This book looks at IT as a means to a business end. It is a tool. How effectively the tool is used depends increasingly on business managers as well as on IT managers and professionals. The aim of the book is to help managers exploit the opportunities IT creates for business design-running their business better, in terms of the top line, competitive strength, and organizational health.
Subsequent chapters of the book examine seven components of business design through IT.
- Competitive positioning through IT.
- Geographic positioning through IT.
- Redesigning the organization through IT.
- Redeploying human capital through and as a result of IT.
- Managing the economics of information capital.
- Positioning the IT platform.
- Aligning business and technology.
The following brief summary highlights some of the business choices and technology consequences of each of these seven components on business design.
Competitive positioning through IT.
Timing is critical in using IT to either target a potential competitive advantage or avoid being put at a competitive disadvantage. Image technology, point of sale, customer/supplier linkages, and electronic data interchange are competitive opportunities today. Will they be competitive necessities tomorrow? What are the issues that determine whether, when, and how a firm decides to take advantage of a competitive opportunity or prepare for a competitive necessity?
Lead versus follow.
What are the criteria for deciding when to take the lead in using IT to achieve competitive advantage and when to wait until the technology is proven and the business risk acceptable?
Compete versus cooperate.
Firms must decide when it is appropriate to move ahead alone with IT and when it is advisable to join with other firms. This is often a key issue for medium-sized and small firms that cannot afford to throw money at technology.
Business "degrees of freedom".
How does a firm determine what IT platform(s) it will need to ensure that it will be able to take advantage of practical competitive opportunities? Its IT choices increasingly enable or constrain its business options.
Geographic positioning through IT.
As business becomes more and more globalized and IT becomes a cornerstone for international coordination of operations, companies' international telecommunications networks and computer systems will become, in effect, their organizational structure. Linking supply, manufacturing, and distribution and coordinating dispersed business teams across multiple time zones demand first-rate international communications. Yet wide variations in technology, telecommunications policy, regulations, and cost can make it extremely difficult to extend national communications and computing resources across geographic boundaries. Geographic positioning thus involves issues related not only to business, but also to where the firm chooses to locate.
Transnational computing and communication.
How does a firm ensure that it has the international IT base it needs to make practical, and support, its international business strategy and to coordinate international operations?
How cities compete through IT.
With the growth of IT-dependent business functions, IT will become a key determinant of whether cities attract or lose businesses. What is the basis for locating operations in specific cities to gain advantages of cost, labor supply, communication, or coordination?
Redesigning the organization through IT.
IT will be used to gain organizational advantage by simplifying and streamlining communication and coordination, supporting new modes of teamwork and collaboration, eliminating unnecessary work, and reducing dependence on old organizational structures and on placing work in fixed locations. The issues here involve people as well as structure, both those who determine it and those who are part of it.
Organizational simplicity.
How can firms use IT to preserve organizational manageability in an increasingly complex business environment? How can organizational advantage be translated into competitive advantage?
Repersonalization.
Where can IT be used to repersonalize management and make communication more immediate, direct, and natural?
Location independence.
What is IT's potential for supporting the activities of teams and business units independent of physical location?
Redeploying human capital through and as a result of IT.
IT often creates and demands immense organizational and human resource changes. It changes the nature of jobs and careers. IT planning without organizational planning is almost sure to fail. Attending to the human resource issues can reduce the pain of change.
Rethinking work and jobs.
Many of the disappointments from investments in IT often reflect automating the status quo, instead of rethinking what work is needed, how it can best be done, and what should be eliminated. Leading IT practitioners and commentators increasingly emphasize the need to rethink, not automate. How should the firm work back from its business ambitions and available technology to rethink workflows and jobs?
Education to lead change.
How does a firm establish an education strategy that ensures that people at all levels will possess the skills and understanding required to handle waves of IT-related organizational change? How can a firm ensure that those skills do not depreciate and that careers are enhanced and not damaged as IT continues to change the business landscape?
Skill/role analysis.
What new skills will be required and new career trajectories created because of IT and how will these affect recruitment, staff development, and retention?
Managing the economics of IT information capital.
IT investments must be managed as business capital, not technical overhead. There are many weaknesses in current IT management processes, especially concerning how to make a reliable business case, measure the business value of IT, and manage its hidden costs. Fifteen percent per year compounded growth rates, unproven economic payoff, frequent cost overruns, new infrastructure costs, and changing technologies give rise to a host of management concerns.
Rethinking systems development.
How does a company reduce the time, expense, and risks associated with information systems development, operations, maintenance, and use?
Making the business case.
How does a firm justify IT investments that provide mainly qualitative benefits and involve significant uncertainty and risk? How can the full lifecycle costs of information systems, including hidden support and maintenance costs, be determined? How can the business value of strategic IT investments be measured in order to establish criteria for evaluating trade-offs between capital commitments to IT versus other business areas?
Information access and reuse strategies.
How can firms best use the information they already collect as part of their business activities for executive information systems and for new products and business planning and monitoring?
Risk management.
When 25-80 percent of a firm's cash flow is on line, so, too, is its reputation, efficiency, and profit base. When the IT system is down, so, too, is the business. Technology risk is now business risk. What are the IT-related technical, economic, organizational, and business risks and how are they identified and managed?
Positioning the IT platform.
Lead times for IT are lengthy-typically seven years for major business developments that require building new technical infrastructures. Companies that lack a coherent strategy for evolving a corporate platform end up with fragmented and incompatible telecommunications networks, information resources, and transaction systems. Integrating these "islands of information" has become both a business and a technical priority.
Business "degrees of freedom" analysis.
What are the business criteria for defining the reach and range of the IT platform? Reach refers to the people and locations the platform can link, and range indicates the variety of services that can be directly and automatically shared across the platform. which services and information resources need to be cross-linked? To what extent do firms that lack coordinated international IT capabilities lock themselves out of opportunities that open up abroad? What degree of reach and range is essential to meet business and organizational demands three to seven years from now?
Vendor strategies.
How does a firm select the IT vendor(s) that can most effectively provide a long-term base for its IT platform and strategies? How can a firm assess its vendors' staying power?
Technology standards.
Which emerging technologies and standards are critical and should be monitored? What are the business criteria for identifying high-payoff technologies?
Aligning business and technology.
The competitive, economic, managerial, organizational, and technical aspects of effective IT use are interdependent and must be kept in alignment. It makes no sense to develop a powerful competitive thrust and ignore the organizational issues that are vital to making it work. It is equally foolish to build a comprehensive technical platform without the business plans to exploit it. Here the issues involve identifying and establishing relationships.
Relationships.
How can the tradition of monologues and mutual frustration between business and information services (IS) managers be ended? How can a firm ensure that management policy drives the timing of competitive moves and choice of infrastructure? How do firms build the dialogue and jointly set an agenda and create plans for aligning IS and business units, corporate and business-unit IS, and external allies and partners?
Aligning core business drivers and IT springboard initiatives.
How can the evolving dialogue between business and IT leaders be used to establish priorities for investment? How can firms avoid scattershot piloting of every new technology and application trend and a scattershot choice of business investments in today's technology and applications?
Moving from dialogue to action.
How do we look at business processes from the perspective of ensuring customer satisfaction and target specific uses of IT to improving them? How can we design systems that integrate the work of people and machines?
The answers to these questions provide the base for a business-led strategy for IT.
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