Information Technology and Management

Dog Eat Dog by Andrew McAfee and Erik Brynjolfsson

The CVS experience is a microcosm of a pervasive trend toward using IT to replicate not only digital goods and services but also business processes. This trend encompasses core activities such as customer service and order management, as well as support activities such as accounting and human resources. Once a company embeds its processes in IT, the processes are executed the same way not only across locations, but also over time. This means, for example, that a company can ensure that no large customer order will be accepted until a specific credit check is performed.

While creating an innovative business process is less visible than developing a new product or investing in factories, our research shows it is actually more important to a company’s success. Intangible process capital is changing the way companies operate and the capabilities they possess. As a result, it also is changing the way they compete.

This is very true. But while on this topic, a risk I see is people seeing adoption of technology as the end rather than the facilitator. The IT solutions should support the organization and help the organization improve performance. The technology should not tie the organizations hands (as it can so easily do when implemented without an understanding of systems thinking, variation, process improvement, sub-optimization, psychology…). I believe in the value of in-house IT resources to create IT solutions that support the organization (rather than buying off the shelf solutions that end up making the organization conform to the software).

There are trade-offs that must be made (weighing the total costs of off the shelf solutions, customizable solutions and in house developed applications), but what I see is too much waste created through poor processes implemented in order to conform to software. Instead I think investing in some IT staff to help create IT solutions that aid the overall process improvement efforts would be wise. Often the best options are open source solutions that not only are cheap but normally much easier to customize and are easier to integrate with open architectures. And then have enough IT staff to do customization – I feel many organizations focus inordinately on shrinking the cost of IT staff. Instead they should focus on optimizing the overall system, even if that increase the costs of IT staff.

Granted I am biased having morphed into an IT person from my previous life as someone mainly focused on management improvement in general (but I did so specifically because of the great opportunity to improve performance through the proper adoption of information technology).

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5 thoughts on “Information Technology and Management

  1. Hmm… I am on my way of measuring the effectiveness of IT ( or IS in a wider perspective). I am wondering, do you have experience on this? I'd like to discuss this topic with you. If you don't mind of course.

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  2. I strongly agree with you. Well done for this blog you’re doing a really good job..

    Well, being morphed into an IT person is not a sin, so don't hesitate to keeping on writing great posts 🙂

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  3. Pingback: CuriousCat: Information Technology and Business Process Support

  4. Well put. I have encountered many a company, both while within industry and consulting, where the organization’s business processes have been dictated by the software (often SAP). The time and effort to undertake such an implementation is truly mind blowing. But, the most egregious aspect is that the processes that are forced on the folks are typically not the least waste way and certainly not the best way to make value flow. It is static and anti-improvement! We need to first take a healthy cut applying kaizen (flow and process) and THEN start thinking about automating, when/where appropriate. And, as you so rightly indicated, we need to maintain an internal capability that can modify and tailor the systems as we live and learn to continuously PDCA. This capability is one substantial way to competitive advantage.

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  5. Pingback: Ignoring Unpleasant Truths is Often Encouraged | Curious Cat Management Improvement Blog

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