SBA

Do we need IT?

(As published in Isle of Man Examiner 16th Feb 2010)

As an ex-CIO / IT Director I probably know a bit more about Information Technology (IT) than most business people. I'm a Fellow of the British Computer Society (The Chartered Institute for IT) and a Chartered IT Professional, I led my last company to be one of the finalists for the "Most IT-Enabled Business In the UK" award, I give occasional lectures, and my work has been the subject of academic and UK government research in understanding the potential of IT in business - so I think I'm qualified to answer the question.

IT, as a business function, can be divided into the provision of three layers: Information Technology, Information Systems, and Business Systems.

Information Technology is concerned with the provision of infrastructure - servers, networks, PCs, standard software such as productivity suites (Microsoft Office etc.), email, web access, security, backup & disaster recovery, telephony etc. Pretty boring really, the ubiquitous stuff we all take for granted in business (except when it goes wrong!). IT delivers no business value of itself, it is commoditised, everyone has it and therefore it doesn't deliver any competitive advantage to us in business. The value in IT is not for itself, but for what we can do with it. IT is raw technology, to create value from it we must exploit it by using it to build something useful. Essentially the role of IT is akin to bricks and mortar, of little use until an architect designs and constructs a System.

So let's consider Systems.

Information Systems (IS) are specific implementations of IT to address common business activities - accounts, stock control, manufacturing planning, maintaining customer records etc. Amongst the most common are Financial Systems, Manufacturing Resource Planning (MRP), Enterprise Resource Planning (ERP), Sales Force Automation (SFA) / Customer Relationship Management (CRM), Document Management (DM) and Field Service Management (FSM). The defining characteristic of Information Systems is that they capture business data and regurgitate it as useful information - stock in hand, prospects in Ballasalla without double-glazing, customers with Aviva pension policies etc. In order to do so they typically require you to enter your business transactions into them (Sales Order Entry, Prospect contact records, Customer profiles ...), and hopefully provide useful functionality as a result (print Invoices, list outstanding follow-up calls and so on). Information systems essentially capture data, regurgitate it as information, and automate common processes. Many Information Systems can be purchased "of the shelf" and configured to support your particular business operations and modus operandi, for instance do you use a FIFO or FILO inventory management process, does your sales process require you to issue order acknowledgements or can you progress to immediate despatch and invoicing? Most packaged Information Systems offer a high degree of flexibility in allowing you or your supplier to configure how they support your business process, and in doing so they allow IT to deliver some business value.

Business Systems will do all that information Systems can, and more. The essential difference is that Business Systems can be programmed to make repeatable / predictable decisions - What stock should we order? Which customers need attention today, from whom? Should we accept or reject this business opportunity? Has this prospect satisfied our KYC requirements? In order to provide such business decision-making functions most Business Systems are either highly programmable, so that you can tailor them to support your particular operations, or are custom-written for you by a software developer, either internally on the IT team, or externally through a software house or systems integrator. Clearly Business Systems can provide significant value, automating decisions that would otherwise be taken by junior and middle management and ensuring that procedures and rules are operated consistently, reliably and fairly.

Whilst IT is ubiquitous, Information Systems tend to appear in respectably-sized organisations, or organisations handling high-value information. Business Systems are more characteristic of larger organisations / enterprises, and are part of the "competitive edge" that IT is supposed to bring to business.

So do we need IT? As a service, yes. We all need the basics of email, word-processing, telephony etc. Do we need it as a business function, a department? Do we need to have our own servers and someone to support them? Probably not, much easier and cheaper to use Google Docs etc. All we need for the basics of IT is PCs and a broadband connection. However if we want to progress into using Information Systems and Business Systems to increase and multiply the value created by our organisations then yes, we probably need to have our own IT, in-house, coupled with expertise to design, build and support it. After all, there's not much point in owning piles of bricks and mortar unless you're planning to build something with them. If you want to get value out of your IT then look around and ask yourself "How is it helping to develop my business?", and if it isn't then chuck it out (outsource, use an online provider), or build something useful with it.

Steve Burrows is Principal Consultant at SBA, an Isle of Man based Management Consultancy.