IT systems landscapes have an unfortunate nature: The more
functionality it delivers to the business, the more difficult it is to
continue supporting the business properly. Here are some examples of
consequences of having implemented too much IT:
- Sunk costs – IT functionality that nobody uses
- Lower System Performance
- Higher development costs
- Less flexibility to react on future business needs / business changes
- More difficult to participate in the benefits of standard software
- Higher IT maintenance costs
Key question for every Top Executive: How to ensure that we implement only so much IT support that the business really needs.
IT systems landscapes have an unfortunate nature: The more
functionality it delivers to the business, the more difficult it is to
continue supporting the business properly. Here are some examples of
consequences of having implemented too much IT:
- Sunk costs – IT functionality that nobody uses
- Lower System Performance
- Higher development costs
- Less flexibility to react on future business needs / business changes
- More difficult to participate in the benefits of standard software
- Higher IT maintenance costs
Key question for every Top Executive: How to ensure that we implement only so much IT support that the business really needs.
Unfortunately businesses tend to do too much – and there are some very common reasons for this. Here some examples:
- Unrealistic Cost Benefit Analysis: The cost benefit analysis
is not being conducted properly or even appears to be biased. Often
people calculate as costs only programming costs which are quite
inexpensive in Thailand. They usually forget costs for process
redesign, change management and opportunity costs for the business
during the launch period. On the benefit side people are often too
optimistic. Having the new functionality doesn’t necessary mean that
people will know how and also want to use it – in many cases new
functionality ends up never being used and hence never providing value
to the business
- Inefficient incentive system: Every single person in the
organization would love to have some perfect IT system to make their
job easier and therefore they keep on requesting new functionality –
what the person doesn’t know is how much the total costs of this new
feature costs to the overall organization. Therefore it is important
that people can ‘feel’ the new functionality in their own budget so
that they are more careful with requesting more and more
- Lack of understanding of real problem: Blaming an IT system
for inefficiencies is easier than blaming people, so often the first
response on problems is to improve the IT system. In many improvement
projects that I’ve worked on our client started under the assumption
that the IT systems need to be improved but later it turned out that
the problems were mainly caused by people being untrained or
unmotivated.
- Tendency to Over-engineering: The nature of many IT people
is that they love new and fancy solutions. They are also nice people
that would like to realize whatever the customer requests to make them
satisfied. However, sometimes just one requirement can reduce costs and
complexity significantly - I experienced only a few IT people, who
would give me this information without asking for it.
- Lack of IT governance Processes: In many organizations
requirements to business systems are not controlled in a professional
way. Some companies may have processes to consolidate and prioritize
new requirements, but fail to put the right people on it that really
make this process happen – so, finally everything what people request
is being implemented, earlier or later
Now - What can I do as a Top Executive with significant IT
spendings? Selective Implementation (SIMPLE) is a principle that I
learned during my time as a management consultant in Germany. At that
time, we were able to save clients up to 75% of his estimated IT
development costs, part of it caused by applying the SIMPLE principle.
This is how it works:
Imagine when you buy a new car, a new set of golf clubs or a new
digital camera. Usually you may have a clear understanding of what you
need, BEFORE you enter the shop. At the time you are in the shop you
are exposed to many additional features that you could also buy. In
many cases people finally buy more than they originally expected to
buy. When you define requirements for IT systems, the thinking process
is very similar: People ask the question: If I implement this
functionality, what will be the benefit for me?
SIMPLE turns this thinking process around. The question is: If I
don’t implement this functionality, what happens to my business? It’s
changing the perspective back from ‘what I all need’ to ‘what I really
need’. You will be also able to discuss solutions other than system
solutions. Challenging people with the idea of not getting the system,
inspires their creativity to think about often better alternatives.
Maybe there is a person to be trained, a KPI to be changed or a student
to be hired.
As a Top Executive you don’t need to do much. Just challenge your
people with this question and ask them ‘if you don’t get this system,
what would you do?’. And if you don’t get a reasonable answer, don’t
sign-off on this new functionality or system solution. You will be
surprised how often people who just told you about all the benefits of
a new system suddenly admit, that there are maybe better solutions to
improve your company.
Try it – it doesn’t cost you anything.
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