Mesh IT with strategy: Harvard professor

For every dollar that companies invest in setting up information technology (IT) infrastructure, they need to invest $2 to change the organisational processes if they wish to benefit from the IT spend, Harvard Business School (HBS) professor Warren McFarlan said at the annual HBS alumni meeting in Mumbai on Tuesday.

McFarlan spoke on how IT has changed the entire landscape of doing business and how it had credited new businesses and decimated the identity of most others.

Quoting to several Harvard Business Review case studies, McFarlan said some of the world's largest corporations had successfully outsource ("sent down the wire") most of their accounting and IT functions to third party vendors leaving the parent company with the core functions.

One of the top global IT vendors had successfully cut down its process time, from the time it took an order to the time the package was installed and operational t the client's site, from 280 days to 160 days. This boosted the company's financial cash flows and put it on a strong financial footing, he said.

Thus, the role of IT becomes central to the strategic planning within the company, he argued.

Reacting to McFarlan, L C Singh, president and CEO, Nihilent Technologies, said: "The commoditisation of IT is not to be confused with IT becoming a commodity. With the mushrooming of IT suppliers, it is the IT business which is now facing commoditisation. However, as far as business is concerned, IT definitely plays a pivotal role in defining and creating strategies, and it provides continued differentiation with respect to customer servicing, distribution, logistics and most of the key aspects of business. All other aspects remaining equal, IT can be a major differentiator and a reason for businesses to succeed in the market place."

Anand Pathak, national president of the Computer Society of India, looks at it differently.

He says "IT should be treated like any other management tool and should be reviewed at the board level and steered by the CEO under the day to day project management of the chief information officer (CIO). Change is the only constant thing in IT and hence continuous change should be treated as a way of life. Change management involves people, processes and paradigm shift in which the company sees itself. All the three must be dealt with carefully. IT change management should be an integral task of IT user champions."

Nandkumar Awatramani, president & CEO, Food Factory, however, believes that to some extent IT has become a commodity. He says "To some extent IT has become a commodity in day-to-day business, but it still provides a strategic advantage to organisations that adopt it. It is how efficiently the information is filtered and used is where the advantage lies."

There are several businesses that have high-tech information systems, but most of the information gathered is of no use. If an organisation uses the information gathered in making important decisions that will create an advantage for them in this very competitive market, then one is using the information to his/her advantage."

Naveen Surya, executive director, Intrex India argued that much depends on how IT is adopted. He says "IT is to be adopted based on an organisations' business objectives and strategy being used. Is an organisation's strategy to reduce cost, expand markets, penetrate new segments, innovative product design? It is very critical to find the right answer first to what is required to make a business successful. Once that is answered explore what IT solutions are available to achieve the desired objectives. Companies need to understand the sequence of change."