For many organizations, especially those involved in the services sector, Information Technology (IT) is a significant part of their overall costs. The cost impost of IT alone should ensure sufficient senior management attention, but IT also offers the tantalising prospect (less often realised in practice) of ‘competitive advantage’. Many CEOs and CFOs, however, feel that IT can be better managed in their organisations, (something the subtitle of the book – What top executives must know to go from pain to gain – implicitly acknowledges) and it is to this audience this recent book is addressed.
The book itself is based on about 20 studies carried out in the last decade on different aspects of IT in business: business process management, IT portfolio management, IT governance, IT and business strategy, and enterprise architecture. The research was mainly done at MIT Sloan School of Management’s Centre for Information Systems Research (CISR), one of the more highly-regarded IT research centres in the world. The book itself is only about 160 pages long, so an immediate problem is trying to cover that much research, on such a range of topics, in such a small book. As a result, the book reads like a series of articles, rather than a single argument.
Nonetheless, as befits a book based on so much research, there are useful insights and case studies sprinkled throughout the book. The IT portfolio discussion, for instance, posits four kinds of IT investments in terms of their risk-reward characteristics: strategic (often experimental and high-risk systems, but also offering a potential high-return), infrastructure (technological foundation for other IT investments, and often difficult to measure returns directly), informational (mainly designed to enhance decision-making, e.g. CRM, and offering moderate risk due to the uncertainty around whether more information equals better decisions overall), and transactional IT (automation of business processes, often the easiest to cost and measure returns on). Applying this kind of framework to IT investments, with the different categories of risk and return, can better help executives think through their IT spend.
Other parts of the book look at different funding models for IT (who pays when), how accountability for IT should be structured into the organization (who should decide what), and how IT can support the broader business strategy (what is our overall IT vision). All these are important questions, of course, and, within the constraints of a single book, the authors have provided some useful initial discussion. It is the raising of these questions, rather than providing definitive answers, that is most useful within the book.
PS. One of the challenges in getting to grips with IT is that ever-changing nature of the technology options. One concept attracting a lot of discussion recently has been ‘cloud computing’, where an organisation accesses much or even all of its IT resources from external service providers. KPMG has recently prepared a report on the experience of Australian companies with cloud computing, and that report can be accessed here.