October 30, 2007

Does Technology Make The Difference In Business?

Does Technology Make the Difference

Technology is perceived as the “enabler” for business. And with the recent commoditization of technology – the playing field has been leveled. Whatever technology, products and services company A can buy are also available to company B. So in effect technology should be the least significant component of any business and therefore it is not about technology.

Maybe not!

Efficiency – Most businesses whether large or small use technology to run their business. From routine business processes like payroll and accounting to sophisticated marketing and customer interfaces like websites and web 2.0 services – it is all supported by a technology infrastructure. Having a more efficient technology platform translates into a more productive business. Efficient IT systems exhibit characteristics like intuitive and easy to use, engage the user and process information effectively. Corporations spend valuable resources to keep their IT systems functioning to support the business. Efficiency in running your IT operations has a direct impact on business value.

Effectiveness – Keeping the lights on is important but making sure you are using energy efficient bulbs leads to effectiveness. Leveraging the technological advances makes your business more productive. Customers have choices and if you don’t have relevant and updated business practices supported by new technology in place to serve your customers – they will go somewhere else.

Integration – The consolidation of businesses via mergers/acquisitions and the proliferation of customer interface channels poses a growing problem for IT departments. The problem is how to integrate disparate IT systems so that both internal and external customers get consistent and accurate information. Integration is neither cheap nor simple but it is a necessity if companies want to complete in the global marketplace.

Innovation – True value is generated when technology is leveraged to enhance the customer experience or propose a better business solution. Consider Walmart’s usage of IT solutions to streamline their global inventory management systems. Dell’s on-demand PC sales model. Geico’s web-based insurance sales initiative. eBay’s online marketplace. In these instances you see technology’s usage as a competitive advantage.

So it is all about technology? No – it is about the business and how technology supports and eventually enhances the business offering.

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Vaughan said...

I think this is a really important point. I think of analogies like education - two people with the same IQ and same education can get very different value from their innate and learned assets. Or a musical instrument in the hands of a maestro versus an unskilled, untrained noodler. IT might be a commodity, but management's ability to harness it for competitive advantage and strategic value is highly differentiated!

Bill said...

IT is crucial in today's business environment. I totally agree with this theme.