Separating value-add from commodity service

Canadian author Peter Thompson has a variation on Nicholas Carr's idea that IT adds no value

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

However, they 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 chief executive of RIS, a Calgary-based applications support and maintenance consultancy.

Much like expecting a paediatrician 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, Thompson says. This is a consequence of an immature IT industry that has spent the last 50 years on big-bang buildup of IT systems, a focus that Thompson says is disastrous in today’s business landscape.

“There’s a coming realisation that, gee, we built all this stuff and now we need to figure out how to effectively manage it to get maximum value out of it,” he says. 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, there is a shift away from the notion that competitive advantage lies in application development, he says.

“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 for IT to pursue it slavishly, he says. 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,” he says.

Innovation is over-rated, fleeting and ephemeral, and competitors will quickly swoop in to copy successful tactics, he says, citing American Airlines (AA) as an example. “In a famous statement, AA’s chief executive said he would sooner sell the airline than its Sabre reservation system,” he says.

But the chief executive was misguided in his belief that 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.

However, 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 build-out”.

Now that the “Great IT build-out” is done, the problem-solving capabilities of an ASM practitioner are sorely needed, rather than the visionary application development (AD) focus of yesteryear, Thompson says. “By analogy, it’s like the visionary who has an image of the way Rome should look once it’s built, 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.”

At a recent CIO roundtable organised by the Canadian Information Processing Society (CIPS), Carr noted a disconnect between CEO and CIO perceptions of the role of IT.

“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 here is in exaggerating their own importance in this area.”

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