IT Value Creation in a Global Economy
In developed economies, creating business value with information technology will soon be less about reducing costs and improving efficiency and more about supporting activities that lead to new markets, products, services, and strategies; many IT managers have cost- and efficiency-based management reflexes that prepare them poorly for this shift, asserts the Cutter Business Technology Council.
According to Cutter Consortium Fellow Rob Austin, "The future belongs to those who know how to create new things. By 'new' I mean novel -- that which obtains value because of its difference from what has come before it or what has been previously imagined, not because it conforms to a predefined idea of what it should be. I mean things that are valuable in large part because they are surprising, in delightful ways. New, never-before-seen or experienced products or services. New, never-before-exploited markets or strategies. The future belongs to those who know how to create things that are new in this sense, not in the manufactured new sense. Knowing how to create things that are novel and valuable is quite a different matter from knowing how to create a high-quality manufactured good. It requires different ways of thinking, different management principles."
Austin continues, "Creating new things is not about value extracted from consistent re-execution of the same processes. It is about new processes, with surprising characteristics and unexpectedly valuable outputs. Our automation reflexes will not serve us well in efforts to create anew."
He recommends:
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Make a list of ways your company might use IT on the revenue side of the income statement.
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Review your company's portfolio of in-progress IT initiatives and see how many of them are primarily cost-side versus revenue-side in terms of hoped-for benefits. Ask yourself whether there are enough revenue-side investments in your portfolio.
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Budget iteratively. Think of revenue-side IT investments as experiments or bets you are placing. Don't make them disastrously large where uncertainty is high, but don't back away from uncertainty either. Try to structure investments so that you "buy information" that helps you reduce uncertainty as you explore potential new revenue sources.
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Look for opportunities to make trying things more cheap and rapid, but make sure you keep the human element present in those processes. Keep in mind that no automated solution, however sophisticated, is as flexible as the human organism. Design applications to magnify the benefits of that flexibility, not drive it out of the process.
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If you work in one of those companies in which everything has to be justified in terms of cost savings or headcount reductions, you must immediately start a campaign to educate senior managers about the importance of expanding the criteria for project justification.
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Take a marketing or product development class at a local business school. Try to take on a more revenue-oriented outlook.
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Be more open to suggestions from those employees who drive you nuts by never wanting to do the same things twice or by hating to do repetitive activities. These people have the motivation you need to tap to create novel and valuable outcomes.
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Keep in mind a deep truth from a Despair, Inc., poster: "If a pretty picture and a cute saying are all it takes to motivate you, you probably have a very easy job -- the kind robots will be doing soon."
Austin concludes, "The challenge for the IT manager in a developed economy who wants to continue to produce business value with IT, then, is to develop a broad new strategy for supporting business value creation via innovation. Unlike the traditional approaches to creating value with IT, which were mostly aimed at the cost side of the income statement, these new ways of supporting value creation with IT will often be focused on the revenue side of the income statement."
To request the Business Technology Trends and Impacts Opinion in which these comments were made, or to schedule an interview with a member of the Cutter Business Technology Council, contact Ron Pulicari (+1 781 641 5114) or e-mail at press@cutter.com.
See more information about Rob Austin and the Cutter Business Technology Council.