ICT Needs to Become a Key Player in Formulating and Implementing Your Business Strategy
Most of us used to come up with a business strategy, and then we asked ICT to support it. ICT is now one of the major areas that will shape the future, and has the potential to create more value at the core of the strategy rather than as an afterthought.
Business, Processes and ICT Architecture in Customer-Driven Strategies
From systems for efficiency and standardization “only”… ….to systems for customer centricity “also”
In the past, the main drivers for ICT were efficiency and standardization in processes – e.g. production, stock management and invoicing. In general, little attention was paid to various “customer processes”. The sets of processes that were in place led to a particular ICT infrastructure and architecture.
Today, many businesses are pursuing strategies that focus on customer centricity, product and service systems for customers, and custom-made solutions. These strategies require a high degree of flexibility, with a whole new set of processes. Yet, when it comes to implementation, the answer from ICT may well be, “we cannot do it”. This, of course, frustrates and irritates both the ICT and the business people. The reality is that much of the existing ICT infrastructure and architecture is no longer capable of dealing with the new requirements. The types of processes needed in a particular strategy do have an impact on the infrastructure!
Business strategy and ICT infrastructure have to connect
Strategic choices – and the priorities among the strategy drivers – have to be reflected in the ICT architecture. A key element in this architecture is the application components that are shared throughout the firm. Examples can include:
- Transactional components related to sales, finance, etc.
- Controlling components related to inventory management, cash management
- Strategic components related to customer or supplier relationships
Those "shared" ICT-based application components make up the "baseline", also called ICT-infrastructure for the firm.
Standardization and discipline are fundamental requirements of ICT. But the more today’s business strategies require companies to be flexible so they can quickly "improvise" solutions for customers, the more ICT-infrastructure has to be organized with a clean, company-wide enterprise architecture. A metaphor can help in understanding this apparent contradiction: Jazz ensembles can only improvise together – as professional musicians – thanks to the common baselines they agree on.
The same is true for ICT-architecture. If business professionals and ICT don't agree on the standard application components that must be shared throughout the company without exception, they will never be able to implement a customer-driven strategy. Only with the right ICT-architecture can customer-oriented processes be created and implemented in an agile fashion. A first requirement for that is that the business and ICT people start thinking about technology in the same way.
ICT and Business People Tend to think very differently about the Value of ICT
Different Approaches for ICT and Business
ICT and business people often have very different frames of reference and approaches to getting the job done. How do they communicate with one another, given their different approaches? How can they co-operate on defining and implementing a customer centric strategy in view of having the appropriate ICT infrastructure?
ICT: Details, parts, logic
Many ICT people today were trained to be engineers. When they went to school, ICT was thought of as the "next machinery" in our modern times. Today’s ICT people often prefer to think about problems on their own rather than talk to others about them. As a group, ICT people care about good machines, good software and learning new things. They tend to be logical, analytical and theoretical. They are interested in details and parts. And they prefer to stick to the facts that are in front of them. There is nothing inherently good or bad about this, it is just the dominant style of ICT professionals today.
Business consultants: Communication, possibilities, the future
Many business consultants have a personality style that is very different from most ICT people. Business consultants care about good communication skills. They live in the future, and they care less about details.
Business managers: What is the value of technology?
There is less of a clear profile for "average" business personalities. But they often share a few characteristics that detract from a smooth understanding with ICT-professionals. For business people, technology has no intrinsic value by itself. Value only emerges when a meaning is given to the technology, and the technology is able to achieve some concrete business savings or value creation. And the value of technology is subjective, in the eyes of the beholder…
Business managers: Data, information, systems and software
Furthermore, business managers may place a totally different value on the same technology – even on the same data. Information management textbooks stress the difference between "information" and "data". Data are computer codes, pure technology. But, information is data that gains meaning when placed in a particular context. In the same way, a "system" is "software" that gets a meaning – a valuable interpretation in a particular context.
Promoting ICT internally
As a consequence, the majority of the business managers are not motivated by the capabilities of ICT in the same way that ICT managers are. Yet, both parties need each other. A technology without a meaning has no value to the business. It is the challenge of ICT-professionals to explain and even sell this meaning and value to their business colleagues so that value can be created. Sometimes "branding" techniques are needed to promote the internal ICT throughout the organization.
Cost vs. Agility
Business professionals need to take the time and effort to appreciate the possibilities and impossibilities of Information and Systems today. They should learn how ICT can inspire and drive new business products and services, beyond today’s imagination. If they force the ICT-department to be cost-driven, they cannot expect it to be agile at the same time. On the other hand, an ICT department that gets the signal to be agile with the business processes should go for it.
Big Data Crunching and Data Discovery Opportunities
In business, it is a well-established fact that numbers drive the business. But it is equally true that people drive the numbers. The people include your customers, suppliers, employees, and shareholders. Your interactions with each of these groups of people generate numbers / data. This goes beyond information about the flow of cash into and out of the organization. Especially in the case of your customers, data about their activities with you can contribute to your strategy. But this only happens if the data is gathered and analyzed to uncover purchasing patterns, product and service preferences, purchase cycles and product life cycles, for example.
Our ability to store data has grown spectacularly over the years. As a consequence, organizations gather more data than ever before. Collecting and storing data has become very cheap. Electronic transactions especially leave plenty of digital footprints in our economies.
Analyzing Unstructured Data
It has become more feasible than ever to routinely collect data on customer behaviour, employee activity, and information about the business and economic environment in which one operates. Much of this data is “unstructured”: text, emails, reports, SMS, pictures, movies and blogs. The real challenge is to turn these huge volumes of data into valuable management information.
Such questions are based on understanding ICT-based business processes as value-based processes. In that context, these questions ask “Where is the value leaking in the processes?” Value is not only a financial issue, so the same questions hold for profit as well as non-profit organizations. Finding answers to the above questions is one part of what business intelligence is today. But there is more.
Discovery: Finding out what is Really Happening
If we have all data about customer, or workforce behaviour, nothing prevents us from learning what is happening. The challenge for both business and ICT professionals is to discover and recognize new patterns, behaviours and exceptions in huge datasets.
Discovery allows professionals to detect variations in customer behavior and factual business processes as they occur in the reality of the business. Variation and successfully dealing with exceptions is crucial in today's competition. And the drive for "standardization" in ICT-based processes does not restrain these processes from incorporating variations in the standard itself.
Better understanding of customers
Discovery of customer variations may give business professionals a better understanding of customer segmentation. This could allow them to develop closer customer intimacy. Discovery may help them understand the emerging "communities" in today’s E-Business markets, where social networking technologies allow individuals to connect fluently around shared values and experiences.
Better processes through data analysis
Discovery of workflow variations may also reveal innovative best practices happening in the workplace. Significant discoveries can be made simply by looking at the existing data that can be gathered from the workplace.
Today, the "new competition" among enterprises is analytical in nature. The company that develops the best analytics to deal with huge amounts of (possibly unstructured) data, and extract through the right filters new insights and concepts, is the winner of tomorrow.
What Makes it so Difficult to Manage your Information and Communication as a Corporate Asset?
Information and communication are true competitive assets. Yet, they cannot be managed in the same way as "material" assets, such as natural resources, buildings or land. Here is why:
- A material asset that is shared by 10 people is divided into 10 parts. Information that is shared by 10 people is still the same information and may have a higher value because it is shared
- A material asset deteriorates as a result of being used. Information, on the other hand, may cost the most when it is not used
Formulating the ICT Technology Strategy
A successful ICT Technology strategy is based on two important considerations:
- What kinds and how much information do you need to support and drive your organization’s Customer Value Proposition (CVP)?
- How will that information – plus the technology that collects, stores and processes it – add value to the organization and, ultimately, to the organization’s customer?
Objectives that support overall corporate strategy
Business managers and ICT professionals need to decide what the objective of their ICT strategy is. Once this is agreed, the organization needs to store new concepts, innovation, best practices, lessons learned, and so on, and build up a new kind of intellectual capital for the firm. Seen from this angle, investing in ICT becomes a way to structurally change the nature of the intellectual capital of the firm.
The CIO’s challenge
The challenge for the new CIO is to explain to the Board of Directors that ICT is not only a matter of technology, but an important aspect of corporate value creation. As a consequence, even an excellent Chief Technology Officer (CTO) is not necessarily a good Chief Information Officer (CIO). Studies of the alignment between business and ICT confirm this. The professional "mission" of the CIO involves deeper challenges than just managing material and technological assets.
Knowledge that organizations accumulate has always been an important source of business intelligence. But with so much data piling up around every business these days, storing, analyzing and protecting it are major challenges. Are you accumulating as much data as you need to move the business forward? Who has access to it? How is the data used? What processes are you using to analyze the data? Who defines and owns those processes? How are you protecting the data from competitors and hackers?
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