IT Expenditure - Why Businesses Spend Huge Amounts on Ineffective IT Investments

Another IT White Elephant!

It seems that almost every day we read in the newspapers about another hideously over budget IT project that doesn't achieve its expected benefits. The ones we read about are usually major multi-million pound projects in the public sector, however this is only the tip of the iceberg.

Many more projects achieve similar results in the private sector, in organisations large and small. These may be anything from the purchase of a new off-the-shelf accounting package for an SME, or a large-scale fully-integrated ERP implementation across multiple sites and countries. These do not usually make the headlines due to the commercially sensitive nature of this information.

Does this mean that the technology is over-rated or that we cannot manage IT implementations or is there something fundamentally wrong with the approach?

Where are we going wrong?

"Computers make it easier to do a lot of things, but most of the things they make it easier to do don't need to be done."

Andy Rooney, US news commentator (1919 - )

I wouldn't go as far as the above comment, however there is an element of truth in it.

Typically the IT implementation is seen as the solution to the particular problem (or problems) being addressed, but this is rarely the case. Often the introduction of an IT "solution" can compound a problem as there is now less opportunity for the human intervention that previously stopped problems from becoming crises.

The problems usually lie in the business processes (both formal and informal), irrespective of whether these are carried out by computers or human beings. Automating these processes can simply have the effect of making the problems happen faster!

The obsession with IT as the solution to every major business issue is compounded by the marketing departments and sales people of software developers selling it as such. Until executives address the underlying processes first, we will continue to see streams of failed, expensive IT projects.

Addressing the real problem

To take a process approach to the problem, we need to understand (in some depth) the informal processes carried out every day by employees. These are not the processes that managers think they carry out, and are rarely as laid out in the ideal world of an ISO manual. We regularly find, when working with clients' employees, that managers are unaware of a large percentage of the processes carried out in ensuring that the job gets done. This is not a criticism of the managers - the level of information overload that this would involve would render them ineffective.

Working with employees so that they can map out their processes in this level of detail and re-engineer them to resolve the perceived problems can have a radical effect with no IT expenditure.

Targeted IT Expenditure

So far I have probably given the impression that I have a "downer" on IT. This could not be further from the truth - the problem I have is with the way IT expenditure is usually approached, and the problems that this approach creates.

Having addressed the process issues, IT expenditure can then be used to facilitate the new process, targeting those areas that would benefit most and significantly multiplying the benefits of the process improvement exercise itself. This expenditure can often be in entirely different areas to those originally envisaged.

At Feechan Consulting, we are now starting to work with enlightened software vendors who understand that it is in their interests to ensure that the client purchases an appropriate solution, rather than simply what they have to sell, as they inevitably take on some of the risk of failure.

Conclusion

Organisations have benefited greatly from IT investments over recent decades and will continue to do so. However, the risks attached to these investments are significantly reduced (and the resulting benefits significantly magnified) if the underlying, informal processes are addressed first.

Glen Feechan is Chief Executive of Feechan Consulting Ltd (http://www.feechan.co.uk), a business consultancy specialising in business process improvement training and consultancy. Email Glen at glen@feechan.co.uk.

Glen is also the editor (and regular contributor) of Changing Business ezine (sign up at http://www.feechan.co.uk).

---

Lets Flourish and Prosper!

Some say that in business as in sex: if it... Read More

Make Them GLAD Youre Their Boss

Criticism has the power to do good when there is... Read More

How To Prevent Your New Manager From Becoming A Statistic

According to a study by the Manchester Group, 4 out... Read More

Firing Someone Without Resentment

Firing, sacking, letting go or terminating people is unpleasant. There... Read More

Business Innovation ? the Value of Work Processes

Creativity can be defined as problem identification and idea generation... Read More

Problem-Solving Success Tip: Define the Problem First

Define the Problem First. It seems obvious, but how many... Read More

Lower the Bar

"Nothing great was ever achieved without enthusiasm." Ralph Waldo EmersonI'm... Read More

How Businesses Can Stop Wallowing in Bad Debt and Prevent It in the Future

"Become the Squeaky Wheel", a new book just published, explains... Read More

Training and ROI (Return On Investment)

Statistics consistently reinforce that the biggest challenge in today's contact... Read More

What Every HR Manager Should Know About Hiring Productive Employees

The characteristics of job applicants have a strong influence on... Read More

Tales from the Corporate Frontlines: Adapting Human Resource Functions

This article relates to the human resource functions competency, commonly... Read More

Technology & Communication

A study a couple of years ago found that 63%... Read More

Executives and Emotional Self Awareness

A major problem impairing an executive's performance is his Emotional... Read More

Better Management Performance - The Easy 3-Step Way

Managers make three mistakes when they try to run businesses.... Read More

Punctuality in Business: What it Says About You

"Nothing inspires confidence in a business man sooner than punctuality,... Read More

Project Management - The Traveling Product Manager

Various studies ? and common sense ? indicate that involving... Read More

Take Your Firm to the Next Level

So you did such a good job in 2003 at... Read More

Management & Leadership - Doing it right in the 21st Century

The Old Way ? Command and ControlAlthough workplaces and management... Read More

Get Over Yourself

Let me tell you a secret.Things don't always go the... Read More

How You Can Learn to be a Better Manager

When you first take over a department, expectations are usually... Read More

Business Innovation ? Tacit Knowledge

Creativity can be defined as problem identification and idea generation... Read More

Take the Easy Route - Delegate

It was 2.30 am. It was cold and dark and... Read More

Performance Management - By Assuming Nothing

Unhappy as Jenny undoubtedly was, she held on very tightly... Read More

How To Turn Business Losses Into Cash Flow

When the typical new business operator starts a business, they... Read More

ISO 9001, What Next?

The overriding goal of ISO-14000. (History 1995)As ISO-9000 becomes a... Read More

Never Hire Anyone Dumber Than You Are!

In a previous life I was a Navy Pilot. Great... Read More

Resistance - How to Handle It

Do you ever meet with resistance from other people -... Read More

Spirits in the Corporate Boardroom.......Oh, sure......

There is a growing movement in the spiritual... Read More

Project Management - I Want It ALL

The knee-jerk response to prioritizing requirements is to mark everything... Read More

The Boss Didn?t Understand Why His Staff Wasn?t Reading His Mind

Many people believe that everyone sees the world exactly the... Read More

I Said Pareto Chart? Not Potato Chart!

Does this sound familiar? You were hired for the new... Read More

Learn About Commercial Collections Agencies Fees

As with any other service, there are good and bad... Read More

Organizational Capital in Politics, War, Sports and Business

Intangible Corporate Assets such as Organizational Capital, Blue Sky and... Read More