Harnessing IT in the New Economy

Article contributed by Bok Hai Suan, National Computer Systems Pte Ltd


The competition landscape has changed dramatically in the new economy, and so are the technology offerings. Different mindsets and approaches are required to harness IT.

Businesses today compete on many fronts - customer services, product features and quality, value, and speed. The uncertainties in the competitive global market have made business strategies and processes highly volatile - what worked yesterday may not work today and what works today may not work tomorrow.

Businesses need to be adaptive and responsive to the changing environment. With knowledge and innovation fast becoming the key ingredient of competitions, businesses are refocusing on their traditional key asset - people, their knowledge and talents.

The key strengths of IT - to store, process and distribute large volumes of data quickly - remains unchanged although it has achieved better price performance, scalability, availability, and reliability over the years. Another newly acquired strength of IT is its reach through inexpensive and proliferating Internet and communication technology, which is changing the rules of competition.

While IT is advancing at a rapid speed, so are business needs. IT systems today have become more flexible and adaptable but they still cannot match the speed at which businesses change. How could IT be harnessed to improve business responsiveness and competitiveness in the new economy? We need to, first, re-examine the existing paradigms of the business roles of IT.

The boo-boos of existing paradigms
IT saves manpower and improves efficiency.
It really depends on whether IT is applied to areas where volume, reach, precision, and speed are key considerations and where IT makes the differences that would otherwise not be possible or feasible. Applying IT to handle non time-critical, low volume, and low value-adding work would not save money or improve efficiency let alone improve competitive advantage.

All business operations must be fully automated and integrated.
Integrating islands of automation would undeniably bring us benefits of consistency, reduced redundancy, and improved efficiency. Such systems however take many years to build. Unless business models and technology are stable (which is highly unlikely), these systems will either be crippled by the never-ending changes in the business models and technologies, or immediately become less relevant when they are completed. Further, such complex systems would become costly to change or replace over time, as few people understand their architecture. Such systems, if mission critical, can become a long-term liability to the business in the fluid environment.

A good IT system is one that meets all my requirements fully.
This approach might be relevant many years ago when IT department builds everything in-house. Given the availability of many mature IT packages today, spending enormous amount of money and time to customize them would remove the benefits brought by such packages - low cost, quick implementation, and ease of maintenance and upgrade. IT systems should be used like any other business assets to advance business interest rather than to suit individual user's working styles.

A good IT system must employ the latest technology.
Business benefits are not generated by possessing the latest technologies, but by applying them effectively to fulfill business needs. Boarding a wrong flight that operates on the most sophisticated Boeing or Airbus will not get you to your destination no matter how fast the plane flies. Following the trends of the latest technologies blindly may give you a false sense of security. They would not bring you to where you want to go.

The success of IT projects depend on the IT department.
If IT is used to enhance business performance, IT projects will involve organizational, social, and political dimensions of the business. IT is a means to a business end. IT projects should be managed as business projects that employ IT and not IT projects that involve business. Studies show that whether an IT project delivers good business results depends more on the organization's IT and learning culture than on the technical design and features of the IT system.

What could businesses do to harness IT effectively in the new economy?
Leadership. Take IT decision as a business decision and at the right level. IT systems should not be designed for specific users' preference or convenience but for business benefits. The decision criteria for IT decisions should not be different from other business decisions that hinge on revenue, market share, service, quality, efficiency, and values.

Partnership. The traditional User-IS relationship where two parties are on different sides of the game may not work well in a highly competitive market. Both users and IT departments should play on the same side of the game against their common opponents - external competitors.

Simplicity. It is easier to complicate things than to simplify them. Simplification requires focus on the essentials, power of conceptualization, and risk taking. Catering for all possibilities in the IT systems to avert all risks, however big or small, is not consistent with business practices which usually involve some risks. Such approaches result in long development cycles - spending probably only 20% of the effort on actual business needs, and the rest on what-ifs.

With user's IT literacy rising rapidly over the years, IT systems should be designed for knowledge workers rather than data entry operators. They should contain only the essential functions rather than all the features to constrain and control what the users do. Users should be allowed to exercise some degrees of discretion inside and outside the system to cater to the needs of the dynamic and unstructured world.

Learning Culture. Businesses must learn to adopt standard IT package offerings. They should reserve customization efforts for functionality that makes a difference to business efficiency and competitiveness. Those with the ability to learn and innovate ways of working with standard IT packages will have the early mover advantage.

Information Skills. More information does not necessarily bring about better decisions. Keeping and generating a lot of information from the IT system but not using them to improve business operations is a waste of scarce IT resources.

On the other hand, studies show that most of the information that managers need is obtained from the external business environment through their social networks. It is essential that IT users today have good information skills - the ability to seek, and make sense of information from both the IT systems and the world at large.

In sum, harnessing IT in the new economy is not about replacing manual work with technology. It is about enabling knowledge workers to collaborate towards achieving business competitiveness. The old paradigm of automating and integrating all business processes needs to be re-examined in the light of the fluid business environment.

There is a limit to how far good software engineering practices and tools can contribute to the flexibility and responsiveness of IT systems in meeting changing business needs. Businesses must learn to adapt to standard IT packages to achieve cost and speed advantages.

Ultimately, harnessing IT in the new economy requires good business leadership and judgement, and a fine combination of human knowledge and talent with technology.

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