Anyone can read this paper. Every attempt has been made to
make it easy to comprehend. However this paper has been primarily written to
assist senior executives in developing a deeper understanding of information
technology within their business and to help establish policies and priorities to
manage information technology in a large enterprise to obtain enhanced business
outcomes. Each
section of this paper is self-contained and can be read separately. For best results
it is recommended that the reader peruses the sequence of sections from
beginning to end.
Information Technology and core
business in a large enterprise such as a bank, a telco or a retailer are often
looked upon as discrete entities. The gap between them is viewed as one which
is challenging to bridge. The primary purpose of this paper is to close this gap
once and for all, to establish that information technology is a critical factor
which determines the operational success of a large business enterprise in
terms of efficiency, competitiveness and manageability.
Today information technology is an
established and maturing profession which requires a wide array of skills for
obtaining a successful outcome. However detailed coverage
of technology management processes, best practices and skills is outside the
scope of the present publication.
This paper is the outcome of decades of
consulting and professional services experience in the world of information
technology solutions for commercial business enterprises but excludes from its
vista the information technology within mission-critical operations such as
defence and aerospace which require the highest grade of operational
reliability and zero-defect quality assurance. Such mission-critical operations
are very obviously technology-centric and normally there are no gaps between
operations and information technology concepts.
My focus is upon the utilization of
information technology within a commercial enterprise such as a financial
institution, a utility services provider, a telecom services provider, a large
retailer or a consumer goods manufacturer. Since the advent of electronic commerce in the
past decade, the trend toward information technology-centric business operation
is an increasing one, growing faster than we sometimes realise. Supply chains,
billing systems, financial statements, customer service desks, payroll and
inventory are examples of enterprise business operations which are continually experiencing
increasing levels of automation via information technology. It is essential
therefore that the executives who govern such large commercial enterprises stay
in tune with what information technology has to offer and how best it can be
utilized.
Please read
on. I wish you all the best in maximising the outcome of your business by
optimal management and deployment of information technology within your enterprise.
Sydney Tirthankar
RayChaudhuri
October 2014
Information Technology, a Business Device, not a
Cost Centre
Information Technology within an Enterprise
It is well-known that the key to successful business
operation lies in well-timed and correct decision-making and in implementing
those decisions in a timely and appropriate manner. No matter what kind of
business you are in charge of, decisions and actions are the main factors that
determine your success or failure. What
is it that helps you make the correct decision and to take the right action?
The answer is a single entity – Information.
We live in an age of so-called ‘Information Overflow’ where
there are multiple sources of information available to most of us and
insufficient time to peruse all of these sources and to obtain the key data
that we need. Old-fashioned traditional sources of information like books,
newspapers, radio and local television channels have today been appended by
global satellite television and the internet. Today a Google search and the
Wikipedia provide vast amounts of selective queried information literally at
our fingertips. Advanced ERP, CRM and Business Intelligence software systems
provide senior executives with much data and information about the operation of
the enterprise they are governing. However for busy executives, especially
those with P&L responsibilities who are in charge of running large successful operations, very limited
time is available to search and filter available data/information using these tools
to support their decision-making. Therefore there is extensive reliance upon
mid-level managers who are tasked with the responsibility of using advanced
information tools and technologies for obtaining and reporting this information
to executives.
Example – Two smaller Banks A and B both have
a need to review their staff grades and salaries and to decide on a plan for
additional hiring and/or retrenchment of personnel for the new financial year.
This data needs to be presented in a week’s time to the board of directors in
preparation for the next Annual General Meeting of each bank where major
shareholders will be present. Bank A
does not have an ERP system in place and the managers and executives struggle
hard and are unable to obtain and to accurately report the necessary
information in the required time frame. Bank B on the other hand has
implemented SAP as their ERP system and has no difficulty in retrieving the
necessary data and presenting to their board of directors the required reports.
Today information technology (IT) within an enterprise is
therefore the single most important element that determines decisions and
actions and thereby the successful operation of the business enterprise. Information technology is a complex entity
and is comprised of multiple equipment types/devices, networks and software
systems, to say nothing of skilled personnel specializing in various areas. The
rest of this paper provides insight and guidelines as to how best information
technology itself can be deployed and managed to maximise the outcome of your
business enterprise.
Information
Technology – diverse and fast changing
Compared with other professions such as Accounting, Medicine,
Engineering and Law, Information Technology is a much younger discipline and a
relatively new profession which can be said to have commenced with the creation
of the first electronic computer ENIAC at the University of Pennsylvania in
1946. Electronic mail first appeared in commercial environments in the early
1970s. The World Wide Web came into existence in 1995.
Today the diversity of information technology offerings,
ranging from social media, interactive portals to webinars and internet
videoconferencing have completely transformed the way busy professionals
communicate with one another. The availability of SMS, email and the internet on
portable hand-held devices like blackberries and i-phones has increased
flexibility of human presence and enhanced people’s ability to respond faster
to communication.
As we progress in time, IT systems, networks and devices
become smaller in size, faster in response and have more capacity in terms of
processing power, throughput and data storage. As a consequence there are
constantly new systems/devices being invented, new versions of existing
products with completely new features, new technology platforms, new standards,
new concepts and new mantras.
Freshly-created products and vendors arise and flourish, existing
products and vendors are constantly being acquired by others, integrated with
other systems, rebranded and repackaged.
Hard to keep up with?
Too diverse and too fast changing?
All true.
However it should be borne in mind that IT is in many ways a
completely different industry from others. It is an industry which thrives on
change, originality, value-addition and innovation. It is also the single most
important element that can reshape and completely transform the future of a
business enterprise.
Example – Telecoms service provider X
has older servers, workstations and application software supporting its
call-centres in charge of billing and new account-related customer
service. Due to growth in customer base
the load on the system has increased significantly without any capacity
enhancement of the information system. Some of their new product information is
not properly available online to their call centre staff. Consequently the time taken to attend to each
customer phone call is long, the system often freezes due to overload. Customer
service staff experience much
frustration and encounter a great deal of customer unhappiness. On the other hand Telecoms service provider Y
has updated information systems in place which have additional capacity for
several years of projected customer base growth. Their new accounts and
billing call centre staff are quick and efficient in responding to client
queries. Increasingly customers are migrating their accounts from service
provider X to service provider Y.
In a competitive and fast-changing world with increasing
economies of scale and aggressive business growth targets, it is essential to
upgrade and enhance information system within your enterprise to keep up with
the demands placed upon it. Changes and diversity in offerings within the IT
industry are phenomena that are caused and fuelled by these ongoing business
challenges.
To
keep abreast of Information Technology Change: Agility
Just as the value of an asset such as a motor car depreciates
with time, just as a car model is superseded by newer models with more features
for the same price paid earlier and with other models with many more
characteristics, so also your information systems depreciate in value and are
superseded by recent versions and by completely new products. It is worthy of
note that tax depreciation claim guidelines for a business enterprise are very
similar for motor cars and information technology assets. Every six to twelve
months IT vendors release new servers (hardware), new versions of operating
systems, databases, applications, server software and versions of networking
protocols. New products are released regularly, sometimes ones that completely
revolutionize the way in which people and businesses operate. Keeping up with
this kind of change is absolutely essential for operating a successful business
enterprise.
What is the best way to keep abreast of technology change
within your enterprise?
Is the cost of information technology change an issue?
In answering the first question a two-way approach is
recommended. First, hire expertise within your enterprise that can provide reliable
advice on the status of ongoing happenings in the world of IT and the business
impacts thereof. Secondly, periodically review and re-evaluate your
organization’s information technology requirements in line with business
changes and growth. Integrate the two streams of activity and your IT
enhancement/change specifications will be defined. Implement these changes as
soon as possible; in other words, be agile.
The answer is to the second question is – for every item of
capital or operating expenditure within an enterprise there should be a
well-defined business case. Return on investment, an evaluation of the
consequences (pros and cons) of not making the change must be thoroughly
assessed before deciding to make the change. When approached in this manner
cost will be justified and will not therefore be an issue.
Newer more advanced delivery models and evolving standards
The new era of 'digital transformation' will lead to more cost-effective ways to maximise the outcome of your IT Transition and Transformation programs. Virtualization technology reduces the overall space, power and physical installation requirements within your data-centre and consequently the carbon footprint also. Service-oriented architectures (SOA) today make possible the reuse of legacy applications and data while developing new applications at a fraction of the cost of replacing these systems altogether. Latest 'service-on-demand' models of IT delivery called Cloud Services for the entire end-to-end gamut of infrastructures, software development platforms and business processes, are set to render outsourced customized IT services or 'strategic outsourcing', obsolete. Big Data and Analytics is now one of the fastest areas of growth in IT, as realization as dawned that mining the plethora of unstructured data that is constantly being generated by modern operational devices and processes like card readers, logs, email, SMS, social media postings, etc, constitutes a veritable gold mine of knowledge that can drive the making of executive business decisions in a highly informed manner. Easy to use Mobile Applications upon smart phones and portable tablets are creating a 'next generation' environment of flexible access to business process interfaces in a way that the world has never known before. Social Media has led to the emergence of Social Commerce which has a powerful one to many and many to many business communications model which is poised to gain momentum in the same way as Electronic Commerce did 15 years ago.
The new era of 'digital transformation' will lead to more cost-effective ways to maximise the outcome of your IT Transition and Transformation programs. Virtualization technology reduces the overall space, power and physical installation requirements within your data-centre and consequently the carbon footprint also. Service-oriented architectures (SOA) today make possible the reuse of legacy applications and data while developing new applications at a fraction of the cost of replacing these systems altogether. Latest 'service-on-demand' models of IT delivery called Cloud Services for the entire end-to-end gamut of infrastructures, software development platforms and business processes, are set to render outsourced customized IT services or 'strategic outsourcing', obsolete. Big Data and Analytics is now one of the fastest areas of growth in IT, as realization as dawned that mining the plethora of unstructured data that is constantly being generated by modern operational devices and processes like card readers, logs, email, SMS, social media postings, etc, constitutes a veritable gold mine of knowledge that can drive the making of executive business decisions in a highly informed manner. Easy to use Mobile Applications upon smart phones and portable tablets are creating a 'next generation' environment of flexible access to business process interfaces in a way that the world has never known before. Social Media has led to the emergence of Social Commerce which has a powerful one to many and many to many business communications model which is poised to gain momentum in the same way as Electronic Commerce did 15 years ago.
Example – Ensure with Us are an
Insurance Company. In their business operation there are daily problems with
incorrect quotes, incorrect claims lodgement and incorrect billing. They
realise that their IT systems are badly in need of being rectified and upgraded
.Their executives embark on a ‘quick strategy’ to resolve this issue by
deciding to emulate the IT systems of a competitor who are operating more
effectively. Half way through the technology migration exercise it is realised
that because a number of their product offerings are differently underwritten
from those of their competitor, installing the same IT systems as the
competitor will only partially resolve their business issues and will not
justify the huge expenditure budget.
The maxims are therefore –
- Change as required by your
business,
- Change on time (agility),
- Manage change,
- Have a business case/budget for every
major change,
- Keep up with technology change,
- Hire change management
expertise.
Information
Technology Policies recommended for a successful Enterprise
We have now established that IT is a critical ingredient to
the successful operation of a business enterprise. We have also discussed that
IT industry offerings are dynamic, diverse and fast changing, far more than
those of any other industry. Needed therefore are sound policies within an
enterprise for managing the IT components within it and also the ongoing
changes and upgrades to these components.
The following policies are strongly recommended for managing
IT within your business enterprise. These recommendations are based not merely
upon industry best practices but are also the result of years of awareness of
issues arising from the lack of sufficient sound policies for managing the
information systems in an enterprise.
- Governance – Define and set up
an IT governance model within your enterprise based on industry best
practices. Roles such as that of
CIO, IT Manager, PMO Manager need to be clearly defined and assigned to
competent individuals with appropriate backgrounds.
- Business-driven- Ensure that the
key roles are held by business-driven individuals who will work closely
with key stakeholders in the business to align your enterprise information
systems with the needs of the business.
- Capacity Management and Planning
– Ensure that your information systems have sufficient capacity to bear
the loads of current high-volume business transactions and are set up in a
manner that they can be enhanced and upgraded periodically to deal with
increased loads and transaction demands.
- Change Management – Have
well-defined change management procedures in place to deal with the need
to upgrade and to migrate systems as necessary.
- Enterprise Architecture – Employ
enterprise architect services to ensure that all the necessary building
blocks of your information system are properly defined and planned
for. In the next Chapter enterprise
architecture is discussed in more detail.
- Outsourcing – Outsourcing of IT
services to less expensive offshore vendors is popular from a cost-management
viewpoint. However this kind of policy, if not implemented with adequate
thought and vendor capability evaluation, can have not-so-positive overall
results. Outsource with care, therefore and ensure that you thoroughly
evaluate the skills and background of your outsourcing vendor before you
sign a services contract with them.
- Security – Ensure that your IT
systems are secure at all levels. While the modus operandi for IT security is part of enterprise
architecture, security policy is to be determined at the organizational
governance level and needs to be aligned to be in compliance with
international standards.
Example – Quality Holidays are a
travel agency business. Except for an IT Manager they have no IT professionals
on their payroll. All of their information systems supply and management is
outsourced to different vendors. The vendor in charge of managing their IT
infrastructure does no capacity planning or management. The servers and
networks have not been upgraded for a while and the infrastructure management
vendor blames the application software vendors every time system performance
issues arise. As a result application software vendors are reluctant to
undertake further work for Quality Holidays. Business analysts within Quality
Holidays have thorough business knowledge but no background in IT. Consequently
when any of their IT systems are enhanced and upgraded by a vendor, there are
gaps between the delivered outcome and the actual business requirements.
Recently they have introduced a new software system to automate a number of
business processes which were earlier being performed manually by staff.
Consequently a number of their operational staff have been made redundant and
this has improved their immediate profitability. However there are increasing
issues with system downtime and client dissatisfaction which is a cause of
great concern for their senior executives who do not know how to address the
issue. The IT Manager has been blamed and has resigned his position.
It is thus worthwhile defining, communicating and
institutionalizing such policies as stated earlier within your enterprise as
early as possible. The lack of any of the above can lead to major issues in
managing your information systems and thereby will negatively impact the outcome
of your business operation.
Information
Technology is a Business Device to be used Efficiently
Information technology has often been viewed as an additional
support component to the daily operation of a large business enterprise,
regarded as a cost centre and an overhead.
This is no longer true. Today the information systems in an enterprise
play a significantly more important role than merely supporting business
operations. In fact, in most cases information systems are the key devices used
to successfully transact business operations. The majority of large business
operations today would cease to operate if their information systems were to
shut down. IT is therefore a business device, in fact a business device that is
omnipresent in all large enterprises and critical to successful day-to-day
operation.
Such a device must be used efficiently.
Example – FoneNow are a mobile communications service
provider who have a number of retail
outlets in Springtown city. These retail outlets are primarily meant for
signing up new clients. New accounts are processed by FoneNow staff who fill an
account application online on their terminals for their clients which are
processed automatically by the company’s information systems and new accounts
are created in a few minutes. The online terminals are networked with backend
servers which process all the transactions. Yesterday afternoon the servers in
FoneNow’s data-centre crashed and the systems were unavailable for 5 hours to
all the retail outlets. FoneNow do not have a business continuity alternative
for their data centre, nor do they have a well-defined manual process for
receiving new account applications. As a result for an entire afternoon no new
FoneNow accounts were created for clients in Springtown city.
In the vast majority of enterprises today IT is a critical
business device that is virtually the life and blood of the business operation.
Lack of efficiency, gaps in processes, lack of alternatives when problems occur
are therefore suicidal risks to the successful operation of a major business.
In calling IT a ‘device’, we are referring nonetheless to a
complex architecture of networked equipment and sophisticated software, data
and skilled personnel. Managing such an entity efficiently needs specialized
skills, deep knowledge and appropriate perspectives and policies to be in place
within an enterprise. Some of these
policies have been recommended in previous sections of this paper.
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