ICT and Digital Strategic Decision

Conclusion: Until recently, relatively unknown presidential candidate, Howard Dean is creating a stir in the U.S. as the leading Democratic candidate for the presidency, which is attributable to his innovative and successful Internet strategy. From the obscurity of just 4 percent of Democratic primary voters, Dean has moved to 15 percent of likely voters, according to a poll taken in November. Dean also took a record US$7.4 million in online donations during the third quarter of 2003, almost half his total for the same period.

Deans and his campaign managers have not re-invented Internet communication strategies, what they have accomplished is better than their rivals. They have demonstrated what is possible once the planning is right to start with. The two elements they have done very well are:

  1. Utilised the Internet is a facilitating channel: connections go from one to one to one and thus join people together.

  2. Encouraged engagement through other techniques like weblogs and meetings.

By connecting with supporters and managing the means to stay in touch, Dean has made the Internet a critical component of his success.

Conclusion: In 2004 many new IT initiatives (especially e-business and business intelligence initiatives) are likely to expose organisations to new technologies and business processes. These new technologies and business processes will require organisations to embark on new experience curves. Organisations that assume their existing track record will be sufficient to take on these new experience curves will find that seemingly low risk projects begin to fail.

Business and IT executives need to recognise that endeavours involving new experience curves must be managed as high risk ventures and where possible organisations should look to minimise the rate at which they expose their business and industry to new experience curves.

My manager looked up at me from his columns and rows of numbers and said in an exasperated fashion, ‘This is an exercise in futility!’ I knew what he meant as we jointly tried to estimate resources needed for systems not yet designed and forecast computing capacity needed for indeterminate transaction volumes.

Conclusion: Many organisations have two business strategies – an actual strategy and an espoused strategy.For IT managers this creates a major problem because these actual and espoused strategies can be very different. If the IT managers align IT systems and processes to the organisations espoused business strategy they will almost certainly make inappropriate IT investments in terms of the actual business strategy.

Recently I found one example where business executives said their organisation was aiming for product / service innovation while the IT manager was implementing an architecture aimed at overall cost leadership. These two different business strategies require completely different systems portfolios supported by equally different IT architectures. In this case the IT manager and the business executive were heading for an inevitable disagreement – one the IT manager was going to loose.

IT managers need to work with business managers to uncover their actual business strategy. To do this IT managers and business managers need to become familiar with a new set of concepts – ones that help business managers uncover the gap between what organisations would like to be and what they really are.

Conclusion: Business prospects are still difficult to predict with good news and bad in equal measure. Even so, growth is minimal and the market is flat. For business planners, management teams and CIOs, the next six months dictates a stripped down and lean strategy.

Benchmarking evidence from the practices of leading corporations shows they have adopted two essential strategic techniques:

  1. Determine organisational structure with the allocation of resources.

  2. Focus on core attributes of product and service and then develop the opportunity to enhance those product attributes.

An important ingredient to realise the strategic goals above is flexibility and preparedness to re-set priorities to trade into the next growth period.

Recently I facilitated an IS strategy workshop. The audience was made up of people at DIRECTOR level - some 20 of them. All were on six figure incomes. The objective of the workshop was to confirm the business strategy for a Division. I started the workshop by asking the following question: * What are the GOALS of your Division (why do you exist?) * What objectives do you want to achieve in the next 3-5 years - are these measurable * How will you achieve these objectives (what are your strategies?).

IT cost recovery is viewed as a necessary part of establishing a clear service relationship with business units, but by itself it will not reduce costs or increase efficiency. In fact the worst cost recovery systems, with IT-centric cost algorithms, reinforce the image of IT as a techno-jungle with no concept of business value, dealing in “funny money” (what do I get for a CPU second?). Misinterpretation of fixed versus variable costs can also lead to faulty decision-making.

There are about 1.24 million Freephone and Local Rate Numbers (FLRNs) not yet released by the Australian Communications Authority (ACA). FLRNs are the 1800, 13 or 1300 numbers and are necessary marketing channels for many organisations. An initiative in the May Federal Budget will promote access FLRNs more equitable, which is a boon for businesses as demand for these numbers is increasing.

Conclusion: The key selling point of 3G is remote access and mobility. This has been evident in the advertising from genuine 3G offers and the “pseudo 3G offers” from Optus, Vodafone and other telcos. The benefits of multi-media bandwidth are unnecessary to most businesses just as also bandwidth speed is not really compelling to most users.

There is no first mover advantage. Even other businesses adopting 3G would not be so convincing because there is no real advantage in choosing it – for reasons of price and usability - as there was in the early days of the PC.

Faced with a communications upgrade businesses need not jump in but should adopt three inter-related policies when considering 3G in the introductory phase:

  1. Negotiate firm performance contracts with vendors, e.g. No result no fee. If the claimed benefit has been improved results in business efficiency however that may be measured then it is up to the vendor to sanction those claims and support the investment in the technology on performance;

  2. Wait for prices to fall which is likely as with most new technologies of which DVD is an example

  3. Wait for better applications, which may come on stream but to date have not materialised.

Conclusion: For the medium-sized enterprise investing in marketing channels entails a high exposure to risk because the investment consumes a larger portion of available capital than is the case for a larger company. Determining obvious returns in customer usage and communication from each channel is critical for prioritising investment. As most competitors have instigated similar customer channel opportunities, and there is a high degree of peering between competitive firms, the cost of maintaining the status quo is nearly the same for all players.

Conclusion: Integration, Optimisation and Functionality are the three concepts to drive growth in technology investment in the future. In the tactical sphere these drivers of growth can be applied in planning the overall channel strategy. Technological implementation has mandated that efficiency gains ought to be made from the capital invested and that will be derived from either Functionality or Integration and Optimisation or a combination of all three.

There is a sea change taking place in the IT world according to a symposium hosted by Gartner Research in Sydney this month to plot the industry''s future path. The central case points to a maturing IT industry and a greater emphasis on increased accountability for acquisitions. Delegates heard that the days of "technology for technology sake" are long gone in the face of reduced IT budgets and less than fruitful past investments.

Conclusion: For medium sized companies there is no opportunity to fail at the planning stage otherwise it’s burning the investment capital and not even dealing with the big ROI issues.

Whatever web analytics software is selected it ought to be accountable over four key criteria:

  1. Enterprise Resources

  2. Capital Invested

  3. Human Capital

  4. Web Productivity

This is a progressive evaluation of a system and is therefore robust enough to assess the return on investment over many dimensions.