Talk is cheap. In the computer industry, it’s cheaper. In the consulting business, it’s as cheap as it gets. It’s not only software and hardware that stock the shelves at the vapour market. Everybody promises their clients the best return on the investment they make in their information technology. But what counts as a win, a draw or a loss when all the hype about the business value of information technology has been exhausted? Let’s have a look.
There is a hierarchy of business value that you can get from information technology.
Back of the Box Value
The most common way to get business value from information technology is to ensure that all the business benefits listed on the back of the box the technology came in have been realized.
Whether you’re buying an off-the-shelf desktop application, an “automated sales force solution” or contracting for a long-term install for ERP financials, the same rules apply. You first need to ensure that the technology in question will meet your organization’s business objectives and enhance its business strategies. A good system of IT governance will cover off these aspects and guarantee executive support and oversight.
Good lifecycle management is key. From the business case for the buy to the decision to take the poor bugger out behind the barn when its time has come, how well you execute lifecycle management will determine how much of the business value that was promised on the back of the box you’ll actually get.
There are no mysteries here. If you’re good at executing the full spectrum of lifecycle management and you’ve got a respectable system of IT governance, you’ll get the business value you paid for.
Copy-cat Value
The next kind of business value is based upon the value you get when you incorporate, across your enterprise, business strategies others have used to leverage their information technology.
The value you’re looking for here could be found in-house or in another organization. Examples? Initiating a telework program, following the clock around the globe to provide worldwide 7/24 service, or using your intranet to support a knowledge management program. This is not about buying more stuff. All of these business strategies provide additional business value by leveraging your existing IT asset base.
So often, technology is purchased for a single business function. Whether and to what extent an organization has the smarts to see past that “single technology-single function” equation comes down to two things: a senior management that understands this kind of “copy-cat” value and is committed to promoting it; and a performance package that rewards the aggressive pursuit of such value by both general managers and technology managers.
Proprietary Value
Sometimes, with enough money, smarts and courage, you can create your own proprietary business value.
Depending upon whether the proprietary value you create is based on management smarts or is technology-based, you’ll enjoy short-term or long-term competitive advantage.
The first company with the management smarts to think up and implement a telework program or a rudimentary automated sales force program had an advantage until its competitors found out about it and started copying it. Where proprietary business value is based principally on management smarts, then the advantage will be short-lived because whatever is creating that value can be easily copied.
On the other hand, where business value is based on a new technology that can be protected in law, copying isn’t a legal option. The first versions of risk management software for financial instruments didn’t drop off a shelf fully developed into a bank’s shopping basket. This kind of technology took years to develop and an extensive commitment from those who sponsored it.
Most organizations don’t have the will or the resources to go after proprietary business value based on technology smarts. What is sad, however, is how few companies and government departments exploit all of the other opportunities for business value that information technology can provide.
Getting business value from information technology — beyond what was promised on the back of the box — depends mostly on management smarts, not technology smarts. How successful has your management team been at exploiting all of the opportunities for business value?
Chuck Belford is president of Management Smarts Inc., a Nepean, Ont.-based management consulting and training company. He can be reached at cbelford@managementsmarts.com