Tools of the Trade
- 05 September, 2006 09:00
It's time the IT industry started calling a spade a spade - especially when it's a bloody shovel!
One of the best descriptions I ever read of IT was that it is "just a shovel". A shovel is a tool; this tool may well help you dig a hole but it won't do the job for you. In fact, the ease with which the hole is dug is largely due to how well the shovel has been applied. Why then, are IT products and services masqueraded as business solutions? Surely, they are only tools?
Like tools, the success of IT products and services also depends on how well they are used. Yet if you read the vast majority of the literature produced by ICT vendors it seems that all a CIO has to do is to install the product for it to work smoothly.
I recently had a very pleasant surprise - in fact, I think it was a first. I was invited by Red Prairie, a supply-chain management software supplier, to a Webinar that did not speak at all about technology; instead, it looked at incentive programs for warehouse staff. Here was an IT company publicly acknowledging what has long been denied by this industry: IT is only one component in improving business processes.
In Red Prairie's case, they recognize that how warehouse staff are compensated must go hand-in-glove with their applications. The Webinar presented the results of research Red Prairie commissioned into the effectiveness of various staff incentive programs. The recommendations? If you want to boost productivity - and to accelerate the time to achieve an ROI on an investment in a supply chain application - then implement suitable performance targets for staff along with the new software.
McKinsey's has also done some interesting research in this area. Together with the London School of Economics, McKinsey's examined whether IT had actually improved productivity in around 100 European manufacturing companies. The conclusions were enlightening, to say the least. Companies that made major investments in IT, but which made few changes to their management practices, saw only a 2 percent boost in productivity. On the other hand, companies that made major changes to their management practices, but which undertook little extra use of IT, received an 8 percent boost in productivity. However, those that made major investments in both areas got a 20 percent productivity gain. In other words, investing in IT without changing anything else won't do much for your company effectiveness.
In fact investing in IT without changing anything else is dangerous, because it perpetuates the myth of IT solutions and reflects the unrealistic expectations many business executives have about IT's capabilities.
These types of investments invariably fail, and it's IT staff who usually get the blame when they do. Regular research from the Standish Group shows that nearly 66 percent of IT projects fail to arrive on time, under budget or with the promised functionality. Put another way, 66 percent of business executives who sign off on an IT investment will end up disappointed. This disappointment results in an enormous amount of business cynicism about IT. CIOs experience this negativity firsthand, but it also flows downhill to the revenues of IT suppliers. The NASDAQ still sits nearly 60 percent below its record high levels, despite this being a time of boisterous share market activity.
I was advised a long time ago that the trick in selling is to under-promise and over-deliver. Most IT vendors have been doing the opposite for too long. They need to change perceptions about what IT can deliver. It's often said that honest people are not afraid to call a spade a bloody shovel. I suspect that most business execs don't care what we call technology products - just as long as the tools do the job.
Peter Hind is a freelance consultant and commentator with nearly 25 years experience in the IT industry. He is co-author of The IT Manager's Survival Guide and ran the InTEP IS executive gatherings in Australia for over 10 years