Reference no: EM131101985

Case study 1.2

Has corporate IT failed to deliver?

This article highlights some of the disappointments with the implementation of corporate IT. The reasons for these disappointments are explored. As you read through the article, evaluate whether you think reasons given are accurate.

In the use of technology to transform business, something has gone badly wrong.

Computers and the internet were meant to put business on a new footing. Newly available informa- tion would make everything smarter, from corporate supply chains to the strategic decisions of senior executives. Entire new business models would be made possible: any company that failed to adapt risked extinction.

It has not worked out quite as planned. Despite all it has promised - and in some cases delivered - the explosion of information technology has failed to live up to the hype. Corporate information systems have become complex, ungainly and difficult to manage.

Somewhere in the 1990s, amid the flowering of high- tech innovation, something seems to have gone awry.

'It's almost as though the technology took over', says Irving Wladawsky-Berger, general manager of International Business Machines' lastest corporate computing initiative, known as e-business on demand. The recent backlash has been powerful. Instead of being an area that corporate executives looked at to give them a competitive advantage, IT has gone back to what it was before the 1990s boom in wishful

thinking: a management headache.

Big IT projects are complex and difficult to make work, with a frighteningly high failure rate. Corporate spending on IT has again become an expense to be reined in, not indulged. And the maturing of the wave of technology that arrived with the internet has left companies asking what they got for their money.

The latest symptom of this malaise has been a questioning of the strategic significance of technol- ogy to business. What real competitive advantage can be gained from technology, runs this argument, if it is equally available to your competitors? Like electricity and the telephone, it may be a necessity; but also like them, it may have little impact on a company's real competitive position. 'IT doesn't matter', claimed a recent provocative article in the Harvard Business Review.

Faced with this scepticism, the technology indus- try is preparing for its next big push. The real transformation of business still lies ahead, accord- ing to this view. It will happen when corporate IT systems operate flawlessly and work together

seamlessly. And while the technology itself may not confer an instant competitive advantage, its effective application is vital to business success.

But can technology companies overcome the shortcomings of the past to fulfil this promise? And how will corporate buyers of IT, still dealing with the after-effects of their last wave of spending, react to the claims?

First, consider the sources of the problem. Perhaps the biggest was the arrival of a new com-

puting architecture that liberated users from the tyranny of the mainframe, but exposed a failure in technology management.

This client-server architecture brought new con- trol to the individual user in the shape of a desktop PC. It also handed power to IT managers, making it easier to develop department-level applications to run the processes that seemed vital in the new internet era. But in the process, the larger corporate picture was lost.

'It was good at the departmental level but it didn't do much for the enterprise', says Mr Wladawsky- Berger at IBM. Liberated from the data centre, IT managers 'wrote code that was fine if it lived alone', says Bob Napier, chief technology officer at Hewlett- Packard (HP). The trouble was, it did not live alone but had to fit into a complex system. 'For some reason, when the internet came along we forgot all the pain of the past' when adapting to earlier gener- ations of computer architecture, acknowledges Mr Napier. 'We discovered we'd left all the management tools behind us.'

A second source of the problem has been the incompleteness of the technology. While individual applications have proliferated, the tools needed to knit them together have been lacking. 'The compo- nents are advancing very rapidly, but critical elements are not there', says Mr Wladawsky-Berger. 'That's a major gap.'

The third reason for technology's disappointment has been a failure to align it with business manage- ment. Technology companies tend to blame customers for failing to understand how deeply new IT systems impact their business processes, while

the users blame the technology for being too rigid. ?