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A lordly view of IT
August 30, 2005
It's rare, and refreshing, to hear a top executive give a level-headed appraisal of the role of information technology. A couple of years ago, Tony Comper, the CEO of BMO Financial Group (and a former CIO), gave a particularly eloquent talk on business computing at an IBM event. Now, the chairman of the U.K. drinks giant Diageo, Lord Blyth of Rowington, has offered some blunt comments of his own. In a recent speech at the Wharton Global Alumni Forum, Lord Blyth cast doubt on the business value of most IT investments. First, he described what he calls "the tyranny of technology," the bias to try to solve problems with new technologies even if simpler, cheaper solutions may be within easy reach. "We waste a huge amount of time designing, training and then redesigning and retraining staff on each new technology program," he said, citing that fact as one of the reasons companies make "$500 billion of bad investments" in IT every year.
He then offered two explanations for why so much IT spending goes to waste: "One, it's difficult to sustain a technology-based competitive advantage; two, companies often lack the management discipline they need when evaluating technology proposals." He says this about IT as a source of advantage: "Too many companies out there are prepared to sell you innovative technology that they sold to somebody else. Real competitive advantage is provided by managerial innovations, either to increase productivity or to build on operational strength."
Lord Blyth also blames the bad investments on a lack of follow-up in measuring the actual returns from new IT systems. He refers to a McKinsey study which shows, incredibly, that "64% of the CIOs [of Fortune 500 companies] did not undertake any follow-up to determine whether IT projects failed or succeeded."
Blyth is no Luddite. He talks about the ways Diageo itself has learned to better manage IT investments - and get real returns from them. But his cautionary words are carefully chosen, and they'll probably ring true for a lot of top managers.
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Comments
Both communities, technology adoptors & providers should seriously contemplate on his words.
Posted by: Mukesh P at September 24, 2005 02:24 AM
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