Archive for the ‘Business Strategy’ Category

What is the best way to think about IT investment decisions?   Leave a comment

IT purchase decisions. Choices about what information technology to invest in.

Often times its just a senior manager saying “I think we should do this”. Then, on the back of that a whole process follows. Justifications for the decision. Quotes and vendor discussions. Perhaps even chaos.

And both from my research, from experience, and from talking with others – this is how the majority of choices about what information technology to use are made. An ad-hoc approach. An approach that really is not grounded in any metrics, and science, any understanding of what really is required for the host organisation.

For, when its brought back to basics – information technology is there to increase the value of the firm.

Any investment in IT should be to either improve:

  • the maturity of the business systems
  • the efficiency of information flow
  • the timeliness of market information
  • the processes of value creation
  • the understanding of customer behavior

So, rather than think “what needs to be upgraded”, put this thought first “from the perspective of the organisation, what should be done?”

 
For more, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, or review my strategy and futures-centric blog.

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Posted October 8, 2014 by terop in Business Strategy, ICT Strategy, Technologies

IT Expenditure – Profit Centre Focus   Leave a comment

Why can’t IT be seen as a profit generator? Why is it that the default position when it comes to IT expenditure is efficiency and not investment?

For me the key here is that IT should not be seen as an amorphous whole. That its function is not the same across the entire organisation. An analogy. For example, don’t we view sales people differently to accounts staff? Isn’t the output from the operational people different from the executive? For if we have people in different roles with different purposes, can’t we have IT in different roles with different purposes?

Aren’t we aiming for effectiveness and efficiency from our operational staff, and income and opportunity growth from our sales staff?

Why can’t we view our information systems the same way? That is, that our information systems are dual use? That in different contexts in the organisation, IT should be viewed and used in a manner relevant to that context.

So, if IT can be viewed as a profit generator – what should our frame of reference be for making decisions? If technology is there to produce income – how do we decide what investments should be made?

If TCO is the measure for operational efficiency, isn’t ROI the measure for income generation?

And yes, there are other formulae for guiding investment decisions.

So, viewing IT from a profit centre focus requires an understanding of the range of potential gains from the investment. These include tangible and intangible factors. It requires a judgement about the additional cash flows from the range of projects under consideration. It requires an understanding of the opportunity costs of doing one project and not another. It requires alignment between the business goals and IT strategy.

For me, IT can definitely assist in the generation of intellectual capital. It can improve income generation potential.

Think about this – if the organisation you work for, whether for-profit or not-for-profit, is operating in the information space – doesn’t it stand to reason that information technology is fundamental to the creation of value?

 

 
For more, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, or review my strategy and futures-centric blog.

Posted September 22, 2014 by terop in Business Strategy, ICT Strategy, Innovation

IT Expenditure – The Cost Centre Focus   Leave a comment

For the majority of organisations, information technology is seen as a cost centre. Its seen solely through the lens of operational efficiency.

And so when viewed this way, the costs of running IT become important. How effective is the technology that is used, how efficient is it being used, and are there costs that can be pulled out?

For example, what are the licensing costs of the Microsoft suite of operating systems and applications? What of the annual subscription/renewal payments for the various line-of-business applications that are used? And are you up to date with the inventory of hardware and their annual warranty renewals?

And flowing from this, are all of these pieces of hardware and software up to date? Are they all necessary? Could things be done better?

A crucial piece of information that I have found that is often missing – what are the projections for growth? How much more bandwidth will you need over the next couple of years? Do you have much historical data on the usage of storage?

And then there is the staffing aspect.

Have you got the right skills in to do the job? Do you have enough people to do what is being asked? What is the workload like? Is the management structure in place fit for use?

And rather than ROI (return on investment), the financial approach for measuring should start with a conversation about TCO (total cost of ownership). For TCO is about operational effectiveness, its about measuring the financial impact of information technology expenditure.

So, it is a given that today’s organisations (for profit & not for profit) need information technology, and they need it to be running well. Yes costs need to be kept down, but IT is a cost of doing business. And like with any other business cost, the expenditure needs to be “business sensible”. When viewed through the cost centre lens, the information systems that are in place need to support the business aims. These systems need to not get in the way of effective business operations.

Thus, the technology supporting the creation, development and management and your organisation’s information does need to be effective and efficient.
For more, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, or review my strategy and futures-centric blog.

Posted September 15, 2014 by terop in Business Strategy, ICT Strategy, Policies

IT for Strategic Advantage   Leave a comment

Given that strategic advantage is gained through the management of information, how are you managing your information?

And where is your information? Is it locked up databases only belonging to unique applications? Is it hidden in those hundreds, or perhaps thousands, of files of unstructured data?

And yes, all that structured and unstructured data is secure. Its backed up, its well managed from an operational perspective. But is it well managed from a strategic perspective? The auditors can come past and give you a clean bill of health from their perspective, but can the forward thinkers come past and say “wow!” Will these strategic thinkers come past and tell you will certainly maintain the health of your organisation through your perceptive management of information.

For IT is a fundamental aspect of enabling staff to be flexible and to be forward thinking. Yes, IT is there to obtain operational efficiency. But its also available to support, even lead, the strategic positioning of your company.

And the importance of strategic positioning? Well, have you thought about what is happening around you? Have you thought about the jetstream of business today? Reflect on the word change. On the improvements we see daily in all manner of areas? On the increasing effectiveness of all manner of new services. Doesn’t life seem to changing at an increasing rate? What about your markets, your customers, aren’t they changing too?

So, how do you keep up? Do you drill into your data to look for historical insight? Do you gather information from outside your organisation to assist in the forecasting of what path to follow?

You can effectively use information technology to improve your strategic positioning.

For more, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, or review my strategy and futures-centric blog.

Posted August 29, 2014 by terop in Business Strategy, ICT Strategy, Innovation