends show no sign of diminishing and account for 2.8% of GDP in the USA. Claims about spectacular successes and, less often, disasters fill many column inches in the business press. However, bad experiences are common and businesses have learned to treat new opportunities with caution. How can managers ensure that potential to earn better returns is seized whilst steering clear of the worthless and hype?

A necessary, but not sufficient, condition is an intimacy with the needs of current and potential customers, products, employees and overall business landscape.

However, research published in October shows that UK directors are trailing behind in understanding what technology might do for their businesses. Over 50% have never attended an IT briefing. The quality of IT advice obtained is therefore more important than ever. However, few Jersey businesses are of sufficient size to include an individual with the required experience on the board. Some organisations have opted for a low risk, low return approach. Others have pushed ahead with ambitious big-ticket projects with mixed results. Yet, unsung success stories in the private and public sectors in Jersey offer valuable signposts to what is being achieved in favourable circumstances. Many of these demonstrate smart use of existing technologies. Most of them powerfully confirm that IT is not about efficiency but rather impacts on the fundamentals by which an organisation survives and prospers. They also illustrate that, as many managers know, obstacles often have less to do with technical considerations than a casual observer might predict.

Lost in Cyberspace?

E-business receives extensive media coverage and this article will not repeat stock messages. However, it is worth noting how the take up of Internet related opportunities illustrates a general characteristic of IT to transform the business landscape. Organisations that pigeonholed the World Wide Web as a marketing novelty or simple extension of their existing business model missed the point. Some success stories are being built on recognition that IT creates new customer/citizen needs, expectations and behaviour, new services, different sources of competitive advantage. Others flourish out of modest expeditionary starting points. The full impact of the emerging changes has yet to be felt. Jersey organisations especially must urgently ask whether they are devoting enough attention to understanding windows of opportunity (and challenges) that are opening so quickly. Cost and technology are famously not the primary hurdles in this race.

Make and Buy

Another celebrated success story of the 1990s is in application software suites. As big businesses became more sophisticated in their use of IT, a sea change away from custom development took place. A new generation of packages now dominates the top end of the market combining good base functionality with a level of flexibility and extensibility that, in the best, rivals a software development environment. These twin aspects offer the best of both worlds - rapidly introducing proven base applications and best practice business processes without sacrificing potential to add enhancements that provide an edge. Smaller organisations, including some local businesses, are reaping the benefits of this and more choices are appearing for Jersey businesses. But, judgements about priorities must not be ceded to technical / support personnel or business users that would not be trusted to understand the fundamental drivers of the business if the big hits are to be had.

Managing it!

The maxim "you only manage what you measure" contains enough truth to provoke some fruitful debate and the mushrooming "balanced scorecard" industry has put a spotlight on inadequate management information. Do you therefore need a data warehouse? Maybe. It is now normal for applications to come with tools to access and report on the wealth of data locked up inside the organisation (financial, but also customer and service quality). Add on reporting tools costing as little as ?100 and are so sophisticated that non specialist personnel can master their use to create information that might have been elusive in the past. Even the not so humble spreadsheet is now capable of directly drilling down into much of the data in core applications (if you know how). However, obstacles to exploiting this potential management resource spring from some unexpected places, which might include:

  • unawareness of the possibilities,
  • lack of management focus on what really key factors need to be tracked; and
  • hard pressed IT personnel who have neither the time nor incentive to increase demand for their services.

No Ships but Hardships

Some impressive successes grow out of resisting the temptation to throw resources at a problem. An interesting case in point is emerging in the financial services sector right now. Regulations are coming on stream with significant ramifications for businesses. Prophets of doom have predicted a burgeoning overhead of paperwork requiring more staff to process. Others have seen beyond the silos of current assumptions to spot common ground related to enhancing customer relationships, more sophisticated risk management and growth. These organisations are seizing the opportunity to rethink and integrate processes required by these business drivers so that regulatory monitoring becomes a by-product. Imaginative management is enabled by established technology to achieve this cluster of benefits. For its part, the technologies reduce duplication, automate some chores, provides information that would otherwise be unattainable (being stored on paper), promotes consistency and control whilst improving staff retention by reducing drudgery.

The Decisive Factor

This article has hinted at some of the live issues and opportunities in organisations in Jersey today. There are others. Few can ignore the impact of technology and some will reap great rewards. However, studies have repeatedly shown that IT spend has no correlation with business performance per se. The bottom line is that future winners will continue to be separated from also rans by the calibre of management rather than size of IT budget.

Sources & Recommended Reading

Strassmann, P A, The Squandered Computer, 1997, Information Economics Press. Provides an extensive analysis of the gap between claimed benefits of IT and actual performance. Includes references to earlier work including the widely debated analysis of Steve Roach at Morgan Stanley.

Ernst & Young et al, The Landmark MIT Study: Management in the 1990s, 1989 . Although some years old contains messages that are still relevant.

Schein, E, Organisational Psychology, Prentice Hall, Englewood Cliffs. Offers a clear introduction to the complexities of behaviour which have a critical influence on how and why technology is deployed.

Friedman, A L, Computer Systems Development, Wiley. This text is not about the technical development of systems but rather how technology is managed and assimilated. Important messages.

Kaplan, R S and Norton, D P, The Balanced Scorecard - Measures that Drive Performance, Harvard Business Review, Jan-Feb 1992. A short and readable article that gave rise to a whole industry. Important messages that can be applied in practice.