BUSINESS DIRECTION OF INFORMATION TECHNOLOGY

It is a cliche to say that business depends on technology more today than ever
before. Thus, we examine some aspects of the interdependence between the
business and systems and technology. In the early years of computer technology,
business received benefits by reducing the extent of clerical and support person-
nel required to perform routine tasks. Businesspeople often viewed technology at
this stage as a necessary, but largely unknown and mysterious, expense. With the
arrival of stand-alone PCs, the mystery disappeared, along with a lot of money.
The problem was that it was very difficult to justify the hardware and support
costs of stand-alone PCs for many employees. Data were reentered from
mainframe and minicomputer reports into PCs. People would show up at
meetings with contradictory data that they had entered. In one case, it was
recommended to a distribution firm that almost all stand-alone computers be
confiscated and warehoused. When this occurred, productivity immediately
improved and costs were reduced — a quick payoff achieved by reducing
technology.
The trend was reversed with the development of local and wide area network-
ing and, especially, with the Internet. Employees could perform online transac-
tions through client-server systems. Data were made available for analysis
through database management systems, and information could be shared among
staff. The Internet and the World Wide Web produced even more dramatic
change. First, widespread remote operations could be inexpensively linked with
headquarters units. Second, customers and suppliers could be integrated. The use
of electronic commerce and its predecessor, Electronic Data Interchange (EDI),
has increased dramatically.
What does this add up to? It translates into the realization of the dependence
of business on technology. It also raises the performance bar in terms of what
must be accomplished by systems and technology. The standards have been
raised. The system or technology not only must work, but also must mesh with
the business and produce concrete results. Firms are also more aware of disaster
stories and the problems with poor or faulty implementation. Two large discount
chains implemented the same technology over a period of years —satellite
communications with stores, point of sale (POS), scanning of bar coding, EDI,
shipping container marking, dynamic inventory, and so on. In both cases, the
systems worked. However, in one there was tremendous business success. In the
other, it was a disaster. Why the difference? Because the successful firm imple-
mented tight integration between the business processes and technology. The
processes were changed to take advantage of the technology. In the other firm,
the processes remained the same. The first firm made more money, had the exibility to expand faster and cheaper, managed inventory more tightly, and
could target specific market segments. The second firm received little benefit.
The lessons learned here are that technology implementation is too important to
be treated as a technical project and, to gain benefits processes and systems must
be integrated.