InformationWeek
Defining The Business Value Of Technology
June 8, 1999
Your letters to my print column and this E-mail forum ask some serious questions about managing information technology in today's world. Since today's world is essentially absurd, my serious responses may sometimes sound a little whimsical, and my occasional whimsical ones, serious. In any case, if you want to participate, write to me at lovelace@home.com. I'll respond to those letters that I can. I reserve the right to edit for size and content. Just sign your E-mail the way you want it to appear online.
Dear Herb:In your reply (Ask The Secret CIO, 1/19/99) to a reader's point about the CIO who was quoted as saying, "If I can't sue them, I won't buy from them," I think you too missed the point.
It's not that one would literally drag a vendor into court. It's that one needs a vendor who can be held accountable, whose pocketbook will suffer if you choose another vendor. That's the problem many perceive with open-source software.
But that is also my problem with Microsoft: It's now becoming so dominant in the markets it serves that the threat of moving to another vendor is meaningless. Microsoft, like IBM before it, is left with little incentive to improve products, support, or pricing. Microsoft's dominant markets now are home and small businesses with operating systems, office suites, and some "enterprise" products. What will happen if the company wins the war it has started with real enterprise vendors?
Thank you,
David E.
Dear David:While it's essentially true that no one except the user will be hurt financially if open-source software fails to deliver as promised, I don't think that fact is sufficient reason to eliminate from consideration such software for enterprise applications.
So far as I can ascertain, there are just three basic ways to react to poor product performance when dealing with vendors of proprietary software. We can try to get their attention by threatening to throw out their products and never buy from them again. We can suggest to them that we are so upset that we might sue and, in the course of events, we will splash their name and our pain all over every industry publication that we can. Or, we can work on their natural desire, as a matter of personal pride on their part, to satisfy us, their customers.
The first method, pledging to strike their names from our purchasing lists, is emotionally satisfying, but frequently ineffective when dealing with the really big vendors. If, for example, we have Microsoft Office or SAP throughout the enterprise, we really don't have much of a choice except to grin and bear it unless the problems with the vendor are so totally outrageous that we are willing to undergo the massive expense and disruption of replacing the products. While threatening to stop purchasing may upset our sales representative, we need to remember that his or her power to redress our grievances is limited. Regardless of what we would wish, very few customers are large enough to strike fear into the hearts of the executives at companies such as the two mentioned above or at others such as Oracle or Computer Associates.
The second method, relying on legal remedies, is at least as painful to the customer as the vendor. Entering into litigation is expensive and time-consuming, without any certainty that the customer will win. Every corporate attorney I know will say that no one should ever go into a deal with the thought that a lawsuit is the preferred backup strategy to resolve non-performance.
The third method, relying on the professionalism of the vendor to fix the problem, seems to provide the best results. Most salespeople with whom I have dealt, and their management, have pride in their performance and will work with their customers as much as they can to resolve problems. Of the options, this is the one that I choose whenever possible.
Because I believe that the pride of individual accomplishment is a better motivator than threats or even monetary reward, I continue to reject the idea of "If I can't sue them, I won't buy from them." As a result, I am not in agreement with those who say that relying on open-source software (such as Linux) is inherently more risky that using proprietary software.
Regardless of whether or not they are employed by vendors, the people who have designed and maintained the code that we use want very much to have their creations work flawlessly. Paid coders do not set their own priorities; open-source coders do. Further, they have no one looking over their shoulders doing a cost-benefit analysis on their labors. Nor is anyone telling them to ship code by a given deadline.
As you point out, some vendors--especially Microsoft--have such a dominant position in the marketplace that the supposed customer advantage of threatening to stop buying is essentially meaningless. What will happen if Microsoft is successful in its drive to expand its empire? I believe in marketplace competition and think that the consumer very much benefits when vendors are forced to compete. To the extent that Microsoft makes the other vendors sweat, the consumer will gain. If, however, Microsoft were to eliminate competition, as it has essentially done in the operating-system and desktop-suite arena, then, in my opinion, we would face unnecessarily high prices and products that are not of the best possible quality.
Dear Herb:I am an IT professional with 18 years service to the company for which I work. Our IT department consists of seven people supporting four manufacturing plants. Our company wants to centralize IT support at headquarters.
What are your thoughts on trying to centralize IT support into one location? I would find this very difficult to do and see the possibility that several employees will lose their jobs.
Thanks,
Rick C.
Dear Rick:The argument over whether to decentralize or centralize IT support has been going around for as long as I can remember. As you can imagine, there are advantages and disadvantages to both courses of action.
All other things being equal, centralizing IT provides a more-focused, lower-cost organization than decentralizing it. And, yes, lower cost very likely means fewer jobs. Decentralizing IT yields a more user-oriented, faster-responding set of support groups.
Both ideas can work and consultants have made a rather good living explaining to executive management of more than one company why the grass is greener on the other side of the organizational fence and how problems will be solved by changing their IT structure. In fact, I have seen in my career companies that have swung, with equal fervor, back and forth from centralization to decentralization every few years or so.
The whole question, though, is why your company executives are considering centralization. What problem are they trying to solve? Is it a cost issue? Control? Incompatible systems? Find the answer to that question and you'll be able to make a better judgment as to the likelihood of success of the centralization effort.
As to my opinion, I believe that the structure of the IT organization should mirror the structure of the company. If the company has a strongly decentralized business philosophy with units responsible to headquarters only for their financial results, then decentralization will probably work best. If the business units simply carry out the strategies developed at headquarters, then it's most logical that the systems function should reflect that approach and therefore a high level of centralization may be appropriate.
Dear Herb:I have a question, not on organizational behavior, but on IT vision.
With all the big companies standardizing on various enterprise resource planning and post-ERP applications (sales force automation, supply-chain management, etc.) as company standards, how do you see the integration of all these applications taking place?
Can vendors such as Extricity, CrossWorlds, and Oberon offer enough in the way of solutions to meet the needs of businesses? What about the need to create custom applications for competitive advantage?
How about the emerging E-Commerce needs? How would these future needs influence bigger companies' decisions ?
Regards,
Osbert T
Dear Osbert:Wow. Those are some very serious questions. Of course, if I really knew the answers with any certainty, I would take my savings and plunk them down on the right choices in the stock market. So, I will give you my opinions, but I have to say that the world is a funny place and the best IT vision is the one that allows for flexibility--just in case we turn out to be not as prescient as we would like to be.
The integration of the various post-ERP systems isn't going to take place in a uniform way, even within the same company. The common feature will be management's opinion as to what provides the most value to the business. One fallout of having spent tens of millions of dollars on ERP systems is that IT is not quite the arcane subject it used to be in the board rooms of major companies.
Business executives are not, and will not be, purists who care about whether a new system fits into some grand architectural scheme. They will worry about how quickly it can be done, how much it costs to implement and support, how risky it is, and what the business benefits will be. The viability of all vendors, not just the ones you mention, will depend on how well they can fit into this type of environment.
A word on systems for competitive advantage and E-commerce. I don't believe in systems for competitive advantage. I believe in systems for competitive survival. The threats no longer come just from traditional competitors. I'm sure that Barnes & Noble scoffed at Amazon.com when they first heard of the company. After all, Barnes & Noble knew who its real competitors were. Moral: If you look only for the car that may run you over, you might just miss the block of concrete that's falling on your head.
Executive decisions in the E-commerce post-ERP world will be based on what is necessary to keep the business you have worked so hard to build from being destroyed by smarter and faster rivals.
Herbert W. Lovelace is CIO at a multibillion-dollar international company. Herb practices his day job under an alias and has changed the names of colleagues to protect the guilty.
View past issues of "Ask The Secret CIO"
Got a question for The Secret CIO? Just send an E-mail
Send Us Your Feedback
Top of the Page
Featured Microsite
