Making Information Technology Strategic. Can information technology be a leading driver of corporate growth? If it is embraced as an integral part of strategy, rather than shoved aside as a back- office function, it very well might. While an alarming number of executives seem to ignore the issue, a new prototype for the role of information technology (I. T.) in business is slowly emerging.
The Italian clothing maker Benetton announced in June that it would soon be managing its retail stores by computer: a central program would collect information from the point of sale to identify the hottest fashion items, then step up their production. Headquarters would also use the information to replenish inventory automatically, as the need arose at the stores. By employing technology in this way, Benetton is making it an integral part of its business plan. Callahan, a vice president of Booz- Allen & Hamilton who specializes in the restructuring of I.
T. To be sure, fretting over cost is understandable. One way to do this is by clearly tagging technology as a business proposition. It means that an operational department of a company has adopted the initiative; the unit will reap the profits as well as bear the costs of development. If done well, this practice means that only the most promising I. T. It also means that technology shifts from being a resource drain to a source of new business.
Division heads at the utility company are always on the lookout for technologies that promise growth and, as a result, systems developers receive strong support from upper management. In return, the systems people are expected to deliver products that respond to a specific business plan. Now, it's an integral part of what we do. Taplin- Canto's division adopted a project that will merge all customer utility bills from the company - - for gas, water and electricity - - into a single bill.
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The division will cover the cost of the initiative, and will also receive credit for any new business garnered as a result. The technology communications gap is invidious; it often condemns I. T. John Donovan, a professor at the Massachusetts Institute of Technology's Sloan School of Management, has taken on that task. He is a self- styled technology crusader, fighting to make sure the two sides know how to speak each other's tongues. Donovan fancies himself in the role of corporate marriage counselor.
Believing that technology is a vastly undertapped resource in the business world, he runs seminars out of his office in Cambridge, Mass., to teach I. T. The trick, he said, is convincing the chief executive of the importance of I. T. As chief executives struggle to get their E- mail to work, the I. T. It is not surprising that some top executives simply stop listening. Donovan likens C. E. O.- C. I. O. Donovan sprinkles his speech with hyperbole to press home his points. To do that, the C.
I. O. The focus should be not on how much new technology should cost, but on how much revenue it will bring in. Should it be a technology expert or a business person? Callahan of Booz- Allen, the answer is clear: it should be someone on the business side. The appointment was a radical break from standard practice, since most C.
IT strategy is a comprehensive plan that information technology management professionals use to guide their organizations. Search the TechTarget. Continue Reading About IT strategy (information technology strategy). Information Technology and Corporate Strategy Senior executives, strategic planners, and information systems managers are increasingly. The mission and management of the information. Presented by: Paul Osborn. BBC Technology Strategy Issued: January 2010.
I. O.'s still come up through the engineering ranks. Someone has to decide the fine points: which browser to use, what kind of software is needed and the like. The fine points can be important: managers might have avoided the huge costs of converting information systems to read the year 2. Teams made up of both business and I. T. Reebok, the giant sportswear manufacturer, uses such teams for all major technology initiatives. At Wisconsin Power, major I.
T. Unifi guarantees the delivery of faxes in much the same way that Federal Express guarantees the delivery of packages. Unifi's customers pay for the comfort of knowing that their messages will arrive at the right destinations. Most of the company's business is in international faxes - - a form of communication that can be complicated by differing time zones, languages and receipt mechanisms (the destination point may be a computer, a voice/fax machine or a dedicated fax, for instance). Ranalli has been asking himself questions. Will faxes become obsolete once everyone is hooked up to cyberspace? How will the Internet change the way Unifi communicates with its customers?
Huebner has an unusual background: along with years of computer experience, he has an M. B. A. He also has, by his own reckoning, a love of tackling complex technological problems. Earlier this year, Mr. Huebner approached Mr. Ranalli with an idea: why not allow Unifi's customers to place service orders and track their faxes on the Internet, just as Fed. Ex does with its packages?
Huebner came up with an alternative plan: prepare a model of the new technology so that non- I. T. Huebner feared, the model would fail to meet users' needs. So he decided to form a 1. I. T. The cost of the effort was set at $1.
Huebner began to canvass for team members, his overtures met with little interest. Business units were asked to identify likely team members, who were forced to . Almost the entire company, as well as three members of the board, showed up for the presentation. It doesn't have to be in the form of a systems model. At Reebok, for instance, the technology group made a video, which was viewed throughout the company, to explain what I. T. The Importance of Intranets.
There now are numerous ways to use I. T. Donovan met the owner of a factory that makes very fine stemware. The professor asked the man to describe his dream, and he replied that he would like to sell to the Japanese, who have a real appreciation for fine glass products. Donovan said he and his assistants labored all night to put together a Web page for the factory. They posted the information in Japanese, and included an easy way to place electronic orders. His dream had come true. A handful of overseas orders is unlikely to change a company's future.
Though an Internet presence may be essential for businesses like Unifi, which have a primarily corporate customer base, the World Wide Web cannot yet be used to access the mass market. Its immediate potential may lie more in its impact on communication within, rather than outside of, the company.
The surging popularity of . For very little cost - - E- mailing capability can run less than $2.
United States can contact a factory in Indonesia. I can communicate with anyone else on the Internet.
It is the ultimate standardization. As the distinctions fade between the corporation and its support structure - - which may include distributors, suppliers, accountants and shareholders - - it is sometimes difficult to say exactly where an organization begins and ends. Intranets can dramatically simplify the running of the virtual corporation.
The company has just set up an intranet operation that is a key part of its business plan. The new system allows Harley dealers all over the world to access the company's customer data base. With an intranet, we hooked everyone up for a minimal price.
Maybe it's a good time to ask if his wife needs a new helmet, too. Employing elaborate forecasting programs and the sales data from the dealerships, the company will, in the style of Benetton, automatically replenish inventory items at the point of sale. In essence, dealerships would be largely managed by corporate headquarters, although officially they would remain separate entities. Callahan of Booz- Allen. This is a particularly important consideration in consolidating industries. American Airlines said one reason it spun off its Sabre reservation system was to ease future alliances with other carriers. Because all travel agents - - and passengers now, through the Internet - - use the same program, the cost of integrating I.
T. Reebok is organizing its I. T. The company has formed a consortium with other apparel and footwear companies - - including the V. F. Corporation, which makes Gloria Vanderbilt jeans - - to come up with a software program that could serve as an industry standard. The goal is to exchange complex design images and information over the Internet. The closing window of opportunity of I.
T. Now, Amazon. com has to cope with a formidable competitor. Similarly, Federal Express once stood out as the only courier group with Internet tracking capability; now U. P. S. For one thing, becoming a technology pioneer can be a tremendous marketing tool. Fed. Ex gleaned a lot of free publicity from being the first on the Net, and Amazon. Taplin- Canto of Wisconsin Power. It can, in fact, serve to magnify a company's shortcomings. The best way to leverage I.
T. It means improved communication between technology experts and managers. It means changing the way corporations are organized - - breaking down the old I. T. It means seeing technology as a source of profit rather than as a cost center. And it means rethinking old relationships with customers and members of the virtual corporation - - the suppliers, distributors and other groups that companies depend upon for success.
C. I. O.'s should drop the jargon and talk about revenue- producing initiatives. Someone with engineering knowledge alone may not be able to think strategically. Teams should consist largely of members from the business side. This can be done through demonstrations, videos and other internal public relations techniques. This requires viewing technology as revenue driver, rather than cost center.
Why Information Technology Often Comes Up Short Thanks to the arrival of the Internet and other offspring of the computer revolution, technology experts have achieved an elevated status in corporations over the last decade. They have gone from being the geeks in the basement with taped- up glasses to well- paid corporate officers. The reasons are complex.
Managers who never turned on a computer before - - delegating word- processing and data- entry responsibilities to low- tier workers - - are now expected to answer E- mail from their airplane seats.