ESSENTIAL TECHNOLOGY KNOWLEDGE FOR BUSINESS EXECUTIVES

Dr James Robertson is an independent management consultant who has undertaken an in depth study of the factors giving rise to information technology project failure and the failure of I.T. to meet business expectations.  He has developed a concise “Pulse Measurement” investigation to diagnose why I.T. is underperforming and from this analysis of organizational pain he advises organizations how to achieve the true potential of their I.T. investments.

In this series of exclusive articles Dr Robertson shares the insight he has gained in nearly three decades of practical experience with regard to the effective application of information technology.  These articles are intended expressly for CEO’s, CFO’s and other senior business executives.  A complimentary series of articles address the subject from the perspective of the CIO and I.T. executives and managers.

Dr Robertson can be contacted at James@JamesARobertson.com

Many organizations experience a breakdown in communication between their information technology function and business management.

This results in situations in which organizations make critical decisions without clear understanding of the consequences and then experience considerable frustration and even loss as a result.  In many organizations the divide between the "business" and the "technologists" is pronounced and sometimes adversarial.

This article looks at the situation from the perspective of the CEO and other executives on the "business" side of the fence.  A companion article looks at the situation from the perspective of the CIO and those on the "technology" side of the fence.

In "CIO Insight" February 2004, published by Ziff Davis, Allan E Alter quotes Harvard Business School Professor Emeritus Richard L. Nolan as saying in a speech before the Society for Information Management the previous October that additional board oversight should be extended to informa­tion technology. "IT is the next disaster waiting to happen," Nolan is reported as saying. "Companies are running on autopilot. We're seeing boards that are essentially inactive, while even top managers are giving short shrift to IT."

The article goes on to report major I.T. project failures and to ascribe a major bankruptcy to I.T. system failure and suggests that board members may soon be sued by shareholders for negligence in the event of such incidents.

I consult regularly to organizations who are experiencing problems with I.T. or wondering what direction to take and, in doing this, I have the opportunity to talk to senior executives and CEO's and hear their side of the story and then to talk to the CIO and managers responsible for I.T. and hear their side.

Frequently one would think that one was looking at two different organizations, so distinct are the differences of perspective.  In diagnosing these situations I have come to recognize the characteristics of the two poles and have also learned that it IS possible to facilitate the development of a constructive working relationship between the business and information technology.  Frequently this does not require a large investment and generally it does not require the replacement of major systems or a change in the contractual relationship (outsourcing) between the I.T. unit and the business.

There are a number of issues that warrant attention in seeking to understand the perspective of the CEO and business executives generally.

I cannot get the answers I want

Frequently executives complain that they cannot get the answers they want to the business questions they are asking even though they know that the raw transaction data is being processed.  Often the answer to this question is converted into a requirement to replace the existing system, such as the "E.R.P." system with a new, frequently "big brand", product.

E.R.P. is a commonly used abbreviation in business today but basically it refers to the accounting and related systems in the average business.  Trouble is that "E.R.P." sounds much more impressive and, on the other hand, is not well understood.  So the phrase takes on a mystique of its own and the product is perceived to have magical qualities to rectify the ills of the business.

Reducing the E.R.P. to its components parts and being clear that none of these are mysterious and none have the potential to magically transform the business is sometimes a key step.

Frequently the problem with getting answers translates to inadequate quality control on the data that is captured or the absence of appropriate provision for data classification and taxonomy (analogous to a library catalogue) which makes aggregation of data in the required manner difficult or impossible.

This is a content issue not a technology issue -- the content is the same irrespective of the computer and software being used -- your name and address are the same in all systems, the ability to process your details effectively is driven by the quality of the content rather than by the constraints of the technology.  For example, if your name and address have been misspelt and entered fifteen different ways with fifteen different account numbers the computer will not be able to produce a consolidated statement of your account history without major manual effort to first remove the redun­dancies for all the people who have data in the system.

I.T. Projects miss deadlines

I.T. projects miss deadlines for a variety of reasons.  One of the reasons is the breakdown in communication referred to above.  The I.T. team are trying to deliver one thing and the business team are wanting something else with the result that at many project meetings changes are made to the specification or the scope.  Frequently these things do not look like scope change or change of specification, for many people they are engaged on a voyage of discovery as they examine the business problem and it seems logical to make the changes.

At one level this is correct, however, if one were building an office building or a factory and at every site meeting the client instructed that walls be demolished, machine specifications be changed, etc, there would soon be an outcry as visible costs escalated and as trucks removed the rubble.

One of the critical challenges with I.T. projects is that the rubble is so intangible.  It take seconds to delete days or months of work and there is no visible sign of the damage apart from a loss of morale on the part of those who have invested themselves in creating a solution that they thought was to specification.

It is vital to have a clear and comprehensive specification and to do reality checks on what is being requested.  Many things can be created with software but, just as with a building or factory, they take time and cost money.  The challenge is for the business to take responsibility for a clear business requirement statement and to develop a meaningful and measurable business value proposition for the real cost of the solution.

This requires both sides to take a stand on only undertaking projects for which there is a clear value proposition.

The answer is frequently "spend money"

As a consequence of the points raised in the previous section, the answer to a business request frequently translates into "spend money".  Business users hear about some functionality or capability that some other business has, or claims to have, and then wants that functionality.

The required functionality is often specified in terms which relate to "XXX" where XXX is the name of a large, big brand software product and so what may well have started out as a wish list or fashion statement translates into a groundswell of opinion that the current system is "no good" and that it cannot do whatever is "required".

This results in a loss of confidence in the current system and a loss of morale and motivation of those who are operating the system.  It can also result in pervasive corridor talk that permeates the board room until there is no confidence in the existing system and the notional requirement for something different becomes self fulfilling.

Frequently the answer to such a situation is a concise evaluation of what is really required and what really exists and then a board level decision to take custody of the existing system and "make it work".  "Make it work" is a quality board decision starting with the Chief Executive which is then enforced throughout the organization in tandem with actions to remediate what needs to be remediated.

Outsource / insource

One of the consequences of the situations described above is that business executives decide to "outsource" the I.T. department to a third party organization.

Frequently this decision will be found to translate to "we do not know how to get this thing to work but there must be someone out there who can make it work" and so a key corporate resource is sold off to a third party.  Sometimes this works because the act of outsourcing requires a solid contract and the legal advisors insist on tying up many of the loose ends resulting in conversations that should have taken place internally at lower cost being transferred to contractual negotiations.

Many times, however, the issues of mythology, lack of executive custody, etc transfer onto the outsource contract and frustration continues to the point where in some organizations the debate converts to whether to "insource" or look at changing outsource contractors.

The answer to this debate is generally a pragmatic look at what can be achieved and a realization that the factors causing failure are people related and not technology related.  In fact, with a pragmatic understanding of the real issues, either insource or outsource can be made to work.

I.T. is moving so fast it seems to be hijacking the business

A widely believed myth is that "I.T. is moving so fast we cannot keep up with it" which translates in practical terms to a situation where it appears in some organizations that the business is being hijacked by the pursuit of the latest technology.

While at some level it is true that the technology is evolving at great speed, the good news is that in many cases business does not know how to apply the technology that already exists effectively and therefore the new technology is frequently irrelevant – improved utilization of what exists will frequently meet the real need.

On closer examination of the "moving so fast" myth it becomes apparent that for most organizations, most of the functions they perform have not changed much in the past decade and are unlikely to change that much in the decade ahead.  Coupled to this, most organisations are not using what they already have to anything near its full potential.

The implication?

Take what you have and learn how to use it really effectively in your business.  A simple example, many organizations operate software which requires staff to capture text based information about interactions and yet they do not train those operators to touch type -- so they peck with two fingers and low speed and low accuracy and the effectiveness of the entire system is compromised.  A touch typing course at a secretarial college is one of the most valuable "computer literacy" actions that many organizations could take for many of their staff, including executives who are answering their own emails.

Essential technology knowledge for informed business I.T. decisions

In responding to my experiences in evaluating I.T. situations where the business complains of under performance I have come to realise that there are some essential principles of information technology that many I.T. people take for granted but which are seldom communicated to people in the business in a formal fashion that everyone can understand and apply.

These are discussed below.

In considering the practical use of Information Technology it is important to recognize that the technology is abstract and complex.  It is difficult to gauge the suitability of a system without looking in detail at numerous screens and reports, accordingly, it is relatively easy to take the route of "demolition" as opposed to "evolution" -- progressive enhancement of the existing solution.

In considering options it is useful to draw comparisons with physical world metaphors such as factories, warehouses, municipal services, buildings, etc.

Different I.T. solutions have different parallels, for examples, a big transaction processing system is like a large factory -- it uses standard production units which may be from various manufac­turers assembled to convert specific raw materials to specific manufac­tured products with a limited number of operators for a large number of consumers ignorant of the process.

Following are some principles that I have found that many business people are either not aware of or do not accord sufficient importance to in taking I.T. decisions:

-- Computers are adding machines (on / off switches)

Computers are binary adding machines or switches that do all that they do by switching 0's and 1's (binary code).  Everything that you experience with a computer is the ultimate outcome of switching based on binary patterns "10011010...".

Computer processors are machines nothing more and software and data are stored as streams of binary code.  As a consequence, computers are predictable -- one could even call them "stupid" -- they do exactly what the instructions tell them to do.

But the process of following these instructions is not visible and they are executed at such huge speed that they appear mysterious and even magical to those who do not know how they work.

-- Databases are warehouses

Databases are comparable to physical warehouses.  Particular pieces of information are classified and stored in a manner that facilitates their retrieval.

If the warehouse is well managed and well operated retrieval of information will be fast and flexible.  A warehouse that is badly managed will not yield the expected outputs, not because of the technology but because of things that people are doing or not doing.

For this reason, content, standards and people (including corporate politics), NOT technology, are the primary inhibitors of system effectiveness.

There are also different approaches required to get data onto a disc for transaction processing and getting data off the disc for management decision support.  In the absence of structured management input to the implementation of a system the probability of structured management information is radically reduced.

-- Automation software products are like machines

Automation software, ranging from word processing software to spreadsheets through to specialized systems like customer relationship management (CRM) are all comparable to machines.

An operator gives instructions and provides input to the machine which executes those instructions and produces output.  No matter how sophisticated the software it is no more than a machine and the level of training, precision and deftness of the operator determines the quality of the output.

Most users of automation software are using a minute fraction of the functionality and therefore constant upgrading of the software is not necessary.  The challenge is the business outcome NOT the technology.

-- Networks are postal systems

Networks are sophisticated postal systems.  All data transmission on a network comprises electronic packets of binary information with an address on the front and a return address on the back.

The Internet functions by sending huge numbers of packets backwards and forwards to exchange complex binary information that is used by people to do things they experience as valuable.  The Internet is not about technology, it is about communication and psychology.

-- People and business strategy determine the value delivered

In essence people and business strategy determine the value that is generated through the application of technology.

Information technology is inert, it is NOT strategic in and of itself, it does NOT create value in and of itself.

People create or destroy value.

Business executives who clearly understand these principles and apply them will find that they are much better able to define an appropriate role for information technology in their business and to engage in meaningful dialogue with those responsible for the technology.

The next article in this series will discuss the real issues with regard to achieving high levels of executive custody of Information Technology – an essential requirement for responding to the increasing threat of Governance liability of business executives with regard to I.T.

Attached Files

The CEO Side of the I.T. Divide

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