Information Technology (IT) has been globally accepted as one of the key drivers in coping up with the rapid changing marketplace. Even living a life in this century has become almost impossible without the inevitable intervention of technology in our day-to-day affairs. In fact, fusion of IT has been imperceptibly got embedded into our entire value system. In the corporate world, technology hype is now ascending towards the pinnacle faster than ever before particularly in the developing countries where acceleration of IT investment got momentum in the early 90s. In most of the developed countries where IT investment got its induction in the late 70s are already at the peak of maturity curve. Irrespective of geographical boundaries, expected ‘Return on Investment (ROI)’ from IT has been paradoxical due to the reasons, which indeed are controllable but often are overlooked or neglected by the organizations and thereby turning the blessing of IT into burden.
In some of the companies, investment in technology has almost surpassed every other investment in terms of financial value offering technology as the most dominant manifestation of achieving the competitive edge. While these overarching outbreaks in technology investment may make sense for the companies involved in pure technology business but such convulsive ventures may not be the right move for the companies whose core business is something other than IT. Jim Collins, in one of his epic publications “Good to Great” delineated the research findings highlighting that the most of the ‘Fortune 500’ companies that transformed from ‘Good to Great’ didn’t use technology as their driving engine during their breakthrough stage. Rather, ‘Good to Great’ companies focused on identifying and defining their core business at which they could be the best at, things that they were more passionate about and their economic stimulus (referred to as the ‘Hedgehog Concept’). And once they identified their ‘Hedgehog’, they diverted all their management attention to it and mobilized all their resources in achieving their Hedgehog. As they started realizing the benefits, only then they considered investing in technology in alignment and in support of their Hedgehog as an accelerator of the flywheel towards greatness and sustainability.
To leverage the benefits of becoming the ‘Pioneer’ or ‘Fast Mover’ in the industry by incorporating new technology into the business, many organizations get fanatic and heavily invest in IT. Some organizations even get ego-centric with enigmatic drive of bravado while deciding on investing in technology with the naïve rationalization that the competitors already deployed the technology and why should we lag behind. Hence, organizations remain blindfold on many of the crucial prerequisites like availability of resources to manage and run the systems, written down business rules and processes, infrastructure availability and readiness etc. prior to implementing IT systems. The foremost concerning aspect of undertaking such radical decisions on IT investment is the process of conceptualizing the organizational needs, determining the essence of time for such investment and selection of the right technology that would complement the strategic intents of the organization. Most tragically, the must needed activities such as spending quality time in conducting feasibility study, requirement analysis, identifying the alignment with core competencies and last but not the least, financial benefit analysis including a thorough ROI analysis prior to investing in IT remain absolutely masked. And the end result is nothing but another failed venture or a legacy of a black hole that directly impact the most expected bottom line of the organization instead of increasing the returns of the shareholders.
Selection of right technology and service provider is one of the very important factors of ensuring the desired ROI. Inclination towards a cheaper solution with high-grade features (lucrative functions but less qualitative) leaving aside high quality solution (right functions and robustness) that would cost comparatively higher price has been a common trend in the selection of technology system. This tendency is yet another misconception and deceptiveness which organizations realize after the completion of the project and during the operations when it is too late to avoid accepting either a recurrent financial loss or a huge loss from a one-time write-off leaving aside the invaluable time and resources that organizations expended during project implementation. A detailed analysis of Total Costs of Ownership (TCW), which consists of cost of acquisition and costs of operations/maintenance instead of focusing only on costs of acquisition would invariably be the most cost effective approach while selecting any IT systems.
A well-judged and methodically selected technology investment may turn into a problematic and losing concern due to the mismanagement during project implementation. While selection of an appropriate Project Manager (PM) along with an efficient project team is very vital, one of the most critical success factors of IT projects is the sponsorship model. Without the explicit supports from the project sponsor, PM and the project team may find themselves in the ‘No Mans Land’ with a troubled project engulfed with many unresolved but imminent issues and risks that are seriously impeding the project progress and exposing the intended project outcomes to jeopardy. Project, by definition and nature of works, is a temporary endeavor undertaken for the delivery of clearly chartered outcomes within a predefined schedule and budget ensuring the desired specifications/quality. This demands prompt decision making in addressing the project issues and risks in a timely manner. And at this stage, involvement of project sponsor is extremely critical in resolving many issues and risks that are sometimes beyond the delegated authority of the PM.
Investment in information technology has double-edged impacts despite of the fact that it is tagged along with many inherent benefits that can be optimized for the growth and sustainability of the organizations. It is thus very crucial to ensure an appropriate strategic mix prior to investing in IT that would ensure the maximization of profits and shareholders return through securing a healthy Return on Investment.
A modified version of this article was published in 'The Daily Star' on July 2, 2013.
Email: abdullah.mamoon@hotmail.com
Email: abdullah.mamoon@hotmail.com
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