IT Management: The application of IP technology in business

The application of technology in the context of the Triple Revolution imposes major demands on senior management. It requires that they lead the implementation in their organisations. Failure to do so will place their businesses in grave jeopardy. Fortunately, a clear set of guidelines exists, based on best practice. Following these is essential if the application of IP technology is to be successful. The guidelines focus on three key areas:

• understanding the technology
• understanding what the technology can do for your business
• creating the environment for success

Unless management does understand the capabilities of the technology, there is evidently little hope of using it to improve competitiveness. Alarmingly, surveys show that the majority of British managers either do not believe that IT can raise competitive prowess (46%), or simply don't know if that's possible (12%). Even more alarming, an overwhelming majority of US managers (74%) do believe in IT's competitive power. The numbers for Germany and Singapore also show far greater awareness than in the UK.

Many British managers plainly only perceive the Internet as an extension of existing information technology. They are sure to be overlooking many valuable opportunities for simplifying and re-engineering processes. Similarly, if management sees the Internet as predominantly an internal and technically focused tool, invaluable supplier and customer contributions and views will be ignored. The technical focus will also miss many of the so-called people issues which lead to developing and implementing the most effective applications of the technology.

The inescapable, absolute fact is that IP technology is a strategic investment affecting all aspects of the business. When developed and implemented correctly it will have a major short-term, medium-term and long-term impact on competitiveness. Its reach extends far beyond a single functional area. The effect on overall competitiveness will be nothing short of dramatic. Because it is such a key factor in the company's future success, all levels of management must be actively involved in debating and reaching the vital decisions on Internet development and implementation

The investment, moreover, is continuous. Consequently, both current and anticipated future requirements need to be considered if the full benefits are to be realised. Because future requirements can never be identified with precision, the focus should be on continuous development of applications which are fast and effective within a clear business framework. Many of these applications will be mundane, like replacing fax with e-mail for specific purposes. Others will provide the kind of lasting, massive advantage that, say, Cisco has won with its Website sales and services.

Riding the Revolution means adopting the policies, procedures and practices which enable technology to be applied effectively to address such real business needs. For an essential start, the views of those involved in and affected by the system must be taken into account. This cannot sensibly be a top-down operation. Top-downism will lead to sub-optimal solutions which are neither fully accepted or effectively operated by the users. The essence of the technology is democratic. Unless it is used as a liberating force, its impact will be blunted.

The next step in this first-things-first process is equally vital. Before applying IP technology, full attention must be paid to simplifying the business processes. One of the major reasons why companies fail to secure the full benefits of any technology is that they do not undertake fundamental rethink of the business and its processes before application. The opportunity to reduce complex and inefficient systems to simple and effective operations must be taken. Otherwise new wine will be placed in old bottles, with the usual unhappy results.

Nor is it enough to bring all necessary staff into the Internet decisions. Suppliers and customers must also be actively involved. Internet development that is focused around internal operations but ignores the company's external relationships is deeply illogical. You cannot be a world-class company without world-class suppliers. And you cannot be a world-class supplier without world-class information links with your customers. In addition, because supply is such a vital part of a successful enterprise, failure to consider suppliers' input is bound to lead to sub-optimal, inferior solutions.

Companies ignore their customers at their peril, too. You must know how customers feel about relevant Internet applications. The apps represent a fundamental change to operations, which, in a modern company, are geared to satisfying customers as a minimum requirement, and, better by far, overjoying them by exceeding their expectations. Decisions which adversely affect or disappoint customers are therefore self-defeating. Try any Website, for example, and you are unlikely to find a truly user-friendly, enjoyable customer process: getting exactly that should be the object of the IP enterprise.

INTERACTIVE WEBSITES
Moving to the ideal of interactive Websites, however, represents a major step-change which will ultimately affect all aspects of day-to-day operations. That applies to any thoroughgoing application of IP technology. Consequently, its introduction must be carefully managed by senior management to avoid disruption to the business. You have to decide whether to proceed with implementation module by module, process by process, and in parallel with the existing system, or to go boldly for once-and-for-all step- change: continuous improvement (kaizen in Japanese) v radical change (kaikaku).

Careful consideration of the alternatives is vital. The benefits of IP technology can easily be outweighed by losses caused either directly or indirectly from poor implementation. Unplanned training, delayed process changeovers, wasted time, etc. generate excessive direct costs. Indirect costs could be far more damaging: harm to the firm's reputation, or orders overdue and lost through failure to meet customer's needs. Whether you choose kaizen or kaikaku, you must operate within an organised framework and with a methodical staged approach.

The first step in understanding what IP technology can do for the business is obviously to understand the business itself. What is the company's true competitive position? Armed with that knowledge - and only then - you can recognise the Internet's potential contribution, using informed appreciation of its capabilities and limitations. To win the optimum value from the Net, seek out those areas where the maximum contribution can be brought to bear: that is, the processes that link into the key business drivers which in turn deliver the company's competitive edge.

Many managers start from a position of double ignorance. When we began working with British Telecom to apply its IP strategy to customers needs, surveys showed that only 3% of British managers considered themselves fully informed about the Internet. Nine months later the percentage had risen by a thumping two-thirds to a miserable 5%. Managers are (thankfully) better informed about their companies' current competitive situation. But 'better' is not enough. Many are surprisingly ignorant about how well their products compete in the marketplace, the standards achieved by competitors, or the key business drivers which will provide winning advantage over that competition.

The whole object of adopting IP technology is to improve the business performance, not just by small degrees, but radically. To improve performance, you need criteria. What is current performance? What is best practice? What benchmarks should you set? Can you transcend the best to set new standards all your own? Too much benchmarking achieves no real competitive gain, and may leave you far short of attainable standards. That is unacceptable. There is no great virtue in being the prettiest pig in the sty.

The business drivers can be thought of as the levers which need to be pulled to achieve the benchmark criteria and the required competitive advantage. In Dell's case, for instance, the system which enables building PCs to order within a four-day delivery cycle is a key driver. Many critical processes are involved in achieving this powerful result. Only genuinely testing benchmark criteria will enable you to identify the key processes that will deliver a winning edge of Dell-like dimensions.

It is vital to identify the criteria precisely. Then realistic targets can be set, and you can establish the raison d'être for the IP applications. Getting wired is not an exercise in new technology for its own sake, a criticism which can be applied to the vast majority of corporate Websites that we have visited. The principle - that the business case should be firmly established before starting to spend real money - applies to any investment. But the case is doubly, if not trebly important, when the whole future of the enterprise may be at stake.

DELIVERING CAPABILITY
The first two stages are complete. You have identified the key business drivers which will create competitive advantage. You know which business processes to improve or transform by IP technology. The next step is to deliver the competitive capability. You are seeking a major return on investment. How are you going to determine that return? Form a realistic expectation of the benefits; you can then measure both progress and contribution. There's an unhealthy tendency to make act-of-faith investment decisions (and not just in cyberspace). Rather, find numbers which help the company to identify and focus on the key areas of competitiveness.

Next, cherry-pick. Agree the solutions which offer the best returns from Internet development and which generate evolutionary growth - the killer apps. Once you know the key benchmark criteria, the business drivers, and the processes, you can identify which applications will deliver the most profitable and speedy returns. Look at the first killer apps as building blocks on which evolutionary growth leading to revolution can be erected. In BT's experience, it's not uncommon for customers to start with an app costing a few thousands, but go on to spending (and earning) millions.

Completing the step-by-step process will not achieve the desired result unless the environment supports success. Since the prime, exclusive tasks of top management include setting the cultural bias, or atmosphere, that is where exploiting IP technology must start, with proactive leadership from the top. This is not a theoretical point. Practical experience underlines the need for senior managers to demonstrate their personal commitment. They must be the IP champions. They must show by their knowledge, enthusiasm, commitment and participation that they fully support the development and implementation of the killer apps.

With commitment goes full responsibility. Delegating the responsibility for strategy founded on new information technology to staff or to consultants is neither acceptable nor workable. Of course, people in the company should be involved in the decision-making as widely and deeply as posible. However, overall responsiblity must lie with members of a top management which is focussed on ensuring that the technology is applied to achieve real business benefit. Their commitment to the process has to be demonstrated by learning to use the IP business tools themselves.

No one expects senior managers to know all the technical aspects of the technology. But they do need to demonstrate their general understanding if they are to lead the implementation effectively. Screenless desks for chief executives, occupied by men who won't touch keyboards, have been common (sadly, far more common than not) for many years. The absence of screens was always hard to excuse: now it is simply inexcusable.

Putting into personal practice what you claim to be essential is basic to leadership. Without that demonstration of commitment and faith, you can hardly hope to win the essential support for a realistic implementation plan. Unfortunately, the same managers who had, or have, screen-free desks spend little time planning how to implement information technology. They lack a framework and a clear process to follow. The systematic search for and implementation of killer apps, however, provides both structure and process.

Leadership extends to personally communicating the Internet rationale to everyone in the organisation and the company's suppliers and customers. Genuine two-way communication is fundamental to successful application. Contributions from the sharp-end operational areas must be encouraged and welcomed. People need to understand clearly the strategic context of IP development - specifically, the competitive requirements which dictate them. With full information, each individual can understand his or her role and how to contribute to competitiveness by improving the service to the customer.

KAITs (Killer Apps Implementation Teams) by definition involve all those affected by the change, including customers and suppliers as necessary. Failure to involve all those affected inevitably results in a negative attitude towards the new system. That leads to opposition from users, low morale and a siege mentality which affects relations between users and system designers. The investment will run to waste, resulting in even more tension between designers and operational management.

THE VICIOUS SPIRAL
If people feel no ownership of the new IP system, a vicious spiral can result, which sometimes leads to complete removal of the new system. This is often seen as a victory by the operational management and, not surprisingly, as a disaster by their seniors. In addition, the designers lose credibility. All too often, the chances of the organisation trusting in new approaches are reduced to nearly nil. But if you harness the contributions and creativity of all the staff, then (and only then) the optimum solutions can be identified and implemented.

The great advantages of moving to the new technology of product and process guarantee that, in case after case, companies wedded to the old products and systems will lose business. There's no escaping this. Since the loss is certain, there is absolutely nothing to be said for sticking to the old. The profit margins on the old business may well be higher. But that's no consolation if the business disappears, as it surely will. The new technology and business model will win, and your business will be cannibalised by others. Your sacrifice will have been in vain.