A recent study of more than 400 global firms found a significant positive effect on profitability from continued investments in information technology.

They even found that a dollar spent on IT would return more in income that the same dollar spent on either research and development or on marketing!

Now, there are several reasons behind this improvement:

1. virtuous cycle: where firms learn how to best manage their IT investment due to repeated attempts at “doing IT right”. Although its obvious, but they take advantage of the opportunity to learn from any failures in upgrading, expanding and improving their IT portfolio over a period of time
2. learning: while closely related to the “virtuous cycle” reason, this explanation relates to an improvement in the use of information. That is, to improve customer satisfaction, to improve loyalty, to open up opportunities with respect to cross-selling, and to reduce marketing and selling costs. All through the better use of information.
3. shift to a revenue focus: while initial IT investments are usually focused on cost reduction through automation, those firms that are doing better are doing so due to a revenue growth bias of their IT investments.

One nuance that was discovered related to the nature of the industry. For those that rely on human capital (ie, service industries) the effect was greater than for physical capital intensive industries (ie, manufacturing).

As their are tangible benefits from increasing the level of IT investment in your organisation, the important point that must not be lost – is that IT investment improves your use of information.

And improving your use of your information requires some critical thinking and a strategic approach to reap the potential rewards.

 

For more of what I have to offer, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, review my strategy and futures-centric blog, or subscribe to my YouTube channel.

Advertisement

When thinking about how to improve your use of data in your organisation there are two important starting points.

First, reflect on the two halves of your business, not-for-profit or government body. One half is the operations side, the other is the value creation side. The focus of your operational side is how to get things done better, cheaper and faster. Improvements on the value creation side are about making what you do that is distinctive, better.

Second, consider Porter’s value chain. That set of activities you perform to turn your inputs into outputs and that set of secondary tasks that support those primary activities.

So, where does your use of data for improving productivity and profit come in?

And how do these two starting points come into the equation.

Consider your operational half using some aspects of the value chain. Do you know how efficient your input transformation process is? How much time lag is there between steps? What is the error rate? What of wastage, breakdowns, and the like? Do you have real-time-data-visibility into this aspect of your organisation?

And consider your value creation side, again using some aspects of the value chain. How good are the buyer-facing links in the chain (ie. sales, service, marketing) at asking questions and collecting data? Are you tracking usage of your goods and/or services for insights into improving your value creation activities?

For once you start collecting this data, you will be able to analyse for trends and patterns (ie. cluster analysis: groups of records, anomaly detection: unusual actions, and rule associations: dependencies) which will result in ideas to improve both your productivity and your profitability.

 
For more of what I have to offer, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, review my strategy and futures-centric blog, or subscribe to my YouTube channel.

Let’s start with defining Porter’s Five Forces.

Michael Porter’s framework for analysing an industry’s competitiveness and for developing business strategy is commonly called “Porter’s Five Forces”.

And these 5 forces are:

1. the threat of new entrants
2. the threat of substitutes
3. the bargaining power of suppliers
4. the bargaining power of buyers
5. the intensity of industry rivalry

To explain, let’s use the example of a corner pizza shop. With respect to the threat of new entrants, how easy is it for another pizza shop to open up just down the road? With respect to the threat of substitutes, if we see pizza as a take-away food what other products can substitute as take-away food? With respect to the bargaining power of suppliers, how much influence does say the landlord, those giving permission for the shop to setup, and the pizza ingredient suppliers have with the pizza shop owner? With respect to the bargaining power of buyers, how much influence do the pizza shop customers have? Are they loyal, can they handle price changes? And finally, with respect to industry rivalry how intense is the competition? How much advertising needs to be done, what does it take to remain sustainably competitive, how many competitors are in the market?

You can see from this list of five forces that information technology can play a significant part in each.

New entrants: Improving productivity and reducing costs are one focus of IT. But what about applying IT to the task of gathering competitor intelligence through the analysis of social media and news alerts?

Substitutes: What actually makes your product unique? Can IT be used to make it even more so? Again through collection and analysis of market intelligence can you strengthen your product’s position in the market?

Suppliers: Are you easy to deal with? Can you configure your IT systems so that you have a better level of integration with your suppliers? Do these same IT systems allow you to pay your creditors before time?

Buyers: Well, we all know who are customers are. But, can they easily complete that transaction? Do you analyse the gold that is your customer database and transaction history to shift the balance of power more in your favour?

Rivalry: Sustainable competitive advantage. Its the mantra for staying afloat and staying ahead in a competitive market. But are you smart with respect to your operational systems? Are you investing effectively when it comes to the production of profit?

There we have it. In summary, your IT systems are a critical resource when it comes to developing your business strategy, and they are a critical component in the analysis of your business environment. The effective and efficient use of Information Technology is a key resource in influencing the effect that each of Porter’s five forces has on your business.

 
For more of what I have to offer, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, or review my strategy and futures-centric blog.

SWOT – Strengths, weaknesses, opportunities and threats.

We know that a SWOT analysis is often used at an organisational level as part of the strategic planning process. But can it be used for the IT department?

I say yes.

It is a way to think about the status of the department (ie. strengths and weaknesses), as well as the environment IT operates within (ie, opportunities and threats).

So, map out your strengths and weaknesses according in areas such as:

• the structure of the IT department
• what is being measured and monitored
• the portfolio of services delivered
• matters like governance, security and risk

By the end of the process, you’ll have a good understanding of what you are good at, what needs further investment, and what needs to be discarded.

Let’s shift to opportunities and threats.

And don’t forget, the suite of Information Systems that is in use by the organisation is their to assist and support the organisation in its mission. Just like the Sales Department should be aligned to the direction of the company, and HR should be ensuring that staff are contributing to efficient and effective outcomes, so too should IT.

And so we come to the external environment. What are the opportunities and threats that are being presented to other departments and to the organisation as a whole. For example:

• is the market for the goods and services produced changing?
• are suppliers demanding linkages with their ERP systems?
• what smartphone applications are becoming de-riguer within your industry?
• are there any implications from changes to applicable statutes and laws?

By the end of this second part of the process, you’ll have a better appreciation for how you can better align the IT department to the needs and direction of the business.

SWOT IT. An approach to developing a better IT Strategy.

 

For more of what I have to offer, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, or navigate to “The Forward View”, my strategy and futures-centric blog.

Having been involved in IT for quite a number of years I have been personally across an extensive list of faults, projects and to-do lists. Where the faults have ranged all the way from printing problems on a PC to Active Directory synchronization errors across multiple global domains. Where the projects have included things like office relocations, SAN upgrades and WiFi rollouts. And where to-do lists (IT strategies) have revolved around understanding the needs of multiple stakeholders, the timing of investment decisions and the availability of resources.

And one of the critical abilities that is common to all of these is the ability to think critically.

Not in the sense of being critical about others, but the process of thought and reasoning.

I’ve seen fellow IT professionals simply content to hit refresh buttons and just go for the software re-install.

I’ve seen projects fall over because some first and second order impacts weren’t considered.

And I’ve seen action items added to strategies for no other reason than it just felt right to the sponsor.

Sigh!

So, while the following list can apply to other areas of endeavor that requires fault analysis, project management or strategic approaches, all of these aspects of critical thinking do apply to the full gamut of activities associated with information technology.

Eight principles of critical thinking:

1. define the purpose
2. what is the question you are wanting to answer
3. collect information
4. consider your inferences
5. check your assumptions
6. be clear about the concepts in use
7. what exactly is your perspective
8. what are the implications

Regarding purpose. What is the objective of that project? What is it that is really trying to be achieved?

Regarding question. How clear are you about the fault you are trying to fix? What are its symptons and underlying causes?

Regarding information. Do you have all the facts and evidence with respect to that fault? How long has it been going on, under what conditions is it triggered, and so on.

Regarding inferences. Looking at that set of strategic objectives, what interpretations and conclusions can you draw out from that body of proposed work?

Regarding assumptions. What beliefs and biases do you hold, and what beliefs and biases do you believe that others hold?

Regarding assumptions. With respect to that project, what are you taking for granted? With respect to that strategy, what are you assuming about the business?

Regarding concepts. What exactly is that idea you have about the cause of that fault? What is the theory you have about the use of that particular technology for that project?

Regarding perspective. Can you step back and see your point of view dispassionately? In the project management discussions, is your point of view valid?

Regarding implications. When you take that step to fix up the fault, what will happen? What is likely to occur as you execute that strategy?

The ability to think critically is increasingly important. Do you take the time and effort to apply any or all of these eight aspects of thought and reasoning to the tasks at hand?

 
For more of what I have to offer, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, or review my strategy and futures-centric blog.

If wisdom can be defined as knowledge in action, on what are you basing your actions? How thorough, even relevant, is the knowledge you have?

How well do you know your markets, your employees and your competitors? How well do you know the systems in place in your business or not-for-profit? Do you know their efficiency or their effectiveness? Are you relying upon gut feel, what people are telling you, or do you have empirical evidence to back things up?

For the better knowledge you have, the better decisions you will make. All leading to a reputation of wisdom.

Where you are known for making right judgements.

And in this information-rich milieu, where the cost of collecting and analysing that information is forever falling, the question is – are you taking advantage of your data resources?

Are you, if you will, fully exploiting the “low-hanging data fruit” in your organisation?

Let’s say you are manufacturing widgets. Let’s assume that a rich stream of data is available from each point in that transformation process, surely the cost of storing that data is negligible! And what about the calculations on that data? Think of the improvements that could be made by looking at the relationships between the data streams from various points in the transformation process.

Let’s say you are dealing with information. Let’s assume that what is produced, ie reports/recommendations/decisions is dependent upon other sources of information. How easy is it to find the right data in those other sources of information? Surely the cost of automatically extracting that data is much less than the manual cost of extracting it? Think of the quality improvements that would flow into that set of reports/recommendations/decisions.

With the manufacturing industry example, the low-hanging data fruit is process efficiency. With the service industry example, the low-hanging data fruit is also process efficiency. The former is data collection that leads to performance improvement. With the latter, its data presentation that leads to performance improvement. And where the resulting knowledge from performance improvement leads to wiser outcomes.

The key point here is that we must reframe our approach to information. We must think critically about how we use the data we have.

For judgements that are more right will follow.

 

For more of what I have to offer, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, or review my strategy and futures-centric blog.

How does information technology help you sustain your competitive advantage?

Is it just a matter of simply just getting the latest smartphone and apps? Or ensuring that your staff have the latest laptops and fastest internet connection? What about the cloud, and moving your data and applications to a completely web-based scenario?

These are important, but there is so much more to consider.

For IT should be there to support the business, not the other way around. IT is a service, a service to help the organisation achieve its goals. And to achieve long term success, those goals should be framed with sustainable competitive advantage in mind. And sustainable competitive advantage is built upon what you do with what you have. Therefore the question is: how well are you using the resources and capabilities at your disposal?

One way of thinking about sustainable competitive advantage is the VRIO model. Where V stands for value, R for rare, I for imitable and O for organisation. So, what do you have that is of value? And does this value enable you to compete in your market? The second layer is rarity. How rare is that resource/capability? Third is imitable. You may have something of value, and it may be somewhat rare, but how easy is it to copy? Perhaps a technology, a process, or the people you have. How easy is it for your competitors to imitate what you do or have? And finally, organisation. How well are you organised to take advantage of what you have?

And this is where information technology comes in. For IT is about information. It’s about the technology you use to support the flow of information throughout your organisation.

Pardon the pun, but IT helps you organise your organisation!

Think about all the different parts of your for-profit or not-for-profit organisation. Think about the operational departments, the sales and marketing people, the product support team, and so on. How well is information flowing between them? How easy is it for the people in each of those sections to get hold of the information they need to do their jobs? Who uses their information outputs, and what do they do with that information.

So we can see that there is a direct link between sustainable competitive advantage and the information technology you employ.

Information Technology helps you to take advantage of the valuable, rare and imitable resources and capabilities at your disposal.
For more of what I have to offer, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, or review my strategy and futures-centric blog.

A recent study by the New Zealand Ministry of Business, Innovation and Employment noted, that there are several factors to consider where management’s aim is to improve workplace productivity. They found the following drivers:

1. Building leadership and management capability
2. Creating productive workplace cultures
3. Encouraging innovation and the use of technology
4. Investing in people and skills
5. Organising work
6. Networking and collaboration
7. Measuring what matters
Thus, appropriate information technology is a central component in improving workplace productivity.

Further, critical measures of productivity in the service industry are the service transaction and the outcomes related to the performance of that service. Therefore, the factors to consider, where the aim is to improve productivity, are both product improvement and process improvement.

Another consideration is the influence that information technology can have over both the operational and value creation activities of any organisation. With respect to operational activities, appropriate ICT expenditure should be aimed at gaining efficiencies. With respect to value creation, or profit generation, activities ICT expenditure should be seen as an investment for the express purpose of creating greater value or generating more profit.

And so, the key question is – what is the aim of your ICT investment? Does it have the intent of improving productivity? Are you investing in things which reduce time taken to complete tasks? Are you investing in things which will increase your income? One is a TCO equation, the other is an ROI equation.
For more of what I have to offer, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, or review my strategy and futures-centric blog.

The short answer is yes. Information Technology can be used to improve productivity. But to realize these gains, we first need to understand the components of productivity.

Now, productivity is a measure of how efficiently inputs are turned into outputs. For example, how efficient is the manufacturer’s production line in transforming raw materials into saleable goods? or, how streamlined is the collation of data that goes into all of those reports we produce?

So, what are the factors that affect productivity:

1. leadership and management
2. workplace culture
3. technology
4. skills
5. process organisation
6. networking and collaboration
7. metrics

So, of these seven aspects of productivity upon which ones can information technology have a bearing.

Skills are a good place to start. A low cost and effective way is training to improve the use of the IT already in place. How well are people using spreadsheets, your line-of-business applications and reporting tools?

Process organisation. Quick wins can be had by using IT to improve the flow of information. Remember, IT is technology for handling information. For example, is data entered twice by different teams? Or, why can’t smartphones be used for inventory management?

Technology. Not just IT, but the innovative use of technology. It is a given that the appropriate investment in technology will pay dividends.

Collaboration. The exchange of ideas and information with others in the industry. Whether they be blogs, social media or smartphone apps, there is an abundance of IT to support and improve collaboration and technology.

Metrics. This is the measurement of, and the reporting on, key characteristics of organisational performance. IT, if used appropriately, can definitely assist in the gathering, analysis and dissemination of critical information.

Leadership. Its all about setting the direction and tone of the organisation. Leadership and management that is open to innovation, open to new, open to change and improvement will see IT as an investment. An investment that leads to both reduction in costs and an increase in profit.

Culture. In this age of a rich information technology society (Facebook, smartphones and WiFi to name three), investment in contemporary IT together with user training and an innovation mindset will lead to productivity improvements.

 

In summary, the answer is yes. Investment in IT does have a positive impact upon all of the factors of productivity.

 

For more of what I have to offer, visit Dellium Advisory, follow on Twitter, connect using LinkedIn,

or review my strategy and futures-centric blog.

At the recent CES, the “Internet of Things” (IoT) was all the rage. With internet connected sensors, miniature computers, appliances, and more being touted as the best thing to get a hold of. It seems that we will be flooded with data.

And what about our personal tech? Think wearables and biometric data. From a third party perspective, think about the mass of heart rate, step, cadence and calorie data that is now available.

And then there is all that data available from Facebook, Twitter, LinkedIn, etc. Data concerning our preferences, our connections, our habits.

Where will this lead?

What is the point of having this surfeit of data?

Where will this abundance take us to.

Well, one view is that all this data is but the foundation of the DIKW pyramid.

1. Data
2. Information
3. Knowledge
4. Wisdom

We have all of this data. But from data we derive information. That is, we can describe sets of data using terms and language with which we are familiar. For example, the data we read from a mass of temperature sensors leads us to describing how hot or cold the day feels. Then from this information, we derive knowledge. Knowledge, in the case of information derived from temperature sensors, about what we should wear. That is, how we should react to the information we receive.

And then finally wisdom. Knowledge in action. Judgement about choosing between courses of action.

So, the question is, will we use this abundance of data for making right decisions? Will the data collected from say these “Internet of Things” devices lead to providing ethical solutions to intractable problems? Will the data collected from personal tech lead to an improvement in, for example, mortality rates? Will the use of data that social media platforms collect lead to better societies and communities around the globe?

For more, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, or review my strategy and futures-centric blog.