IT Enables Seismic Shift to Services

Ann All

Nicholas Carr notwithstanding, some folks think IT has never mattered more than it does today. That's because technology is the driver behind the seismic shift from good old-fashioned industry to services.

 

Peer Insight President Jeneanne Rae, writing in BusinessWeek, notes that America's investment in IT has corresponded closely with the move to a services-based economy. "Server farms, mainframes, and networked PCs have displaced factories as today's primary industrial complex," she says.

 

The services attached to commodity products, rather than the products themselves, are what's important, Rae contends. So perhaps it's not all that big of a deal that production of many products has moved overseas. (Although the Economist Intelligence Unit warns that companies that do so may ultimately have problems generating new intellectual property.)

 

Developing services around products, however, requires companies to know their customers better, to produce new business models on a dime, and to become master systems integrators -- all functions that are enabled by technology.

 

Rae wonders, then, why IT is generally "sitting on the sidelines" of innovation discussions instead of actively participating. "In order to support the robust innovation pipelines that many corporations aim to build, we have to rethink how we integrate IT into our organizations, particularly as it relates to driving innovation," she says.


 

She suggests that tech executives should regularly lead innovation teams in technology road mapping and system architecture sessions. Iteration and user testing of new software concepts will become more important. Business and IT management must work closely together.

 

Like Rae, CIOUpdate columnist Patrick Gray says that IT is generally better at producing innovation solutions to well-defined problems rather than facilitating the generation of innovative new ideas. IT must do a better job of saying "no" to business requests that will not benefit the company as a whole, he advises.

 

In some cases, GrowthWave President John Hughes told us in an IT Business Edge interview, The Three Stages of IT/Business Alignment, IT can be sabotaged by business units that have learned that the squeaky wheel gets the grease.

These are relationships where people in the business have figured out how to get things done from IT, but they are making it difficult for IT to achieve the business objectives. [Their personal objectives] may not be the highest-return items IT should be working on, the items where the business is going to get the greatest returns for their investments in IT.

The solution to this problem, says Gray, is to automate as many tactical tasks as possible, and also to inform senior management that IT intends to shift its focus from tactical to strategic issues.

 

And IT must first pinpoint the company's true business priorities. Thus, strategic planning needs to be more of a "trickle-down or waterfall effect," says Gray, instead of the traditional exercise in which each department separately produces its objectives.



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