Part I
By Andre Griffith
Introduction
This series looks at applications of information and communications technologies to traditional businesses in Guyana, and at some of the implications for the formation of a new business sector based on the so called atomic e-business models such as information processing, online retailing and others. We will also from time to time look at applications to the public sector insofar as services provided by that sector are a significant factor in the local business environment.
The first issue that we examine is that of Strategic Information Systems Planning (SISP) which has been widely researched and has been the source of much controversy in academic and business circles. The source of this controversy was an article by Nicholas Carr in the May 2003 issue of the Harvard Business Review entitled “IT doesn’t matter”. In that article he described information technologies as “commodity factors of production” that are “becoming costs of doing business that must be paid by all, but provide distinction to none”.
Carr’s arguments have been hotly disputed, by many business leaders and academics and there is a seeming consensus, that while the information technologies are today ubiquitous thus cannot in themselves any longer confer unique advantages, the ability of a firm and its management to leverage the technology are not, and that it is the latter scarcity that makes the difference. Additionally, some authors have pointed out that the interpretation of the concept of business strategy determines whether IT is conceived to be of strategic value.
Guyana is an extremely small market of limited wealth, thus the viability of our firms is unquestionably dependent on their becoming regionally and eventually globally competitive. This requirement will eventually expose our businesses to competitors that have already invested in significant information assets among other things. The implementation of the CSME means that this is a current rather than an impending issue, thus regardless of the view they subscribe to, many firms are in a position where they have to decide on appropriate investment in ICTs which is essentially the Strategic Information Systems Planning process.
Strategic Information Systems Planning
Strategic information systems planning (SISP) has been defined as the process of identifying a portfolio of computer-based applications that will assist an organization in executing its business plans and realizing its business goals.
It should be evident from the definition of SISP that there is a necessity for an organization to understand its business plans and goals before attempting to engage in strategic information systems planning. Preferably, these plans and goals should be expressly articulated in some form.
Strategic Fit
A local manufacturing company that was primarily oriented toward industrial customers in a mature market produced a strategic plan that hinged on reducing the costs of its operations and diversifying its product portfolio by introducing consumer products. This company opted to invest in computerised accounting applications rather than manufacturing or marketing applications.
This company ended up with a sophisticated bookkeeping system, while management of its complex operations remained manual and cumbersome. Readers may be inclined to think that such a problem is a result of some unique type of backwardness on the part of Guyanese industry however this is definitely not the case. The problem of which this case is an example is well known to researchers as the issue of “strategic alignment” which continues to be a problem for companies the world over. How does a company, develop and agree a strategic plan on which it stakes its survival, then elect to utilise a significant amount of scarce resources on elements of an application portfolio that are at best peripheral to its strategic objectives? Part of the answer to this question lies in the issue of IT governance in the organization.
IT Governance
The regime of IT governance within the firm dictates among other things, how the applications that comprise the strategic portfolio are selected. Is selection of those applications done by the IT staff ? does each functional unit go off and acquire its own applications ? or, is the portfolio identified collectively by top management where the expenditure on applications is considered alongside expenditure on core productive assets ? One can easily find local organizations where one or another of these approaches obtain and the issue essentially speaks to the process by which any significant investment decision in an organization is made. All too often however, IT investment decisions are not subject to same level of scrutiny as other investments mostly because top management does not feel competent to deal with these issues. Decisions are left largely in the hands of an IT practitioner who most times is neither well placed the power structure to understand the strategic issues nor well versed in the business issues to appreciate them. The results of this abdication of responsibility almost always include cost overruns, late deliveries, angry clients and disgruntled executives who feel that scarce resources would have been better allocated to their departments with greater returns.
In our example company referred to above, added to the financial cost of the selection decision, was the potentially more serious cost of the destructive internal rivalry between its operational and support units. An examination of the IT governance environment in this company revealed that the investment decision was determined largely by a small number of powerful executives with considerable influence over the allocation of resources. Readers may again be tempted to believe that this sort of phenomenon is a result of some unique to our local environment, however, this again is definitely not the case. In fact examples such as these are exceedingly common in the research into SISP and indeed one powerful lesson is that information systems cannot ever be considered in isolation. Rather SISP has to be a holistic process that takes into account, the environment within and outside the firm including most importantly the human element. Next week, we will examine in greater depth some of the best practices in IT Governance.