Digital information technology (IT), tools, and services are everywhere and underpin almost all aspects of modern life, whether in business, government, or society at large. Most everything we do nowadays is dependent on them. These technologies make possible new business models; new ways of connecting, collaborating, and creating; new ways of organizing and working; and indeed, new ways of socializing and entertaining. Today, large organizations such as governments and hospitals, once considered bureaucratic and inflexible, are being transformed by the innovative use of digital IT. In fact, their use is key to breaking down the traditional walls between departmental silos in both business and government. This can be seen in healthcare, where large-scale investments in IT seek to create much-needed efficiencies in healthcare service delivery, while at the same time enhancing care delivery quality and positive patient outcomes.
With all the excitement about the potential for IT to facilitate the delivery of extraordinary value, there is the sober reality that many IT-dependent projects fail to deliver their promised benefits. In the USA, the botched rollout of the Obamacare website in October 2013 is a most public present-day example of failure that can occur when business or government becomes dependent on digital business models to deliver services to customers or citizens. The difficulty with the government of Ontario’s implementation of the Social Assistance Management System (SAMS) in 2014 is another prominent example. Clearly, when dealing with complex technologies, there are opportunities for failure. However, as a report by McKinsey and Company (2013)1 confirms, many of the challenges documented are less the result of technological failures. More often, failures result from poor governance and management; inflated and unreal expectations about technology and what it can do; unrealistic timeframes for project delivery and benefit realization; and the shortage of and poor allocation of financial, human, and technological resources, among other non-technology reasons.
The Business Management Challenge
In addressing the issues faced by organizations in delivering value from IT investments, we cannot start by concentrating on the technology or focusing solely on the IT department. We must start by looking at the overall business and its strategic imperatives. What are its challenges and goals? How is it faring? Only by understanding the big picture, independent of technology, can we be properly prepared to assess how technology can be brought to bear and where best to apply it in pursuit of organizational objectives.
Enhancing the Organization’s Ability to Achieve Its Strategic Objectives
Organizations, whether in the private or public sectors, must consistently deliver high-quality services that their customers or constituents are willing to pay for. If they don’t, customers or constituents will go somewhere else with their money or their vote. Therefore, a key business challenge faced by executives is how to enhance their organization’s ability to achieve its strategic objectives while meeting customer needs. Organizations that are deficient at setting clear objectives are likely to be less successful at generating and sustaining long-term growth. A key question though is, What are these objectives? Often, objectives are viewed from the prism of completed projects and service implementations. If the main objective of any endeavor is to get the project implemented on time and on budget, then the metrics and measures that matter will center on project delivery dynamics. However, just ensuring a product is made or a service is implemented does not guarantee use and successful adoption from customers or clients. The strategic objectives have to focus beyond the project delivery cycle to embrace the full business model. Objectives must focus on the customer or constituent to really be of substantive value.
In the Obamacare health insurance website debacle, for example, it seems that an inordinate amount of focus was given to the timeline for going live with the site on October 1, 2013. Consequently, important features and processes were cut and severely curtailed to meet the implementation time deadlines. While the timeline was important, if more focus had been placed on the customer experience and outcomes, different decisions might have been made about cutting functionality and curtailing important processes such as robust stress testing.
Similarly, engineers at Volkswagen lost sight of what their customers value when they introduced software that allowed them to pass emissions tests in a way that did not reflect how the vehicle performed in real life. As well as angering regulators, Volkswagen lost the trust of their existing (and future) customers. The immediate costs of penalties are, by some estimates, potentially billions of dollars. The long term costs from lost sales due to the lack of focus on value perceived by customers will not be known for many years.
Market Flexibility and Operational Dexterity
Another challenge faced by organizations is market flexibility and operational dexterity. How can they be responsive to the market while at the same time being nimble in their operations? Businesses such as Dell have long thrived on their celebrated business models that embodied flexibility and dexterity. Dell’s much-vaunted order-processing and supply chain management system provided significant competitive advantage for many years. However, even these models are proving to be less sustainable in highly competitive industries. More recently, Dell has had to redefine its strategy, and restructure its business and operations to survive in the IT industry. Other companies, facing similar challenges, have merged with other players (Compac and HP), been acquired by another company (Cognos by IBM), or gone out of business (Nortel Networks).
Time to Market and Cycle Times
Reducing time to market for a product or time to access and use of a service is also a challenge that organizations consistently face. Businesses must reduce the cycle time between order generation and service or product delivery if they are to survive in a dynamic and hypercompetitive world. Customers or constituents are no longer willing to wait for long periods to get the service or product they want. They have become accustomed to getting things done almost immediately and are therefore more likely to be impatient waiting for everything to fall into place. The idea of comparing government service delivery with that of for-profit services such as Google, Amazon.com, and Facebook is now embedded in both business and political discourse. The standard for online service delivery has risen dramatically. Municipalities such as the City of Ottawa in Canada’s capital are taken to task for not being able to provide the seamless experience similar to that of buying products and services through Amazon.com or eBay. Why must citizens wait, or worse yet, make several trips to a municipal office to pay a bill? Constituents now expect there to be little delay between the origination and the delivery of a service order. Anything less is a failure.
Orchestrating Dynamic Supply Chains
Products and services get delivered through an interconnected network of people and organizations. A key challenge for organizational executives is how to effectively orchestrate dynamic supply chains for products and services. Supply chains, for the most part, have long ceased to be vertically integrated into the same firm. Nowadays, there are many supply chain players and they are distributed across a wide variety of organizations in many geographic settings. Digital IT, therefore, takes on greater significance because it is essential to the flow of information across the supply chain. Without it, some supply chain arrangements are impossible. Supply chain orchestration and logistics services provided by a company such as Li and Fung of Hong Kong are legendary for their complexity and efficiency. The speed and quality of information flows within the supply chain are critical to business success.
Often people think of supply chains as only relevant to products that we buy. However, services also have supply chains. Service value chains are critical to effective service delivery. For firms and service organizations to be successful, they must optimize supply chain processes while ensuring that there is sufficient flexibility to deal with emergent issues generated in the operating environment.
Building Capabilities to Innovate and Grow
Organizations that have been successful in the past, particularly, face the issue of how to innovate and grow the organization into the future. A good example is the situation faced by Blackberry. As an innovator in the smartphone market, Research in Motion (RIM), as it was then known, gained significant market share and accolades for its ingenuity. However, it fell into the trap where its core competence became a core rigidity, a phenomenon articulated by Harvard professor Dorothy Leonard (Barton) back in 1992.2 Leonard argued that organizations that once succeeded based on some core competence must be careful to not fall into the trap of resting on their laurels, only to find that those same competences stand in the way of being responsive to change in the environment or market. Geoffrey Moore in his book Dealing with Darwin: How Great Companies Innovate at Every Phase of Their Evolution talks about this issue as well. So a key business challenge for executives in organizations is how to sustain innovativeness over the long term while taking steps to exploit these innovative solutions in growing the business or service offering.
Reducing Operating Costs
Driving efficiencies in operations and reducing cost while enhancing service delivery is a conundrum for organizations. While the focus on serving the needs of customers or constituents should be paramount, organizations cannot ignore the cost of doing business. If costs escalate, the take up of products and services will decline over time. Therefore, a delicate balance must be found between cost reduction and product and service enhancement. There have been many attempts at striking this balance in both private and public sector organizations. The more recent focus on creating shared services organizations is a reflection of this. However, too much focus on reducing costs without a corresponding focus on the impacts on services can be counterproductive.
The Big Picture
Executives must acknowledge, understand, and address the wide array of business challenges organizations face, whether they are in the private or public sector. Throwing money or technology at the problem will not provide a magical fix. Leaders must actively engage in developing and applying innovative solutions to create new opportunities for sustainability and growth.
The IT Management Challenge
One of the most significant ways of dealing with the business challenges organizations face is to apply advanced digital IT systems and services to resolve business problems and pursue business opportunities. With IT playing such a significant role in today’s organizations, executives must focus their efforts on understanding and resolving the challenges encountered when applying IT to facilitate business evolution and growth. There are a number of substantive challenges that must be addressed if IT is to play an effective role is serving the organization. If enough attention is not given to these issues, failures are inevitable. Success can only come from focused and sustained efforts to deliver value from IT investments. Some of the key IT management challenges organizations face are discussed below.
Ensuring Operational Continuity Through Effective Management of Essential Digital Infrastructure
Making sure that IT works right and works all the time is the most fundamental job for any IT organization. An IT system that is not up and running cannot deliver value to the organization. Managers must ensure that the essential digital infrastructure (artefacts, systems, processes, and skills) is in place and operational. Without a robust, resilient, secure, and functioning IT infrastructure, organizations have no hope of achieving their strategic objectives. If the lights aren’t on, there is no point trying to talk about other, more advanced, applications of IT in an organization. Ensuring operational and business continuity is foundational to other advanced uses of IT. Many organizations make the mistake of underinvesting in IT infrastructure in the hope that nothing bad will happen. They then expect to gain substantive business value without the corresponding investment. It’s as if they believe that something magical will happen. Investments delayed for too long will always come back to haunt the organization. In one Canadian federal government department, investments in renewing the IT infrastructure kept being put off for political reasons. It seemed too expensive every time it was to be addressed. However, the systems have now deteriorated to the point where they are being “(the phrase begins with held together by duct tape”. They now have to be replaced, and the bill for this is great. There is no good, cheap way to get around the work that needs to be done. If the infrastructure is not renewed, the consequences of failure will be catastrophic for the citizens. Ensuring a robust, resilient, and efficient IT infrastructure requires prescient and proactive IT portfolio management. Attention needs to be paid to designing an enterprise and IT architecture that allows for efficiencies that result from the standardization of common infrastructure.
This will facilitate the relatively easy integration of unique applications important to the success of organizational units. Too often infrastructure is allowed to become fragmented, leaving it vulnerable to failure because of gaps that develop and increase over time.
Navigating the Complex Arrays of Technology and Technological Change
Rapid and disruptive change is a constant for IT. No sooner have organizations become comfortable and competent with deploying and using a technology that it becomes obsolete. The constant change in technology is a challenge for those who must make decisions as to what technologies are important to pursue, what technologies to invest in, in what timeframe to make these investments, and how to ensure effective transition from one technological platform to the next. Currently (2015), there is growing focus on technology solutions and systems such as cloud computing, social networking, big data, and mobile computing. Each of these offer a myriad of ways to transform how organizations run their business and how they serve customers. Cloud computing arrangements offer the opportunity to provide software as a service (SaaS) such as those provided by Salesforce.com, Google, Microsoft, Oracle, and SAP. Platform as a service (PaaS) models are also possible with services such as those provided by Force.com, Google App Engine, and Microsoft Windows Azure platforms. Companies such as Rackspace, GoGrid, IBM, and SAVVIS are providers of infrastructure as a service (IaaS).
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