Business as Usual

Feb 2001

Is the economy in for a soft landing? When will technology stocks bounce back? Are interests rates on the way down? Will the UK join the Euro? One way and another we seem to be facing a somewhat uncertain economic climate at the moment. Over the past couple of weeks I have taken the time to reflect on the significance of IT to the economy as a whole. First some basic principles, IT on its own is a complete waste of time, fascinating undoubtedly but essentially pointless. Combine it with real business processes however and it can generate massive productivity gains. Add some creative thought to the mix and you can create completely new service and product delivery concepts.

One could regard the development of computing in business as an evolutionary process. The age of the mainframe which was all about the automation of repetitive clerical tasks gave way to the age of the desktop PC in which everyone had their own beautifully constructed spreadsheet model of the world. This in turn has given way to the age of the Internet in which every one was going to be able to sell anything to anybody 24 hours a day and we all become millionaires. It is easy in the current climate to be cynical about some of the more ridiculous get rich quick fantasies of the dot com bubble. But if we take a look around the actual growth in the use and reach of the Internet has carried on relentlessly. And as neophyte dot coms run out of cash in their quest for a global brand, existing global brands move into the vacuum and offer an increasing array of services on-line backed by their existing reputations and infrastructure.

The important point is that the Internet like the automation of manufacturing, or the use of the telephone to sell car insurance, has become mainstream. Whilst this means that the threat of a few dozen nerdy twenty somethings overthrowing the established corporate order overnight has receded. It also means that real businesses and consequently real managers have got to compete in this space or they will really lose out. The perennial problem is that most senior managers do not understand IT and the IT industry certainly does not always have the best interests of its customers as its guiding principle.

It is unfortunate in many ways that the IT industry has developed and defined itself primarily around products rather than services or expertise. This is hardly surprising when you think of the huge success of companies like Dell or Microsoft who have grown fat supplying every desktop and every home with commodities we did not even know we needed 20 years ago. But packaged software and desktop PCs like books and televisions have become just that - commodities. Businesses which were devoted to selling these things as high margin specialist items find themselves squeezed as margins plummet in response to this commoditisation and they are forced to find new ways to 'add value'. Unfortunately this generally means the repackaging of the same basic components and ideas with a blizzard of hype and a brand new acronym. This is particularly true in the world of business software. There are relatively few basic types of business software; databases, network operating systems, messaging systems and web servers being some of the most important. And, of these, databases are probably the most fundamental.

Database software such as Oracle or Microsoft SQL Server forms the basis of the vast majority of business systems from electronic catalogues to accounting systems. Yet the majority of business systems are bought and sold based on a specific function rather than as part of an overall information strategy.

It is almost as if the IT industry and business managers are colluding to perpetuate the segregation of the core information assets of the business into discrete systems or 'products'. This demarcation, reminiscent of one of the more absurd facets of industrial relations in the 1970's, is a major barrier to the realisation of the full benefits of IT in business. Document management, e-commerce, work flow, sales order processing and customer relationship management are not completely separate activities with their own discrete information requirements. They are interrelated aspects of the whole business process. In other words they are views and uses of a common set of information relating to customers, products, transactions etc. And the efficiency with which that common set of information is used and maintained is the key to the productivity benefits of IT to the business as a whole.

In order to gain the full competitive advantage of effective information and communications systems businesses need to think of their specific departmental systems requirements as applications of their core information assets and the database systems that support them. Similarly the IT industry needs to reshape itself around the principle that it is primarily devoted to providing the specialist expertise to maximise the productivity of its customers. We should be adding value to our customers' information assets rather than attempting to add value to the same old software by repackaging it as yet another completely new application that everybody needs and nobody understands.