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How much IT do you really need?

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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