Operations Research Management Science - Cyberspace

<BODY bgcolor="#ffffff" link="cc0000" vlink="cc0000" text="#000000"> <img src="../cleardot.gif" width=1 height=1 vspace=4 border=0><br>   <table border=0 cellspacing=0 cellpadding=0 width=480><tr valign=top> <td width=10><img src="../cleardot.gif" width=1 height=1 hspace=4 border=0></td> <td width=470> <FONT face="verdana, arial, helvetica" SIZE=2><B><I><A HREF="../../ORMS.shtml" TARGET="_top">OR/MS Today</A> - December 2003</I></B></font><BR> <hr size="1"> <img src="cleardot.gif" width=1 height=1 vspace=4 border=0><br> <font face="times new roman, times"> <img src="../cleardot.gif" width=1 height=1 vspace=4 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=2><B>Cyberspace</B></FONT><br> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <FONT SIZE="+2"><B>IT Matters, But Only in Frame</B></FONT><BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=2><B>By ManMohan S. Sodhi</B></FONT><br> <hr size="1"> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br>    A thought-provoking article in <I>Harvard Business Review,</I> "IT doesn't matter" by Nicholar Carr [1], has generated much response in letters to <I>HBR</I> and in various magazines and newspaper columns. Much of this response is thought-provoking as well. A wise man once told me that for every great truth, the opposite is also true. On the other hand, there are nearly as many great lies about IT as there are newspeak-isms like "This war is about peace." Assuming there is a great truth about IT, maybe Carr and others are describing an elephant as blind men (correct only when their views are taken together). <P>Contrary to what you might expect from his title, Carr does not want us to become Luddites and give up technology. What he says is that, like electricity or railroads, IT has become pervasive and business practices have become embedded in software. Therefore we should <I>not</I> include IT in strategic considerations for competitive advantage. Instead, companies should put their IT focus on keeping its cost low, especially since top-performing companies have some of the lowest IT expenditures as a percentage of revenues. Moreover, as IT has become the "backbone of commerce," companies need to manage the associated risk.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=3><B>A Sample of Responses</B></FONT><BR> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> Some of the responses I have read [2, 3, 4] can be summarized as follows: <P> IT remains a profound catalyst for change and we can extract strategic value from the accumulation of sustained near-term process innovations (Brown and Hagel III [2]). <P> It is naive to assume that discontinuous technologies will not offer similar transformation opportunities in the future, and often, only the senior management team's imagination limits new IT-based opportunities (McFarlan and Nolan [2]). <P> IT is a must today even though Carr may be right ultimately. While there is some commoditization, e.g., PCs and payroll applications, there is also much potential to improve applications for product design and customer understanding (Szygenda [3]). <P> IT's importance for transporting information is only tertiary as "the value is in the message, not in the means of conveyance." Business processes do not get embedded in the software because two look-alike companies may implement enterprise technologies like SAP R/3 with very different results. Standard protocols and greater interoperability between systems only give firms greater freedom to combine applications for strategic value (Strassman [2]). <P> What really matters is the set of factors like integrated business and IT planning and execution to convert IT investments to business value (Broadbent et al. [2]). <P> IT never mattered. What matters are people who invent, deploy and use IT. Strategic advantage comes from how we marry IT to our business models, organizational culture and our creativity (Lewis [2]). <P> Although the best performing companies spend much less than the average on IT, so do the worst ones. Those who recognize the importance of good management, not spending levels, will ultimately reap the rewards (Pisello [2]). <P> The "system" is not the software or the information system being created. It is the work system that matters and that cannot operate without IT (Alter [2]).<BR> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=3><B>My views</B></FONT><BR> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> For me the question "Does IT matter?" is like asking someone if they have stopped beating their wife. Either "yes" or "no" is a wrong answer. To get at the answer you must question back what exactly IT is used for. <P>One aspect of IT is individual empowerment: desktop hardware and software as well as e-mail to enable us to communicate with other individuals. This is already a commodity. <P>The other aspect is enterprise empowerment  the various systems that enable useful and actionable information to be transmitted across business processes within a company and across companies. "System" in this context is not only the hardware, the software and the communications channels, but also the business processes that use the information being exchanged. As business processes are very much a part of strategy, so is IT. <P>Another way of saying "IT does not matter" would have been that IT's potential has been fulfilled. For OR professionals in particular the implication would be that our models, algorithms and analyses have become a part of everyday life in most companies. I wish this were so. In fact, the growing gap between OR/OM research and the average business process in the average company suggests that there is much potential for a company to gain strategic advantage by using OR-enabled IT. (See for example the recent article in the <I>Sloan Management Review</I> on using OR models to aid strategic supply chain planning [5]). <P>Like IT, OR matters only in context. As the character Murnau says in the film "Shadow of the Vampire," "If it is not in frame, it does not exist."<BR> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=3><B>References</B></FONT><BR> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> <OL> <font size=1> <LI> Carr, N., 2003, "IT doesn't matter," <I>Harvard Business Review,</I> May. <LI> HBR, 2003, "Does IT matter? An HBR Debate," <I>Harvard Business Review,</I> June. <LI> "Business technology: IT is a must, no matter how to view it," 2003, <I>Information Week,</I> May 19. <LI> <A HREF="http://www.nicholasgcarr.com/articles/matter.html" TARGET="_new">www.nicholasgcarr.com/articles/matter.html</A>, downloaded Nov. 12, 2003. <LI> Sodhi, M., 2003, "How to do strategic supply chain planning," <I>MIT Sloan Management Review,</I> Fall 2003, Vol. 45, No. 1, pp. 69-75. </font> </OL> <img src="../cleardot.gif" width=1 height=1 vspace=4 border=0><br> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=2><I><B>ManMohan Sodhi</B> is a member of the operations management faculty at Cass Business School in London. He welcomes your comments at <A HREF="mailto:M.Sodhi@city.ac.uk">M.Sodhi@city.ac.uk</A>.</i></font><BR>  <img src="../cleardot.gif" width=1 height=1 vspace=5 border=0><br>  <img src="../barblue.gif" width=468 height=1 border=0 alt=" "><br> <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <CENTER><script type="text/javascript"></script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"> </script></CENTER><br> <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=1> <LI> <A HREF="tocfr.html" Target="_top"><I>Table of Contents</A><br> <LI> <A HREF="../../ORMS.shtml" TARGET="_top"><I>OR/MS Today</I> Home Page</A><br>  <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <img src="../barblue.gif" width=468 height=1 border=0 alt=" "><br> <b><i>OR/MS Today</i></b> copyright © 2003 by <A HREF="http://www.informs.org/" target="_new">the Institute for Operations Research and the Management Sciences</a>. 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