Getting the edge with IT

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No one confuses surgery with pediatrics – but most people perceive application development and infrastructure maintenance as one big fuzzy mass of undifferentiated IT activity.

But these are actually two separate and distinct disciplines, says Peter Thompson in his new book, Maximizing IT Value through Operational Excellence. Thompson is the founder and CEO of RIS, a Calgary-based applications support and maintenance consultancy.

Much like expecting a pediatrician to perform surgery, the chronic inability to align IT to business across industries is a symptom of an IT sub-discipline being asked to do the wrong thing, according to Thompson. And this is a consequence of an immature IT industry that has spent the last fifty years on big-bang buildup of IT systems – a focus that Thompson says is disastrous in today’s business landscape.

“There’s a coming realization that, gee, we built all this stuff – now we need to figure out how to effectively manage it to get maximum value out of it,” says Thompson. IT should be viewed as an applications support and maintenance (ASM) discipline primarily, which is a custodial role concerned with sustaining and leveraging system assets, he says.

At the CEO level, he says there is a shift away from the notion that competitive advantage lies in application development. “Except for a few unique packages, everyone pretty well has the same software and applications: Microsoft Office, Oracle and so on. It’s not the software you have, it’s how you use it that makes a difference.”

While innovation plays an important role, it is wrong-headed for IT to pursue this slavishly, says Thompson. Real business value lies in managing the nuts and bolts of IT systems and processes efficiently. “For the average company, competitive advantage will come from doing the same thing as the next company but a little cheaper, faster or better.”

Innovation is over-rated, as it is fleeting and ephemeral. Competitors will quickly swoop in to copy successful tactics, he says, citing American Airlines (AA) as an example. “In a famous statement, AA’s CEO said he would sooner sell the airline than its Sabre reservation system,” he says. But the CEO was misguided in his belief the system would give AA a killer advantage. “If that were still true, all the other airlines would be bankrupt today.” Instead, AA’s lead quickly slipped away when other airlines acquired similar reservation systems.

But operational excellence has also proved elusive, largely due to IT’s historical focus on what Nicholas Carr, pundit and author of Does IT Matter, calls the Great IT Buildout. “IT types all love to build, but this is a major stumbling block. There needs to be a cultural shift away to support and maintenance.”

To achieve operational excellence, organizations should put in strong central processes such as ITIL and other such process-oriented IT methodologies in place, he says. “IT people need to be aware of this sea-change so they’re not caught unawares.”

Now that the Great IT Buildout is done, the problem-solving capabilities of an ASM practitioner are sorely needed, rather than the visionary application development (AD) focus of yesteryear. “By analogy, it’s like the visionary who has an image of the way Rome should look, versus the problem-solving guy who makes sure Rome works once it’s built by putting in sewers, keeping the lights on and making sure the trains run on time,” says Thompson.

This highly unsexy view of IT is nevertheless part of a larger and inevitable historical pattern, says Carr. “Most tech cycles are like that: telegraph, telephone, electricity and railroads. In all cases, the innovative edge faded away and then they became utilities, cheap, universal and invisible,” he says.

In operational excellence, Carr is intrigued by the idea of treating basic applications like black boxes with dedicated teams to control them. “In this scenario, the technology itself becomes invisible, which I like. It’s a step towards the modularization of IT, which I think will be critical in the future.”

He points out that 70 per cent of IT budgets and attention go to non-differentiated, largely commodified applications and equipment. Only a small slice of applications is truly strategic, and these are typically specialized applications that are hard for competitors to copy or where there is no incentive to vendors to develop them.

At a recent retreat for about 85 IT and corporate executives hosted by RIS in Kananaskis, Alberta, Carr (the keynote speaker) noted a disconnect between CEO and CIO perceptions of the role of IT in the course of a moderated panel discussion. “The differences were striking. At the board level, members don’t see IT as a source of competitive advantage. It is an essential service but they don’t pay much attention to it, beyond making sure it doesn’t blow up or incur too much risk,” he says.

By contrast, the CIOs had a radically different view, he says. They saw IT as a central source of strategic advantage. “The CIOs weren’t on the same page as the CEOs, who were more in tune with Thompson’s operational excellence message. If a CIO can be a superb manager of IT, that’s success.”

Carr believes CIOs are in the throes of an identity crisis. “They want to distance themselves from the technology itself and want to reinvent their role as leaders of innovation or enablers of change or whatever, but the danger there is in exaggerating their own importance in this area.”

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