FT.com / Home UK / UK - Introduction
Understanding Business Technology Introduction
By Alan Cane, Senior Technology Correspondent
Published: March 17 2007 07:57 | Last updated: March 17 2007 07:57
There has never been a more important time to understand business technology. Let me re-phrase that somewhat bombastic claim: there has never been a more important time to understand the way technology is reshaping the way business is conducted and the implications for management of the spread of technology throughout a company’s operations.
Nobody is expecting executives to become technicians or to learn computer programming. But technology is changing swiftly and without a sound appreciation of the principles involved, executives will struggle to make the most of its potential and are likely to fall victim to its pitfalls – of which there can be many.
These changes are a consequence of the way the personal computer, broadband internet and the collapse in the real cost of computing have begun to do away with the barriers which once separated the data processing department, essentially an organisation within an organisation, from the rest of the company.
Those barriers often resulted in a schism between information technology and the business, a separation marked by mutual distrust where neither side spoke the same language or espoused the same business objectives. While things are changing rapidly with the growth of high capacity intranets and the internet and high powered small computers, many of these attitudes remain – to the extent that a new kind of executive, the business liaison officer, who is well-versed in both technology and business is emerging in a number of companies to act as interpreter between the two sides.
Conventional data processing will not go away any day soon – too many companies have too much invested in legacy systems responsible for processing orders and keeping track of inventory – but existing technologies and processes are evolving at the same time as new technologies are being developed which present both IT staff and business executives with new challenges. One such challenge is Service Oriented Architecture or SOA which, on the one hand, opens a company to a number of innovative relationships with its customers but on the other allows “outsiders” unprecedented access to its data systems.
It follows that business executives must themselves become au fait with the elements of business technology for a number of reasons. First, because of the need to be a “good customer” when specifying and managing new IT projects. The most common cause of the failure of a computer project to come in on cost and budget and to meet user objectives is a lack of empathy between the commissioner – the business – and the supplier – the IT department. Few large projects are completed without changes along the way and change management is crucial to controlling costs and handling risk. Business executives should have a good working knowledge of what is possible and what is not if disasters are to be avoided.
Second, cost. The data processing department has traditionally been seen as a cost on the business rather than a profit centre. It remains one of the most expensive elements of the average company’s budget even if IT spend is expected to be flat or only slightly positive for the next few years.
What is not immediately obvious, however, is that the lion’s share of that budget – perhaps 60 per cent or more – is swallowed up in simply “keeping the lights on”: running the company’s existing systems and carrying out routine maintenance. This means that comparatively small sums, as little as 20 per cent of the overall budget in many cases, may be left over to finance new work. In the worst cases, only 2 per cent of budget may be available for innovation. Hence, the interest in technologies such as grid computing and virtualisation which are designed to cut costs and allow companies to make better use of their existing equipment.
The problem for many companies stems from the fact that IT grows in an unco-ordinated manner. Every time a new project is started, new hardware and software is purchased leading to a surfeit of computers and, more seriously, a surfeit of software licences which have to be renewed annually at a significant cost – a phenomenon known as “overlicencing”.
Grid computing is an approach to cutting costs through which all or many of the company’s computers are linked in a network so that all the available computer power can be utilised by sharing processing between the several machines. Virtualisation allows a single machine to run several operating systems at the same time: the result is less power consumption, more efficiency, a smaller physical “footprint”, flexibility and lower costs.
Storage is another big issue. In the past, companies simply created a hierarchy of storage media, moving information from high speed disks, to lower capacity systems and finally to low-cost tape. But no longer. Changes in the law means that corporate information in many forms including e-mails must be easy to retrieve at all times.
Storage also represents a new and significant risk for companies as the growing capacity of devices such as USB memories, iPods, mobile cameras and digital assistants make it possible for employees to walk out of a company with much of the company’s intellectual assets in their pockets. This is a very real problem which can only be solved by vigilance and by using software which refuses to allow foreign devices access to corporate systems. Furthermore, for most companies the law demands that the security of its information be guaranteed.
The law, in fact, casts a long shadow over IT operations these days. Software piracy is still rife even in developed economies and the threat of jail hangs over managers who knowingly allow pirated or counterfeit software to be used in their companies. So, it’s important to know that your software comes from a reputable source. Surveys in the UK, however, suggest that very little counterfeit software is in circulation. By far the greatest problem is software with a dodgy licence. This could include software imported illegally from abroad, educational licences being used in non-educational establishments and software upgrades purchased without the underlying licence in place. As software typically comprises the second largest component in a company’s IT spend, it is important to have disciplined procurement and management procedures in place. And that is a management responsibility.
Project management, cost, legality: all these stem from ideas of best practice in IT management. The most important reason for executives to understand business technology today, however, is the new options it opens up for business innovation. It is no longer enough, for example, simply to operate a website through which customers can obtain news and information. The latest internet development, “Web 2.0”, essentially describes a range of technologies which allow the customer to interact with the website in a variety of ways. Among the most futuristic is “Second Life”, one of a series of “metaverses” or imaginary universes in cyberspace where business is conducted between “avatars” or electronic representations of real people. It is, however, no more than a somewhat unusual alternative interface to the internet, an all-singing, all-dancing browser.
Second Life is a suitably exotic example with which to conclude this brief introduction to modern business technologies. Over the next few weeks, down-to-earth topics including customer relationship management, human capital management, supply chain management and financial management will be explored and explained,including discussion of how to maximise their business benefits. Don’t forget, however, the potential of SOA and Web 2.0 to transform the mainstream to the leading edge.
Copyright The Financial Times Limited 2007
No comments:
Post a Comment