It was a rather popular cartoon; a haggard and clearly exhausted man returned home, slumped across his easy-chair, complaining to his wife that, “The office was murder today! The computer system was down and we had to play Solitaire with real cards!”
No one can deny that information technology has transformed today’s corporate world from that which we once knew. It has progressed through the typical four stages of technology evolution; from the experimental stage to novelty, progressing to utility and ultimately ubiquity. In fact, IT has today become so widely available and accessible that we often fail to notice its very presence around us.
Just a few years ago, computer textbooks tended to heap acclaim about how IT would eventually eliminate daily tedious and repetitive tasks and, in this manner, provide everyone with a more fulfilling work environment as well as additional free time. Monotonous routine, we were promised, would fast become a thing of the past through the implementation of IT and computerisation.
In truth IT has brought about one of the most powerful revolutions in corporate productivity in the global economy. It is central to the strategy of most organisations and virtually every business today, even the smallest, is heavily dependent on IT and significantly impacted by its availability, reliability, efficiency and responsiveness.
IT is undoubtedly a unique corporate resource since, when applied strategically, delivers increasing quality and capability at a lower cost; providing businesses with the rare opportunity to do more with less. It has driven growth and innovation, as more and more businesses deploy IT solutions to automate processes, improve assets utilisation and reduce costs.
In May 2003 the highly regarded Harvard Business Review published an article by its then editor, Nicholas G. Carr, entitled, “IT Doesn’t Matter.” In his article Carr, an independent business writer and consultant, said: “IT has transformed the business world. Today, no one would dispute that it has become the backbone of commerce. It underpins the operations of individual companies, ties together far-flung supply chains, and, increasingly, links businesses to the customers they serve. Hardly a dollar or Euro changes hands anymore without the aid of computer systems.”
However, Carr then provoked widespread outrage when he questioned the widely-held but “mistaken” assumption that: “As IT’s potency and ubiquity have increased, so too has its strategic value.” Carr argued: “What makes a resource truly strategic – what gives it the capacity to be the basis for a sustained competitive advantage – is not ubiquity but scarcity.”
In other words, it does not matter if companies implement progressively more hardware and software applications, albeit in the hope of gaining advantage over rivals, because such technology is by and large available for implementation by the same competition and consequently will not differentiate, in any perceptible manner, one business organisation from another.
Competitive advantage can only be gained by having “an edge over rivals by having or doing something that the competition cannot have or do.” However, the “broad availability, affordability, power and presence of IT” had, according to Carr, transformed IT from a potentially strategic (competitive) resource into an essential commodity factor of production, akin to the classical production factors of land, labour and capital. “IT is becoming a cost of doing business that must be paid by all but provide distinction to none,” admits Carr.
So does IT matter after all? In truth IT does matter. Carr’s assertion is based upon the flawed, but surprisingly all-too-common, business approach of placing IT as the central and predominant aspect of corporate strategy. The annals of IT implementation are speckled with tales of how business organisations have implemented IT and “allowed” it to influence, affect and sometimes even negatively reshape established and proven business processes rather than endorse, improve and support them. Proverbially speaking, this is akin to putting the cart before the horse.
IT matters principally when it is the business, and the inherent processes, that determine the use of technology to create distinctive and strategic advantage, and not the other way round. In such cases technology supports the business processes, practices and procedural improvements brought about through the application of IT.
In today’s highly competitive and dynamic environment it is the ability to describe and define business processes, and not the ownership of technology, that provides competitive advantage. Business organisations need to exploit IT to define, deploy and optimise end-to-end business processes that can adapt to changing circumstances, as these occur, whilst consistently differentiating the organisation from its competition.
This is a paradigm shift away from the traditional “data-centric” approach to IT implementation; based on the use of advanced information systems, databases and applications for digital record-keeping activities and to control and manage corporate data. In the words of Carr: “The core functions of IT – data storage, data processing and data transport – have (today) become available and affordable to all and consequently do not provide any potential competitive advantage.”
In contrast, IT matters, and renders competitive advantage, when it supports a “process-centric” approach to system implementation. In such a scenario, IT implementation is instigated by means of strategic planning, extends into managed implementation and continues with periodic assessment and monitoring for corporate effectiveness and the realisation of targeted benefits. IT is used to align the business strategy with system implementation so as to ensure genuine corporate value.
A “process-centric” strategy combines optimal workflow/s, functional, organisational and data/resource views with underlying metrics such as costs, cycle-times and responsibilities to provide a foundation for analysing value chains, activity-based costs, bottlenecks, critical paths and potential inefficiencies.
The end result of a well-planned and well-managed “process-centric” IT implementation is a system that is more closely aligned with business goals, sustains quality, improves controls and delivers long-term value. Given such tangible benefits, IT does matter.
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Mr Sammut is business solutions adviser at iMovo Ltd, a customer relationship management and business intelligence solutions company.