Does IT deliver on its promises? Does it make sense to invest in new technologies and new service offerings in order to achieve cost reductions and improve service in the business?
IT has offered the promise of efficiency, cost reduction and improved service levels both internally and externally. The Internet, outsourcing, off-shoring. ASP, SAAS, VMware and ERP have promised huge potential opportunities, yet we read how those solutions have fallen short on the promise. In fact, over the last 10 years technology like the Internet has enabled the opportunity for a global business model that otherwise was impossible.
Does that mean that those technologies or solutions don’t deliver on the promises? In my experience it is a more complicated answer – but the short answer is – it can. The key is to put as much emphasis on the “I” (Information) as we do on the “T” (Technology) in Information Technology.
Some of the technology misses that I’ve experienced in both, large public companies and small/medium private enterprises include:
- Suppliers arrive with clear value propositions, but they often make assumptions that the business pursuing the solutions understands what needs to be in place to realize the benefits. The businesses that pursue these solutions with the intent to simply ‘hand-over’ the operation to a service provider resulted in chaos and higher costs.
- Business and IT leaders facing such serious business challenges that they are looking for quick help. They go to the technology experts and technology consultants with hopes that their technology and business issues resolve themselves once the technology is acquired. Only to realize after the investment that an organizational change initiative wasn’t even considered.
- A multi-billion dollar business commits to an ERP implementation only to have it fail. Then they write off a $180 million sunk cost and virtually start over again.
- A business pursuing an out-sourcing of the their IT infrastructure with the intent to eliminate their internal IT staff and reduce costs by at least the promised 20%, only to find that the service levels became substantially worse while the costs actually increased.
- A business unit get excited about the promise of a SAAS solution without due diligence around security costs. While the costs on the surface may prove to have a lower initial out of pocket investment, when all the security, integration, WAN and service costs are incorporated, we found that the TCO (Total Cost of Ownership) over 5 years only had a 5 – 10% benefit with increased risk vs internal hosting.
So what is the answer? Here is where it gets challenging:
- If it sounds too good to be true, there may be a need to dig in for more facts and understanding.
- Pick a partner that is willing to help prepare the business for the technology before jumping into the technology-enabled solution
- IT and the business need to work together to prepare for the introduction of the solution
- Have a clear and thorough understanding of the services the ‘old solution’ provided
- Have a clear and thorough understanding of the services the ‘new solution’ is expected to provide
- Understand how you used to do business / IT and measure it
- Understand how the new solution will enable the business and how it will impact / improve your existing metrics/ measures
- Invest in the ‘Information Architecture’ as well as the ‘Technical Architecture’
- Look at operational solutions and SLAs differently from project solutions and SLAs (in the case of outsourcing)
By preparing your business processes and your IT processes you can create the foundation for the transition. By understanding how to measure your business and IT results, you will more clearly understand how to quantify your benefits realization. By understanding your ‘As-is’ service levels agreements, you will be prepared to deal with the ‘to-be’ SLAs with an outsourcer.
Your technology partners want your initiative to succeed. Success on both sides will hopefully lead to good business results for you, and a long term relationship with your partner.
