Back in 2004, a famous, and somewhat confrontational, Harvard Business Review article was published by Nicholas G Carr, called ‘Does IT Matter?’ In this, he suggested that organisations are wrong to continue to make large scale investments in software like ERP, as the availability of this software has resulted in it becoming ubiquitous, something that every organisation can own. He therefore reasons that as every organisation can own these tools, they cannot provide competitive advantage.
7 years later, we find Carr’s ideas and propositions becoming fact, as organisations rush to leverage software savings via using ‘Cloud’ based computing, where access to software is ‘procured’ rather than the software itself; removing the need to purchase large scale technical infrastructure. Software will be rented out on demand, in the same way TV and movies have become ’on demand’ via the web. The acquisition of software will – as Carr suggested – be ubiquitous, and the ever increasing speed with which this technology gets updated and improved means that any advantage gained through acquisition alone will be short lived indeed. Today’s sexy tech will become retro very quickly.
However (and it’s a big however) – to a great extent this has always been the case. Cloud computing does reduce the speed, cost and complexity of software implementation, making software more accessible for all. However it would be a major mistake to think everyone will get the same benefits. What Cloud computing will do, is really create focus on what you do with this software. And this really comes down to the Efficiency vs Effectiveness debate. As Bill Gates famously stated;
“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency”.
IT systems therefore, need to be focused on as a strategic accelerator to improve that which adds value; to make essential tasks more efficient. But it shouldn’t be used to automate that which shouldn’t be undertaken at all. Unfortunately, in most cases, especially with large scale investments like ERP systems, what has happened is that in many cases the system has simply replicated the existing business processes – good or bad. Whilst this has potentially created ‘efficiency’ benefits, it is unlikely that it created any ‘effectiveness’ improvements. In a large number of cases these systems are basically used as transactional recording devices – where people write down what they have done, the sales orders they have placed, the production orders that have been completed, the financial postings they have made. Little focus has been made on truly evaluating how to optimise the business and use this technology to be ‘smarter’, to plan better, and to create results that the business hasn’t previously seen.
Competitive advantages are available from IT systems like ERP, and they are substantial. But these advantages really come from the processes they enable, the information they provide and more importantly the capability of the people using it.
Sean CuleyBusiness Transformation Expert (SCOR-P, FCILT)Sean Culey (SCOR-P, FCILT) is a global keynote speaker on the topic of disruptive technologies and their impact on businesses, the economy and society. He is the author of 'Transition Point', a detailed look at the causes of technological disruption and the impact it has had on our society, and how the current wave of technological change - from robotics to AI - will completely disrupt our business models, economy and society at large. Sean is also the author of numerous articles published in magazines such as Forbes, The World Financial Review and The European Business Review.
Sean is an expert at helping companies develop and deliver new customer centric business models, and he advises supply chain leaders on how to align their organisation to ensure they are executed successfully. He has 25 years of experience including six years as CEO of business consultancy ‘SEVEN’, and a decade working for Cadbury Schweppes, where he was the Global Design Authority on what was the world’s largest SAP implementation. He has developed a series of masterclasses about Disruptive Technologies and how companies can create new business models to exploit them.
Sean is also Visiting Fellow at Cranfield University and a Fellow at the Chartered Institute of Logistics and Transport (FCILT). He is also the UK’s only certified SCOR Master Instructor and a futurist for IBM Watson.