Thursday, April 21, 2011

Technology: The Fall Guy

imageMost IT projects that do not enable business capabilities mandated by the business strategies will fail. The blame, however, is usually attributed to the technology, which is simply an enabler and not the driver! If this reflects your company, there is reason for introspection and review of the process leading to capital IT investments.

Though information technology is the underpinning of modern economy and invariably the single biggest enabler for day-to-day operations of any business, its role is not necessarily well understood. When capital investments in creating business capabilities fail to produce desired results, technology is often the fall guy, the chosen scapegoat. Even though it is almost always the inability of the underlying business capability to produce any competitive advantage that is the problem. After all, information technology is simply an enabler, a tool, a means to the end, but not the end in itself.

strategy+business magazine focuses on this point in one of their recent articles on business intelligence.  The authors, Jamie Campbell, Kenny Kurtzman, and Adam Michaels quote Gartner: “through 2012, 35 percent of the top 5,000 global companies will regularly fail to make insightful decisions because they lack the right information, processes, and tools.” They further argue that, “the reason that most companies aren’t getting the most out of their business intelligence has nothing to do with the software itself” and that, “very few companies have the discipline to focus their operations in every business unit and product line on the things they do best. Those that do are the companies that identify their strongest internal capabilities; set thoughtful, strategic goals for them; and then constantly — almost obsessively — measure their performance against those goals”. The authors further claim that, “The key to designing a successful business intelligence strategy is metrics. They should be closely aligned with a company’s strategy and essential capabilities.”
What the articles says about business intelligence is actually true in the larger context of business capabilities as well – almost all capital IT projects that fail do so not because of technology but in spite of it. While some are simply ill-conceived, most of the projects fail to produce results (1) when they are not aligned with the larger business strategy, (2) they do not fill-in specific capability gaps, and (3) they are not based on a good (near-complete) understanding of the capability gaps mandated by the business strategy but missing in its operations.
This alignment of the business strategy to the functional capabilities and the underlying technology requires diligence and focused effort, it remains the holy grail for achieving the promised ROI for most IT projects. This is the focus of my second book on supply chain strategy.
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© Vivek Sehgal, 2011, All Rights Reserved.

Want to know more about supply chain processes and supply chain strategy? Check out my books on Supply Chain Management at Amazon.

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