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Why IT continues to matter

July 26th, 2014
Reading Time: 4 minutes

medium_4268170530I found this paper earlier in the week. I honestly wish I found this three or four years ago, as it is a great pre-cursor for understanding how to break up a business and set the appropriate technology strategy to support the overarching business strategy.

It pulls together a number of ideas I’ve been playing with over the last few years with regards to business-mapping  and lets me see, what appears to be, the embryo of a lot of the thinking in support of Simon Wardley’s model. The origin is an article by Nicolas Carr, 2003, Why IT doesn’t matter. I never realised it was from a larger paper, I read the HBR article 2 years ago.

His main recommendations for IT are

  • Spend Less
  • Follow, don’t lead
  • invest only when risks are low
  • focus on vulnerabilities rather than opportunities
This is all based on the view that IT is not of strategic importance because:
  • Technology is expensive so not everyone can afford it.
  • Not everyone will be sufficiently imaginative to see the potential
  • Those who exploit it early may be able to lock-in customers, markets or business in a way that is difficult to break or match.

These all read like excuses, putting It into the “too hard” basket. If we treated HR with the same contempt we’d never employ anyone because people are really expensive, I might not be able to use them to their potential, I’m locking by business into relying on those people because they know a lot about me.

This attitude also explains why so many people can’t see the chess board when it comes to business strategy in general; if you ignore it because it’s hard and copy the competition, you’ll be fine.

I find Carr’s position baffling given that he started with a great model of understanding the lifecycle of technology. In it Carr describes 4 Phases in the lifecycle, similar to the great model by Simon:

  1. Initial stage – new and not understood (Wardley – Genesis & Custom Built)
  2. Build out stage – increasing number of business acquire the tech (Wardley – Custom Built – Product)
  3. Infrastructure stage – rationalisation and standardisation (Wardley – Product – Commoditisation)
  4. Commodity stage – inexpensive and ubiquitous (Same as Wardley)

 

The baffling bit is that IT is treated as an amorphous blob, fitting holly within one of these 4 stages. As the paper points out (and most of us know) this is not the case. IT within a business is built up of many components, supporting any number of varying activities.

 

Relationship to IT outsourcing?

The article points out that in Carr’s view, IT outsourcing = acknowledgement that IT is not strategic to the operation of a business, and that the extrapolation is that it isn’t strategic as a whole. This cannot be further from the truth. You outsource functions that are not strategic. This does not equate to outsourcing means that IT is not an asset, it is focusing business investment where it will get generate the most impact to customer/revenue – Something I’ve commented on in the past.

Strategic value of IT components

The investment in IT for a business not only requires an understanding of the external market influences but also the use within the business to deliver; at a component level:

  • competitive advantage
  • fundamental capability to the business
  • long-term value
  • a platform for change
  • the necessities for survival (cost of doing business)?
  • a platform for innovation (yours or yours through your customers)?
Linking Business map to EA roadmap

Linking Business map to EA roadmap

The strategic value of IT does change over time. It has to! The environment, internal and external, to the business is in a constant change of flux, and the strategies and tactics that organisations use need to shift to accommodate. This is part of why when I draw out business-maps I don’t have a static trajectory, they tend to move down(or up) in value (hence visibility) over time as the component relates to an essential part in supporting one or more of the above.

 

All in all, I really like this paper. It is a very broad view of the implications of dismissing IT in business and how one might go about using it strategically. I think the practical examples are the only thing missing, but that is easily remedies by visiting Simon’s blog.
photo credit: Ian Sane via photopin cc

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