The demands networks, along with e-commerce and multimedia communications, are driving a revolution in the biggest linkages of all: the telecoms networks that join up the world. New user demands are growing all the time. Using mobile phone terminals, for major instance, you can access a corporate network from almost anywhere in the world. There's much more to come. As Nick Hampshire writes, 'users are wanting to attach a whole range of applications hardware that is just starting to come onto the market'.
The latter range from advanced Personal Digital Assistants, which are likely to become as ubiquitous as mobile phones (and to be mostly allied with them), to 'sophisticated electronic white board systems'. Writing in CeBITViews, Hampshire predicts revolution:
'Out will go the network loop to be replaced by point to point switching, and out will go the client/server model to be replaced by the triple layer database/application server/thin client model. Indeed, out will go much that is familiar in networking to be replaced by a whole range of new and exciting ideas'.
Setting the technicalities aside, this means that computing power is moving back down the network as the service providers aim to supply much more bandwidth with greater reliability. For networks based on mainframes and mini-computers downtime is already negligible: three to four hours a year, even zero. But it's deeply unsatisfactory that PC networks can go down for three to four hours a month. The technologists are hard at work seeking solutions. A fundamental fact of the Internet Age is that problems in use automatically create advances in applications.
In a sense, indeed, the technology can be left to look after itself. The real issues are not technological, but managerial. How are benefits like those listed above going to be realised? How are the choices between technologies going to be made? Only when technology is utilised fully and focused to support business objectives can it provide competitive advantage.
In the West too much technology has been applied for its own sake, not as a part of total business strategy. That may explain why the UK has won 26 post-war Nobel prizes for scientific innovation, but so few in the world marketplace. In contrast, Japan's Nobel score is just four - yet its manufacturers have wiped out whole Western industries.
Since technological advance was equally available to the West, why didn't its companies take advantage? The answer lies squarely with management leadership. While the West has fallen prey to fashionable management theories, ubiquitous consultants and questionable techniques, the Japanese have been quietly applying simple frameworks, simple structures, simple processes and simple tools in a consistent and determined manner in their manufacturing industries (but unfortunately not in their financial institutions).
It is important to understand that Japanese success is founded on using tools and techniques taught at every level of the company. This applies as strongly in information technology - somewhat suprisingly - as anywhere else, if you believe M.Bensaou of Insead and Michael Earl of the London Business School. The surprise, according to their article in the Harvard Busines Review, results from the prevailing wisdom: 'that Japanese companies lag behind the West in IT and that Japanese management could learn from US and European practices. Some Japanese believe that themselves'.
THE JAPANESE SOLUTION
Bensaou and Earl believed that, too, until they 'were startled to discover that Japanese companies rarely experience the IT problems so common in the US and Europe'. The Japanese simply adopt the approach so strongly recommended in this book: their leaders know that the purpose of IT is 'to help the organisation achieve its operational goals'. In other words, don't (as in the West) try to develop an IT strategy that 'perfectly mirrors the company's business strategy'. Instead, base your IT decisions on 'simple and easily quantified performance-improvement goals'. The Japanese model is:
• Let the basic means of competition, especially operational goals, drive IT investments
• Judge investments by the improvement they make to operational performance
• Select the technology that helps to achieve the chosen performance goal in a way that supports the staff involved
• Rotate managers through the IT function, have IT specialists and users work together, and give IT supervision to managers who also have wider responsibilities
• Design the system to use the tacit and explicit knowledge that people already possess
We wouldn't argue with a word of that. The Killer Application Workshops and Teams that we have created in our work for BT follow precisely these principles. That goes against the grain of Western managers who not only go for the big strategic bang in IT, but use (as Bensaou and Earl point out) inappropriate capital-budgeting processes to run and evaluate their IT investments. They also put the technology before the need, try to make specialist IT management business-conscious, and 'design the most technically elegant system possible and ask employees to adapt to it'.
That approach leads straight to a dire situation reported by the Wentworth Management Program. It cites a study by Standish researchers which found that half of all IT-dependent projects in the US overrun their budgets by 90%, and fewer than one in ten is delivered on time. As for business benefits, a Cranfield survey in Britain showed that potential benefits were fully identified by less than a third of respondents. Two-thirds inadequately quantified the benefits - not surprising, given that nearly half admitted overstating benefits to get project approval. The benefits are often not realised, anyway, because of...
• Lack of business accountability for benefits
• No commitment to the project from the business
• Not enough emphasis on changes in working practices
• Unrealistic benefits claimed at the outset
• No explicit success statements
• No success criteria sought and measured after implementation
• Uncertainty about benefits as they become harder to identify and measure
To that depressing list, we would add lack of leadership, which must be sorely missing for any of these seven failings to appear. They would not occur in successful Japanese companies, whose senior executives, too, are trained in what is needed to achieve improvement through technology and who personally lead education and training. In the US and the UK too many managements stop short of taking this active leadership role and delegate responsibility to their juniors, in particular to technical specialists in the IT and engineering functions.
That's Management by Lip-service, the most popular and least fruitful of all management techniques. The need for a radical rethink of the business is implicit in the application of technology to convert the company from a hierarchy to a network. As top hierarchs, that involves some sacrifice from senior managers and from many below them. The sacrifice is essential: otherwise they risk sacrificing the company.
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