The Long View

Productivity and Convergence

First let me apologize to my regular readers - both of them (the homeless fellow that takes refuge from the cold in the Detroit Public Library and reads my blog, and my snowbird father in Florida - Hi Dad!) -  for having been remiss in posting. I hate to post unless I have something interesting to say, and I've been a bit distracted with other matters recently.

Next, let me recommend some reading that leads into the topic of this post. Marcy, my wife, received Thomas L. Friedman's The World is Flat as a Christmas gift. After I attended a local event (Rob Pasick's Leaders Read at the Ann Arbor IT Zone) that had a panel discussion of this book, I determined that she hadn't yet started it, and took possession of it.

I can't stress enough that this book is an absolute MUST READ for anyone, but most importantly for anyone involved in business, public policy and education.

End of book plug.

One of the many, many interesting things that I ran across in Friedman's book related directly to my last post in which I mention that the promised productivity improvements of IT systems haven't been realized because the business processes often haven't caught up with the technology.

Friedman quotes Stanford economist Paul Romer - "When people asked, 'Why didn't the IT revolution lead to more productivity right away?' it was because you needed more than just new computers, you needed new business processes and new types of skills to go with them." Friedman echoes this thought when he states "Introducing new technology alone is never enough. The big spurts in productivity come when a new technology is combined with new ways of doing business."

Friedmann describes a convergence of ten technology-related forces which "begat the convergence of a set of business practices and skills that would get the most out of" these technologies. He draws a parallel with the introduction of electricity to industrial production in the 19th century - that it took not just the ability to generate and distribute electricity, and the invention of electric motors to transform production. It also took the development of experienced "factory architects, electrical engineers and managers who understood the comlementarities among the electric motor, the redesign of the factory and the redesign of the production line" before electricification really had an impact on industrial production.

So while Friedman reinforces my point, I am excited by his assertion that the world is rapidly acquiring a cadre of managers who understand this, and who are establishing the new processes and the new ways of doing business that the new technologies make possible.

The Laggards are (often) right

I mentioned in a recent post that I was re-reading Geoffrey Moore's Crossing the Chasm. The thought occurred to me while reading Moore's description of the Laggards in the product life-cycle that in many cases, the Laggards have it right. To quote Mr. Moore, "One of the favorite arguments of skeptics is that the billions of dollars invested in office automation have not improved the productivity of the office place one Iota. Actually, some fairly good data exist to support this notion".

While Moore discusses ways to rebut this line of argument, I would suggest one of my favorite points: Technology is only as good as the processes that it supports. I would rather be operating a company that had rock-solid processes implemented through mediocre technology, rather than dysfunctional processes with state-of-the-art technology.

I've seen too many cases of companies trying to solve problems by throwing technology at them.

One of the most hilarious examples of this that I can recall was when I was with a software firm producing a product for the behavioral health market. At that time, many community mental health organizations were facing significant changes in their business practices brought on by managed care and revenue capitation. One of the issues that they were struggling with, and that they repeatedly were demanding their practice management software to solve for them was the issue of services "incurred but not reported". Basically, the problem was that they had clinicians that would perform services, but fail to report those services in a timely fashion, so that the organization could account for the financial liability for those services having been rendered.

Here was a perfect example of a broken process within these organizations (they couldn't get their clinicians to report the services they were providing to clients), so these organizations were trying to find some technology - from us or any of our competitors - that would fix this broken process. As technologists, we could come up with all kinds of different mechanisms to collect the data. But short of implanting RFID chips into all of their clients, they would all require some user action to actually record the service event, and the phenomenon of "incurred but not reported" could still occur.

So the Laggards' skepticism is often right on the mark, but the fault doesn't always lie solely with the purveyors of the technology. It isn't the technology that is lacking, it's the proper implementation of the technology within the framework of the business. The challenge for us, if we're responsible for implementing a technology solution (whether on the business side, or the technology side), is to ensure that what we're accomplishing is really making things better rather than just making impressive rows of blinking lights.

Competitive Advantage - Process or Technology?

I've been chatting up an idea for the past six months or so, and in mentioning it during a business meeting almost in the same breath as this web log, realized that I've never posted an entry on this topic.

If you were running a company and were forced to make a choice between superior processes with poor, outdated systems, or poor processes with state-of-the art systems, which would you choose? I know what I'd choose, and without any hesitation. Technologies are only as good as the processes that they support, and if you have good processes, bad systems are less of a hinderance to achieving company objectives than are bad processes.

If I'm fortunate enough to be in a business where my competitors keep trying to gain a competitive advantage by throwing technologies at business problems, I can probably kick their butts by using my limited technolologies to support really good processes to operate more efficiently and serve my customers more effectively.

Now obviously, really good processes supported by state-of-the-art technologies is the killer combination, but you still have to be process-centric to really make that work. It isn't enough to see how fast you can implement the technology. You have to look at the technology, see what real opportunities it presents to transform your processes and separate the wheat from the chaff in terms of your operation. In a process-centric company, new technologies can stimulate thinking along new lines, giving rise to new, more efficient, more effective processes. However, these processes must be practical - it may be possible to implement them technically, but there may be logistical, behavioral or physical limitations that make them impractical.

For example, tablet PC's and wireless telecommunications are definitely cool technologies. Yes, they have the potential to allow real-time data collection from your field sales force. However, unless you think through the process of real people in the real world, taking into account certain well-known behavioral factors, a miniscule R on a significant I could result!

I see many industry analysts pondering the reason for the slowdown in corporate tech spending in recent years. I'd like to think that part of the reason is a recognition of this fact - that technology is only an enabler, and that good processes trump bad processes every time, no matter what technologies are used!

Irrational Exuberance

One way or another, I've been in the technology business for a long time. As a result, it's easy to assume that every company has bought into the benefits of various information technologies, and has deployed a significant number of those technologies as part of their day-to-day operations. While this is a fair assumption with larger companies that simply couldn't operate without a certain level of automation, there are still many companies that are operating in a manner that was common ten or twenty years ago.

I spent some time recently getting caught up with a person I met a couple of years ago while they were working for a client. This person made a move to a new employer in the last year, and was explaining how her new company has been operating without a primary line-of-business software system. They have instead been relying on a lot of Excel worksheets operated as ad-hoc databases developed by individual employees. My friend has been doing some much-needed education, demonstrating the power of a central database and the analytical power of SQL. The immediate result has been a great deal of enthusiasm, and a sudden recognition of how many company issues can be addressed by applying this technology. However, each issue and opportunity is being viewed in isolation, without looking for the commonality between them that could lead to an integrated IT architecture.

In hearing of this, I cannot help but recall how many businesses I've seen over the years who were struggling to bring some order to the chaos created by a multitude of technology "islands". While this case is increasingly rare, I think that even for companies well versed in the application of technologies to the solution of business problems, the tendency is to look at a specific issue and apply a technology to address it, without taking a broader view of the company's goals, objectives and challenges, and integrating the technology solutions into a coherent IT strategy.

Information technologies are by their very nature disruptive. Whenever a company adopts a disruptive technology, there is an opportunity to re-examine the company's processes and to engage in some re-engineering of those processes. You want the processes to shape the technology, not the other way around. In this way the company can ensure that the processes that the technology supports are appropriate to the overall goals and objectives of the company. Given the expense - both in time and money - of implementing a technology solution, the technology can have the effect of solidifying the process.

These dangers are multiplied when the technology solutions are applied to individual issues with little or no thought of integrating the solutions into the company's overall operations.

Just as it's important for a company to have a strategic plan, and to evaluate every business decision in terms of that plan, it's also important to have some sense of how the IT infrastructure fits into the company's strategic goals and tactical objectives. This allows decisions regarding the implementation of technology to be evaluated in an orderly, prioritized and integrated fashion, in support of longer-term issues. Irrational exuberance about the ability of technology to address specific problems can lead to a patchwork of sub-systems that will be difficult and expensive to integrate at a later time.