Realizing the potential of IT

McKinsey has recently released a report titled “IT’s unmet potential: McKinsey Global Survey Results” that shows that there is still a lot of work to do to align IT and business.

The survey attempts to answer the following high-level questions:

  • How IT can serve as a tool to help build competitive advantage
  • What risks arise as competitors use disruptive technology
  • How companies develop their IT strategies
  • What challenges they face in implementing those strategies

A snippet from the report:

Respondents highlight risks they face from information- and technology-based disruptions and the corresponding increase in importance of information and technology capabilities for improving business performance and outperforming competitors. Though improvements have occurred since last year, respondents also underline the need for IT executives to apply these capabilities more effectively in developing and executing business strategies.

CIOs and other senior executives agree that ideally these capabilities should, for example, promote innovation and better enable companies to seize new opportunities. Still, they continue to see a gulf between these aspirations and the value that IT currently delivers.

That last paragraph jibes pretty well with my experiences.  Organizations have a lot of good ideas but fully realizing those ideas has been tough.

A few of the results:

  • Nearly two-thirds of respondents say their organizations are at risk from information- and technology-based disruption.
  • The survey found aspirations for IT are substantially unmet: respondents see a large gulf between their IT organization’s current priorities and what IT could contribute
  • Executives view IT as largely effective in the delivery of basic services, companies still are struggling to get IT to go further
  • Executives in both IT and non-IT roles largely agree on a short list of steps to improve the IT performance gaps cited above. Over 40 percent of respondents favor improving the talent of IT staff and increasing the accountability of business units for implementing IT initiatives

There is some good stuff here, especially that last bullet point.  Perhaps 2009 and beyond will see organizations focus on building their IT staff’s talent and capabilities.  Sounds like organizations are finally realizing that IT Staff can be a competitive advantage.

Want to know my suggestion for realizing the potential for IT?

  • Reduce the bureaucracy – this will remove barriers to ‘getting things done’.
  • Get closer to your customer – this will allow the business and IT to better understand the wants/needs of the business and help to better align both ‘sides’
  • Hug your IT staff – This gives your IT staff the feedback that what they do is important and is the first step in removing the IT Turnover culture found throughout the world.

Just my two cents worth.  Jump over and read the entire McKinsey survey for more info.

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Web 2.0 in the Enterprise

Web 2.0.  A term that is overused and often misunderstood.  And one that has been touted for years by consultants as the ‘next big thing’ coming to Enterprise IT.  I’ve read many articles and heard tons of people talking about bringing Web 2.0 to the enterprise.

But….I’ve seen very little success and it appears that McKinsey’s latest survey from June 2008 backs up my own experiences.

The survey, reported in a McKinsey article titled “Building the Web 2.0 Enterprise“, show’s an increase in the adoption of Web 2.0 in the Enterprise, but very few successes.

From the article:

Our findings also suggest that after an initial period of promise and trial, companies are coming to understand the difficulty of realizing some of Web 2.0’s benefits. Only 21 percent of the respondents say they are satisfied overall with Web 2.0 tools, while 22 percent voice clear dissatisfaction. Further, some disappointed companies have stopped using certain technologies altogether.

This is a pretty interesting result…and one that I’ve seen happen again and again.  Why are so many organizations failing at Web 2.0?  I think it has to do with poor technology strategy and a poor understanding of what value the available technologies can really bring to the company.

The McKinsey article continues (emphasis mine):

At many companies, Web 2.0 is now familiar, but the mix of tools and technologies companies use is changing. Blogs, RSS, wikis, and podcasts are becoming more common, perhaps because companies have a greater understanding of their value for business.

It is great to see some Web 2.0 tools showing up in the enterprise, but they are far from ubiquitous.  This result does show that when organizations do understand the value of a tool/technology, they can understand how to use it.

The one interesting tidbit from the survey was the dramatic rise of social networks by organizations.  Personally, I think this is due to Social Networking being ‘the cool thing’ right now and has more to do with the success of Facebook than organizations really understanding the value social media can bring.

Interesting articles and interesting times we live in.  I’m very interested in seeing McKinsey’s 2009 survey to see what’s changed. I expect social networking and social media to drop off a bit because most organizations don’t really know how to utilize these tools.

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McKinsey on Responding to Competition

Interesting study released by McKinsey has just been released titled “How companies respond to competitors: A McKinsey Global Survey.”

The study, which is surprisingly concise, has some interesting information, but as all things McKinsey, there is a sales pitch involved.  The main ‘abstract’ of this report says:

Management theory suggests that companies facing serious competitive threats should extensively analyze how to fight back. Actual managers, however, say they are satisfied with the results of a less active approach, according to a McKinsey survey. Companies that understand how their competitors really react may be able to gain an edge.

The results of this research suggests that:

On the whole, as companies determine how to respond to a competitor’s moves, they generally assess three or fewer options and don’t look forward more than two years. About half don’t examine more than one round of countermoves by any competitor. A significant number rely on intuition to determine a response. And companies most frequently respond with whatever counteraction is most obvious in the moment—answering a price cut, for example, with a cut of their own, which often doesn’t hit the market until at least one or two sales cycles after the competitor’s move.

As I mentioned, the report has some good info, but there is an underlying ‘sales pitch’ that says the following:

  • most companies don’t have a clue what they are doing
  • Hire McKinsey and we’ll perform ongoing exhaustive analysis for you and help you make better decisions.

Now…personally, I think McKinsey has some good folks and they offer some excellent services, but I think this particular research report does more harm than good.  Why?

It makes it very obvious that organizations are clueless and that in order to make the ‘right’ decision, an organization should hire McKinsey so they can make those decisions for you.

What I’d like to see is another report from McKinsey that outlines what value their decision making process on competitive moves brings to an organization.  Can they guarantee better results than can be had by assessing ‘three or four options’ and/or using intuition?  Perhaps…but would those results make more economic sense? If i have to pay them a million bucks for them to give me two more options to choose from, does that really help me?   If the option generates multiple millions of dollars in savings and/revenue, yes…but if not, then perhaps no.

I’d recommend reading the article regardless of what the size of your organization.  If you take anything away from it, have it be this:

When thinking about your competition, take the straightforward route and follow your instinct.  Create options for how you can out-maneuver your competitors…and when you think you’ve thought through the options, take a step back and think again.  Try another angle…see if you can come up with other options.  At the end of the day, your intuition has to lead you through whatever decision you make…if it feels right, then it probably is.

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