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3:38 PM Thursday July 10, 2008
Whew. It wasn't easy, but the days of decentralized IT resulting in fragmented business processes, duplicate and error prone data, security holes, vendor driven technology, and runaway costs are over. You've worked hard to implement enterprise technologies that not only address these issues but coordinate activities across the enterprise for the benefit of customers and shareholders.
Problem is, you're not done.
There is a fascinating article in this month's Harvard Business Review entitled Investing in the IT That Makes A Competitive Difference that discusses how "internet and enterprise IT are now accelerating competition." As processes become more digitized within enterprise IT, they can be propagated more quickly across the organization. Companies that select the right operating model to digitize, embody the processes within enterprise IT, deploy the solution consistently throughout the enterprise, and then continuously leverage the platform for further innovation and propagation will lead their industries.
For years, in the quest to move to common data and horizontal-process integration, the enterprise systems mantra has been along the lines of, "you get what you get and you don't throw a fit." This approach works well to clean up issues from years of decentralized and uncoordinated decision making, but falls flat when the competitive mantra changes to "deploy, innovate, and propagate" where innovation is fueled by the insights, passions, and risk taking of individuals and small teams throughout an organization.
The article concludes that standardized enterprise-wide IT platforms are a necessary, but not sufficient condition for competitive success. The very platforms developed for consistency need to be leveraged for innovation and used to rollout new ideas quickly.
You can support your company's competitive imperative by becoming a key agent in your company's innovation engine. You don't need to be a technologist, but you do need to be an expert on your business processes, data, and technology systems that run your business. To do so, make sure that you:
• Understand your company's operating model and the processes that need to be consistent across the enterprise to drive competitive success (e.g., market to sell, lead to order, quote to cash, etc.)
• Commit to relying on your enterprise systems to get what you need (rather than demanding customizations or building stand alone systems)
• Know the configuration options inherent in the enterprise systems that can be leveraged for experimentation (e.g., report writers, data extract, process scripts, screen "painters", table driven logic)
• Champion experimentation with full transparency and discipline regarding success measurements
Alternatively, IT needs to foster the capability of "consistent innovation" by:
• Working with the business to identify the operating model and the implications regarding process, data and technology
• Ensuring that "tight but loose" decision rights are rigorously defined to ensure consistency but prescribe where innovation can occur within the defined boundaries
• Architecting and delivering technology that ensures consistency AND promotes innovation and change. It's relatively easy to build systems to perform tasks in a prescribed manner by people in static roles. But it's much more difficult to design and deliver systems that are configurable in terms of inputs, process, and outputs and where the authority to access and make modifications are encoded in logic that ensures compliance to enterprise decision rights (e.g., a system that allows vendors to be hired at the local level and held to common quality standards may need to support a mix of national and local vendors and market based quality measures at some time in the future.)
In spite of the significant investments your company has made in enterprise technologies, not only are you not "done" - there is no "done". With increasingly competitive markets, companies who fail to develop the capabilities to quickly innovate and obsolete their current practices will be overcome by companies that do.
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Susan Cramm is the founder and president of Valuedance and a recognized industry expert on information technology leadership and coaching. She is the former CFO and executive vice president at Chevy’s Mexican Restaurants. Prior to Chevy’s, Cramm worked with the Taco Bell Corporation and held the positions of CIO and vice president of the Information Technology Group and Senior Director for Financial and Strategic Planning.
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Comments
I am an IT manager who came to IT through the customer service side of the house. Your Idea Cast '8 Tings We Hate About IT' hit a nerve as I have been on both sides of the fence.
First, thank you for fairly painting both sides of the picture so clearly. A couple of more bullets for the business thinkers who are trying to get the most out of their IT organizations:
So many people talk about Total Cost of Ownership (TCO) and benefit. The five questions I ask for any change: 1) How much money will this make in revenue, 2) How much will it save and which budget will it come from, 3) What will it do to lower capital investment 4) Is it required by law. 5) If you cannot provide an argument from the first four questions, what is the strategic value.
Many of the projects I have seen over the years would easily be eliminated if people would think in terms of their business and the real process constraints. One of Warren Buffet's Institutional Imperatives - the mindless imitation of market and competition – is very much alive and well in IT in the form of vanity and imitation projects.
I would like to take exception to your point about consumer electronics not welcome because we are not up to date. If I put many consumer appliances on my network they fail for one of two reasons. Just like trying to use your home coffee pot at a Starbucks, performance and reliability of many home devices is just enough. You can buy one terabyte of home storage for $300. It costs me about $10K because the thing has to perform at a much higher level at rate of use and speed that would kill the home unit.
You mentioned the second reason; security. Take a look at cool toys like the iPhone. I would live to have one but I cannot secure the thing. Gartner has given a nod to the new G3 model but still warns that it cannot be secured to the same level as a Blackberry or Good mobile device. A breach of my data results I a loss of consumer confidence resulting in a 40% drop in revenue in my business…I think I have a product design flaw not a backwards IT department. Security is harder than many people think and most of the issues are shielded from the user – just because you are not paranoid does not mean they are not out to get you.
For my final rant – I resist the idea that all projects should use iterative approaches. I agree from the standpoint that waterfall methods do not work all that well but we take it to extremes. I have seen too many projects going two hundred miles an hour down the freeway using the guardrails to steer. Rigor equals risk and usually the foundation projects that lay infrastructure or core applications require more upfront engineering. Just like the guys working on your streets they seem to take forever and often cannot produce incremental gains. Often the need for speed is used as an excuse for a lack of planning or methodology in design. Once you have a solid technical foundation and methodology, the door is open to the extreme methods – you have to walk before you run.
I believe much of the IT portfolio management and investment strategy literature that is emerging and maturing will help in each of these spaces. The free market, as always, will be the great decider of who is right an who is wrong. Thank you for your time and attention.
- Posted by Tom
July 15, 2008 6:40 PM