The Long View

Technology as enabler

Once again, with feeling...

I've expressed the opinion several times in blog entries (and will say to anyone who gives me the slightest sliver of opportunity to riff on this) that technology is only as effective as the processes that it supports. I've said many times that I'd rather be running a company with outstanding processes and mediocre technology than a company with state-of-the-art technology and dysfunctional processes.

I started reading a book that's long been on my "must-read" list, and  - bang - in almost the opening pages is the empirical evidence for this observation.

In Good to Great by Jim Collins (and you really have to read it to get a sense of the depth of the five-year research that went into this book) he recounts a number of things that one might expect to have played a part in a company's transition from a good company to a great company, but in fact did not. One of these things was technology.

Technology and technology-driven change has virtually nothing to do with igniting a transformation from good to great. We did find technology to accelerate transformations, but we learned that technology cannot cause a transformation; it can never be a fundamental prime mover in a shift from good to great.

So, if you want to be where the action is, to effect change, or to try to achieve greatness in a company, it is definitely NOT in the IT department, writing code, maintaining networks or configuring servers, no matter how cutting-edge the technology. You have to be led and directed by someone who can formulate the goals and objectives the technology serves.

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If you were running a company and were forced to make a choice between superior processes with poor, outdated systems, or poor processes with state-of-the art systems, which would you choose?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.