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Management Information |
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IT Expenditure - Why Businesses Spend Huge Amounts on Ineffective IT Investments
Another IT White Elephant! It seems that almost every day we read in the newspapers about another hideously over budget IT project that doesn't achieve its expected benefits. The ones we read about are usually major multi-million pound projects in the public sector, however this is only the tip of the iceberg. Many more projects achieve similar results in the private sector, in organisations large and small. These may be anything from the purchase of a new off-the-shelf accounting package for an SME, or a large-scale fully-integrated ERP implementation across multiple sites and countries. These do not usually make the headlines due to the commercially sensitive nature of this information. Does this mean that the technology is over-rated or that we cannot manage IT implementations or is there something fundamentally wrong with the approach? Where are we going wrong? "Computers make it easier to do a lot of things, but most of the things they make it easier to do don't need to be done." Andy Rooney, US news commentator (1919 - ) I wouldn't go as far as the above comment, however there is an element of truth in it. Typically the IT implementation is seen as the solution to the particular problem (or problems) being addressed, but this is rarely the case. Often the introduction of an IT "solution" can compound a problem as there is now less opportunity for the human intervention that previously stopped problems from becoming crises. The problems usually lie in the business processes (both formal and informal), irrespective of whether these are carried out by computers or human beings. Automating these processes can simply have the effect of making the problems happen faster! The obsession with IT as the solution to every major business issue is compounded by the marketing departments and sales people of software developers selling it as such. Until executives address the underlying processes first, we will continue to see streams of failed, expensive IT projects. Addressing the real problem To take a process approach to the problem, we need to understand (in some depth) the informal processes carried out every day by employees. These are not the processes that managers think they carry out, and are rarely as laid out in the ideal world of an ISO manual. We regularly find, when working with clients' employees, that managers are unaware of a large percentage of the processes carried out in ensuring that the job gets done. This is not a criticism of the managers - the level of information overload that this would involve would render them ineffective. Working with employees so that they can map out their processes in this level of detail and re-engineer them to resolve the perceived problems can have a radical effect with no IT expenditure. Targeted IT Expenditure So far I have probably given the impression that I have a "downer" on IT. This could not be further from the truth - the problem I have is with the way IT expenditure is usually approached, and the problems that this approach creates. Having addressed the process issues, IT expenditure can then be used to facilitate the new process, targeting those areas that would benefit most and significantly multiplying the benefits of the process improvement exercise itself. This expenditure can often be in entirely different areas to those originally envisaged. At Feechan Consulting, we are now starting to work with enlightened software vendors who understand that it is in their interests to ensure that the client purchases an appropriate solution, rather than simply what they have to sell, as they inevitably take on some of the risk of failure. Conclusion Organisations have benefited greatly from IT investments over recent decades and will continue to do so. However, the risks attached to these investments are significantly reduced (and the resulting benefits significantly magnified) if the underlying, informal processes are addressed first. Glen Feechan is Chief Executive of Feechan Consulting Ltd (http://www.feechan.co.uk), a business consultancy specialising in business process improvement training and consultancy. Email Glen at glen@feechan.co.uk. Glen is also the editor (and regular contributor) of Changing Business ezine (sign up at http://www.feechan.co.uk).
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