SNw 007 Where in the World is I.T. Going? Created by James on 6/13/2013 2:18:33 PM
Continuing from the subject of the last issue which examined information technology as a judge of Governance
This issue examines the question of "where in the world is I.T. going?"
this article is in response to the statement that "I.T. is moving so fast it is not possible to keep up with it"
Earlier this year I examined strategy, its definition and determination. Then, in the last issue I examined the relationship between I.T. performance and corporate Governance and suggested that I.T. is the harshest judge of corporate governance. This may appear to be a complete side track from strategy but, since I.T. investment failure is generally a failure of corporate strategic capability, the topic remains within the broad subject of strategy.
A conversation some time ago posed another question that fits in with the current side journey and I would therefore like to discuss it today.
Statements are frequently made along the lines of "I.T. is moving so fast it is impossible to keep up with it!"
In this issue of StratNews I would like to discuss this issue as this statement, IF true, has huge strategic ramifications for many organizations -- in the sections that follow I point out the reasons why it is a myth that business cannot keep pace with technology.
What IF I.T. IS Moving SO Fast?
If it is true that information technology is moving so fast that business cannot keep up this suggests a "mouse on a treadmill" situation -- huge sums of money being poured into hopeless projects that are obsolete before they are complete.
Inability to make reasonable judgment calls on the future direction of business insofar as the use of I.T. is concerned.
Dependence of business executives on technology guru's who have crystal balls that are the only way to foretell the future and therefore the only hope of I.T. salvation.
The connotation of "too fast to keep up with it" carries with it an implied hopelessness that is cause for serious concern.
IF it is valid?
In the sections that follow I aim to persuade you that I.T. is NOT moving so fast that business cannot keep up but rather that I.T. is advancing in predictable ways and that the REAL issues with I.T. are issues that business executives are well equipped to understand.
I.T. Failure is a Consequence of Failure of Corporate Strategic Capability
I have been speaking at conferences for over a decade now on the 70% outright failure rate of I.T. investments and the accompanying further 20% of sub-optimal outcomes.
My analysis of the factors causing failure has not changed materially in that time although my understanding of the detailed dynamics has grown dramatically.
The essential reason for I.T. investment failure is a failure of what I term "Strategic Capability", the ability of organizations to determine their core strategic drivers, determine where they are going and plan and execute measures to accomplish desired change. These change initiatives may include I.T. but this must be seen in the context that 90% of strategic planning initiatives fail to deliver the desired outcome and 70% of business process reengineering projects also fail -- so these failure statistics are NOT exclusive to I.T.
One of the reasons these failures occur is as a consequence of a degree of governance abdication by executives trapped in the myth that I.T. will solve problems they don't understand and cannot solve themselves and that the mystical beast that I.T. has become through powerful and seductive marketing and advertising is capable of solving problems that the founders and leaders of the corporation are incapable of comprehending let alone solving. These myths are just that, myths.
Human beings today remain the most powerful cognitive and strategic thinking super computers on planet earth and will remain so indefinitely. It is up to corporate executives to once more take charge of their organizations and put the I.T. dragon in harness to do what they strategically define as necessary.
What are the REAL Causes of Failure?
The factors that really give rise to I.T. investment failure are as follows:
1. Information technology mythology (30%)
2. Lack of executive custody (governance) and inappropriate policies (20%)
3. Lack of strategic alignment (15%)
4. Lack of an engineering approach (12%)
5. Poor data engineering (10%)
6. People / soft issues (8%)
7. Technology issues (5%)
Notice that technology is only 5% of the source of failure and, accordingly, technology is unlikely to be driving the effective application of the technology in a way that makes it difficult or impossible to manage. These factors are discussed in detail in my book "The Critical Factors for Information Technology Investment Success" which can be purchased by replying to this email. They are also discussed in detail in the various courses that I run, including the Executive Masterclass which will be held next Tuesday (7 November 2006).
Note that once one understands the causes of failure it is possible to understand what is required for success.
What are the REAL Requirements for Success?
The factors that must be effectively managed for successful I.T. investment outcomes and, in fact, successful strategic change initiatives generally, are underpinned by a general principle that in everyday life buildings stand up, aircraft fly, ships float, machines work, motor vehicles operate, houses keep out the weather, etc and they do so reliably, dependably and profitably -- we know how to use them effectively.
It is reasonable to expect the same level of reliability from I.T. A successful solution is one that does NOT FAIL.
The critical factors for a successful I.T. investment are:
1. Executive Custody (Governance) (25%)
2. Strategic Solution Architecture (18%)
3. Strategic Alignment (16%)
4. Business Integration and Optimization (14%)
5. Project Management (12%)
6. Information Management and Data Engineering (10%)
7. Technology Components (5%)
Once again technology is only 5% of the issue, the primary issues are around corporate governance and strategy and the ability to determine and execute strategic change initiatives effectively. Yes, there is a continuous whirl of innovation and glamour around the I.T. industry but in terms of the fact that most of what most organizations use the technology for it is as a mundane set of tools where the added functionality is seldom of real value to businesses whose personnel do not have any real level of mastery of the basic functionality of the tools.
What is the point of advanced glamorous functionality when many users cannot use a keyboard fast enough or accurately enough to capture meaningful and reliable information to be processed by the technology? Touch typing courses rather than new software are in order for many organizations to improve I.T. value delivery.
SO -- Where is I.T. Going -- REALLY?
The I.T. industry is an industry driven by marketing and hype in many respects, it does not have the robustness or accountability that the medical, legal, accounting and engineering industries have where significant failure is accompanied by significant legal consequences for the practitioners responsible for that failure.
In considering the question of where I.T. is going it is useful to consider the air transport industry.
Did you know that the Boeing 747 is over thirty years old and is the most economically successful aircraft ever to fly?
Did you know that the Concorde flew about four years BEFORE the 747 and was a dismal failure economically notwithstanding the fact that it was technologically far more advanced than the 747? The last Concorde was placed in a museum in 2005.
The military aircraft used by the United States of America are orders of magnitude more advanced than the Concorde but the bulk of that technology is not commercially relevant -- we do not need "stealth" airliners.
It has taken over thirty years for the airline industry to learn how to use the Boeing 747 to full capacity to the point where it is now economic to produce a larger aircraft and the design of that aircraft is being driven by increasing passenger volumes at congested international hubs NOT by technology. Yes, advanced technology is being used but the business case is a commercial one -- more passengers on more routes more frequently and at lower fares, profitably.
I would like to suggest for your consideration that the I.T. industry is where the aircraft industry was about twenty five years ago. It knows how to produce technology that is way more sophisticated than business needs (Concorde), the challenge is now for business to learn how to operate the mundane technology profitably and effectively (747).
The Real Direction of I.T.
The real future of I.T. looks something like the following:
1. Dramatic failures
Corporate collapses, litigation, legislation, statutory liability and licensing
2. Software company shake outs
Mergers, acquisitions and failures leads to access to source code, multiple versions supported, configuration management
3 Long software product life spans
10 years plus for word processors, spreadsheets, etc, 20 years (50?) for core E.R.P. systems, Diversity of high value third party add on tools, standard data models
4. Less is more
Stripped down software, lean, mean, competitively priced software companies, algorithm brokers and traders, multiple utility libraries competing for business
5. Executives take custody in response to massive corporate failures or near failures
Understand the essential fundamentals of the technology, highly competitive strategic capability, define, design and execute strategic plans reliably and effectively
6. Emphasis shifts from routine transaction processing to decision support and decision MAKING
Constant churn in the operational software space diminishes, emphasis on decision making and decision support, how to support the corporation to be more effective and efficient -- about people NOT technology
7. Corporate level solution innovation
Technical professionals become real business partners, high investment success, reliability and sustainability, practical application of realistic and pragmatic I.T. solutions makes a positive dramatic difference to the organization, end of the I.T. "special case syndrome"
The true potential of I.T.
Overall, an exciting and empowered place for business users of information technology to be but an uncomfortable journey to get there as human beings resume control of their organizations and cease abdicating in favour of the mythical ability of computers to solve "people"problems
Conclusion -- Where in the World is I.T. Going?
I hope that the above discussion will assist you to effectively position information technology in your organization.
There is no doubt that there are amazing things that can be done using information technology, yet it requires the business genius of the people who have built the organization to effectively define the role that information technology should play in the organization and then to use the people in the organization to unlock the potential.
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