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The Critical Factors for Information Technology Investment Success is a modern, leading edge discussion on the factors that give rise to information technology, strategic planning and business optimisation failure and how to design solutions against failure.
Coverage includes chapters on the attributes that constitute a world class solution, factors that give rise to failure, the critical factors for a successful solution and a discussion of various other principles necessary for a successful outcome.
There is a detailed discussion of the manner in which data validation tables and associated codes represent the critical interface between knowledge of the business and the technology. This is vital for success and is the solution to the syndrome of executives spending millions on new information technology investments only to find they cannot obtain the information they require.
Other chapters discuss a business outcomes based approach to software procurement and outline a structured approach to corporate strategic analysis and design of corporate strategic plans.
Lawrence Borok, CEO of Vantage Point Healthcare Information Systems, Inc. has this to say about this book:
"The great service of this book is that now a knowledgeable and experienced engineer is educating his software engineering colleagues and business executives about the tried-and-true principles and specific steps to construct or procure and implement systems - in this case information - that succeed."
 James Robertson is CEO of James A Robertson and Associates a consulting company specialising in the strategic and successful application of information technology. He has diverse experience in engineering, mine design, investment economics and military leadership. He has over twenty three years experience in the effective application of information technology in business.
Dr Robertson has spoken at numerous conferences internationally and has been listed in Who's Who in the World for four consecutive years as well as in Great Minds of the 21st Century and 2000 Outstanding Intellectuals of the 21st Century as well as other accolades.
The Graphic on the Cover is based on the Strategy - Tactics Matrix of Professor Malcolm McDonald, used with permission.
Review in The Financial Mail
The book was reviewed by Duncan McLeod on page 33 of the 5 March, 2004 edition of "The Financial Mail"
fmmail@bdfm.co.za
Summary
Overview of the Book
Forward
Preface
. About the Author
. About the Book
. Acknowledgements
Chapter 1: The Context of Information Technology Business Solutions - An Industry Characterized By Failure
Chapter 34: Wrapping Up
Table of Contents
Index
Pricing and Ordering
The Critical Factors in Information Technology Investment Success recognizes the extremely high level of Information Technology Investment failure, catalogues the causes of failure and presents a structured approach to avoid failure.
Compelling messages the book contains include:
Only ten percent of Information Technology investments meet or exceed the original business requirement and seventy percent of projects fail totally. Only ten percent of Strategic Plans succeed. Seventy percent of Business Process Re-engineering projects fail.
This book explains why.
Information Technology, Business Strategy and Business Process Re-engineering are all facets of one composite field of business improvement which require an integrated holistic approach to achieve results
Information Technology is not about technology, it is about people.
A clear understanding of the strategic driver of the business is one of the most critical factors that determines Information Technology Investment success.
Highly structured validation data and codes in a comprehensive data model represents one of the biggest opportunities for businesses to secure real benefit using Information Technology.
This book confronts probably the single most challenging topic confronting business management today - how to apply Strategic Planning, Business Optimization and Information Technology to support business effectively, strategically and sustainably.
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I've seen and worked on many software projects over the past twenty years, and rarely have results equalled expectations. These projects were at some of the largest corporations in the United States, and ranged across such industries as banking, mutual funds, insurance, entertainment, healthcare, as well as government. While some were massive in scale, truly "enterprise-wide" undertakings, others were more modest, focussed on improving workflow in a single department. But what they all had in common was a significant gap between what was promised and what was delivered. In the research field there is a concept known as "gap analysis," but rarely has this concept been applied to information technology, specifically software engineering for business. This book performs gap analysis on the subject of why most information technology systems fail.
I've known James Robertson since 1999, when he contacted my company to submit a proposal to a healthcare organization he was helping at the time. We did submit, and got as far as making a presentation to the Board, but alas, the organization was acquired by a large insurance company shortly thereafter and the project was stillborn. But having gone through the gauntlet of his evaluation process, I can attest to his investigative thoroughness. More than that, I experienced firsthand his relentless (and good humoured) probing to understand the structural underpinnings of our system. His perspective was unique, able to be systematic in the strict engineering sense and also analytical about the system's ability to fulfill the needs and capabilities of the business it was supposed to serve. Many engineers don't have a good grasp of business; James is one of the few who not only has a good grasp of business, he understands business.
Information technology professionals sometime forget that the reason that IT systems are designed and built is because they help people and businesses accomplish things. In other words, without the "users" that many in IT have a condescending attitude towards, they would be out of a job. This book begins by pointing out that the vast majority of new systems are considered failures by the companies which had them built, something which should be very humbling to the software developers. But rather than romanticize about human usability design, James patiently explains proven techniques and lays out detailed sequences of tasks commonly found in other engineering fields, to software engineering.
This is perhaps the first book on the subject of software engineering to discuss how to avoid building a system that fails. James takes many classic engineering techniques, such as having a laboratory and performing extensive testing, that goes far beyond the typical QA team found in most software organizations. Another is his belief in the preparation of extremely detailed written specifications, so that, as he puts it, "Software construction is then a matter of advanced 'cabinet making' working exactly to the 'drawings'." In other words, just as any building is constructed from a set of blue prints, so should software.
The book also makes many critical points either overlooked or not well understood by software developers, such as the necessity of designing the data structures before the process logic. As someone who has designed and built software, I can attest to the wisdom of this point. Computer programmers can't wait to start "screen painting," and often the data structures are an afterthought. The result is that their works of art can't reach all of the data needed to fill them completely, so they have to go back to the drawing board.
This last point goes to something deeper, namely that software must be designed based on a solid understanding of the business that it addresses. Somehow this understanding must be embodied in the data structures. Only then can the sizzle-the screens and plethora of features and functions-truly make life easier for the people who must get their work done every day with the system that we built.
Throughout the book the architecture / engineering / construction model is mapped onto the software development life cycle. The strength of this book is how completely it maps the ways in which engineering projects must be organized and managed-no one wants to have a bridge collapse-to software construction. While many software companies and IT departments in corporations do implement some of these concepts, usually they are applied in a fragmentary way.
Although many in the software industry use some of the same terms, very few actually have studied their origins and understand their full meaning. The great service of this book is that now a knowledgeable and experienced engineer is educating his software engineering colleagues and business executives about the tried-and-true principles and specific steps to construct or procure and implement systems - in this case information - that succeed.
Lawrence Borok, CEO
Vantage Point Healthcare Information Systems, Inc.
New Milford, Connecticut, USA
lborok@vantagepointinc.com
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Seventy percent of all business information technology investments fail totally. A further twenty percent fail to meet the business requirement. It is reported that ninety five percent (nineteen out of twenty) of all enterprise resource planning investments do not deliver what is promised. Ninety percent of strategic plans fail. Seventy percent of business process re-engineering projects fail.
The business solutions industry, as mature as it seems, is surely an industry characterised by failure.
There is clearly a need for a robust approach to designing failure out of what is undertaken whether strategic plans, business optimization programmes or information technology investments.
I have been involved in the strategic application of computer systems in business for over twenty years and in the development of effective business strategies for over ten years.
In the early years of my experience I undertook a number of projects which were notable successes and which created real competitive advantage for the organizations for which the information systems concerned were developed.
Subsequently, I started to consult in the field of effective application of computer systems in business. As time progressed I experienced some successes but also failures. My training is in Civil Engineering and I have BSc and PhD degrees in that field as well as practical experience. In addition, I have been designing and building things since childhood. Most of them have worked and worked well.
My first experiences of sub-optimal information system projects were challenging and traumatic, I was not accustomed to failure. In fact, my whole engineering training had trained me to expect success by designing against failure. The whole discipline of engineering is about designing failure out of solutions.
Without really consciously deciding to do so, the moment that I experienced failure in information technology projects I started to examine the projects in detail in order to understand what had caused failure so that I could design failure out of subsequent projects.
This investigation took me into a diversity of fields. Early on it became apparent that there was a vital requirement for the alignment of business information systems with strategy and consequently I started to explore the field of strategy development. I rapidly found that there was an absence of rigorous comprehensive methods for strategy development and implementation and started to undertake research and development in this field.
I also soon came to discover the widely reported ninety percent failure rate for business strategic plans.
As I continued to gain experience and continued to experience a mixture of success and failure, I came also to recognize the enormous impact of so-called soft issues or people issues on implementation failure. In gaining understanding of this I came to understand the close correlation between information system implementation and organizational redesign. If the system is effective it will have an impact on the structure of the organization.
Progressively I came to understand that the three fields, business strategy, organizational design and business information system development, procurement and implementation were all different facets of the same field of organizational improvement and could not be considered in isolation. They are all interlinked and interact in a complex manner.
As this journey of discovery continued I found increasing evidence that the factors giving rise to strategy failure were the same factors giving rise to information technology investment failure and were the same factors giving rise to business optimization failure.
As this understanding and experience increased I developed an ever increasing catalogue of factors giving rise to failure. I also found myself speaking at conferences in various locations around the world on these subjects. Subsequently, I received international recognition through Who's Who in the World, Who's Who in Science and Engineering and a number of other accolades.
I continued to undertake projects and continued to find that sometimes things went well and sometimes things did not go so well. As this happened, the catalogue of factors contributing to failure grew and, at the same time, the experience of the things that worked to prevent failure also grew.
Because the experience evolved in what one might term an "organic" fashion the body of knowledge was initially relatively unstructured.
More recently I started to analyse the data that I had acquired. This was done using the critical issues strategic analysis process which is discussed in chapter 33, to analyse this body of data and bring greater structure to it. At the same time I gained even greater insight into what was required to design failure out of strategic solution programmes, be they information technology, business strategy or business optimization.
In doing this I became absolutely convinced that the only way to avoid failure was to regard all three of these aspects as different components of a total solution and to design solutions that incorporate all these facets.
This book represents the culmination of these years of experience and on-the-job practical research, learning and development.
It sets out to make visible the factors that give rise to failure. It outlines the factors that are necessary for success and it offers an overall approach to design failure out of strategic business solutions.
The book is written with particular emphasis on major corporate strategic information technology investments since these represent one of the greatest untapped opportunities and greatest challenges of the years ahead. In presenting the thesis around this dimension the book also addresses the full inter-relationship with strategy and business optimization.
In fact, I would go so far as to suggest that it is very difficult today for any organization to take radical new measures to create sustainable competitive advantage. To create sustainable competitive advantage requires a holistic plan of action that includes information systems and business optimization in support of business strategy in the manner presented in this book.
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About the Author
Dr James Robertson has BSc and PhD degrees in Civil Engineering.
Dr Robertson has been exposed to the use of computers since the days of the card punch and typewriter terminal. He was also actively involved in the practical application of the first desk top personal computers. He has been actively involved in the practical application of computers in business for over twenty three years.
His experience includes a five year postgraduate materials science research project. During this project he used computers to analyse the stability and forces in large dams and to process over seven thousand pages of laboratory data. This included the development of graphics software for plotting complex graphs of the research results. In the process he researched information cataloguing techniques and developed a complex information cataloguing scheme. He received a major national award for the resulting doctoral thesis and travelled internationally as part of the award.
He then joined a firm of international investment consultants. He computerized this business and developed first principles computerised economic models of major corporations listed on the stock exchange. He also developed a database and flexible reporting application to allow rapid production of presentation quality reports for clients. In the first year these developments allowed the firm to increase it's client base and double it's turnover. During the four years that he was with this firm he also studied the global economy and commodity markets and gained a solid grounding in economics.
While with this firm he was also involved in consulting to clients in terms of the application of the results produced by the computerised analysis. This resulted in him travelling internationally and meeting with clients which included the senior vice presidents of major international banks. He continued to service this organization as a client for a further seven years.
This was followed by four years with an international civil engineering and mining engineering consulting firm. Experience included the use of computers for ore body modelling, mine design, slope stability analysis and processing of laboratory data.
At the same time, Dr Robertson architected and lead a project to migrate the organization from a large mini-computer installation to one of the earliest personal computer networks. This project included the specification, development and implementation of a fully integrated enterprise resource planning system for the firm. This system is still in use over sixteen years later. He also initiated a programme to place a computer on every engineer's desk with incentives to encourage high levels of literacy, including touch typing skills. He also managed a team of technical programmers.
After this Dr Robertson entered private practice consulting on the effective application of computers in business. Early assignments included the evolution and implementation of the enterprise resource planning system developed for his previous employers for other clients. Other projects included strategic marketing planning, systems audits and specifications and the development of a risk management system.
Concurrently with the above activities, for a period of over twelve years Dr Robertson was involved in the part time military with a military engineering regiment. For about six years he served as administrative officer with full responsibility for administration and human resources management, learning much about these fields in the process. Responsibilities included the supervision of the operation of a computerised records system and much was learned about the challenges of maintaining computerized records for large organizations.
Subsequently, he was appointed as officer commanding with the rank of Lieutenant Colonel and served in this capacity for four years. During this period he attended all the necessary training courses which gave an excellent grounding in results orientated, high efficiency tactical and strategic planning up to the Brigade level (approximately 7,000 men plus machines). He gained much useful experience in the leadership and management of large numbers of personnel during this time.
After four years consulting on his own, Dr Robertson merged his firm with two others, a specialist software development firm and a decision support systems firm with a view to establishing a one stop solution shop. Dr Robertson served as chief executive. A diversity of projects in all three fields were undertaken and Dr Robertson spoke widely at international conferences during this period. Projects included a highly sophisticated loss information management system, an information technology strategic plan for a major corporation and a wide diversity of other projects.
After four years Dr Robertson returned to consulting full time for his own account and has been doing this for seven years at the time of writing. Projects have included development of strategic plans for a diversity of clients, implementation of a national crime prevention strategy, architecting and managing the acquisition of a comprehensive enterprise resource planning solution for a large primary healthcare provider network and a wide diversity of other projects.
As a consequence of this diverse experience over so many years, Dr Robertson brings substantial knowledge and experience to the writing of this book. During this period he has systematically sought to bring the disciplines of the engineering industry to the development of effective strategic solutions in business. The great diversity of experience outlined above ensures that this book draws on diverse fields in order to propose solutions that are distinctly out of the box of conventional thinking about information technology and strategy and which offer the potential for solutions that really work.
Dr Robertson has spoken at over fifty conferences internationally and authored many white papers on subjects relating to the subject of this book. This professional background of diverse experience and practical thinking in and around the fields of effective strategic business solution development and effective information technology project development and implementation all underpin the work on which this book is based.
Dr Robertson has been listed in Who's Who in Science and Engineering, Who's Who in the World (four years running), Great Minds of the Twenty First Century, Two Thousand Outstanding Intellectuals of the Twenty First Century and the Contemporary Who's Who.
This book represents a summation of the thinking that has lead to these accolades.
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About the Book
This book offers a sobering, challenging and stimulating look at the practical issues of effective strategic business solution investment against the backdrop of the professional achievements of the author.
One of the vital characteristics of engineering is summed up by the statement "engineers do not design bridges to stand up, they design bridges not to fall down". This translates to something the author calls "design for success by engineering against failure".
This principle is one of the threads that runs through this book -- what causes strategic business solution investments to fail and how to design failure out of the solution.
The book includes a comprehensive review of the factors that give rise to failure of strategic business solution and information technology investments.
It addresses subjects such as information technology mythology and lack of executive custody as two factors that contribute substantially to the failure of projects.
Lack of strategic alignment is also identified as a major factor giving rise to investment failure and is discussed at length together with some principles for identifying what strategic alignment is and how it is achieved.
An engineering approach to projects of this nature is presented and forms a thread that runs through the entire book.
Part 3 of the book provides a comprehensive introduction to the principles that the author advocates for developing projects and programmes that are designed not to fail and therefore to succeed.
The book ties together a diversity of established knowledge together with innovative, practical suggestions as to how successful projects and programmes can be achieved drawing on the construction industry metaphor.
A diversity of physical world examples are used to bring practical context to many of the issues facing organizations investing in strategic programmes, strategic information technology or managing existing investments. One of the lessons that is derived from these parallels is that if the parallels were effectively applied a large proportion of projects which fail would never be undertaken since there is frequently no real business case and the real cost of a successful investment far exceeds the expected benefits.
It is hoped that this book will contribute to a swing away from failure and contribute to a situation where the situation will be reversed. A situation where registered professional business solution engineers will deliver outcomes where more than ninety five percent of all strategic business solutions and strategic information system investments meet or exceed the specified requirement. The opposite of the present situation.
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Acknowledgements
I would like to acknowledge all the people who through their knowledge and wisdom have played a role in bringing me to the point where I could write this book. I would particularly like to acknowledge:
-- Professor Milton Harr for teaching me to apply lessons in one industry, profession or speciality to solve problems in another.
- Professor Malcolm McDonald for his definitions of strategy and marketing that have profoundly influenced my outlook on these subjects.
- Ettienne du Preez for his friendship and technical excellence that proved that my concepts and ideas could be successfully applied in custom developed business software.
I would also like to acknowledge my numerous clients with whom and through whom I have gained the experience on which this book is based. Also my many business associates and friends who through the years have provided their input, comments and wisdom in diverse ways that have contributed understanding and insight which have made this book possible.
Dr James Robertson PrEng
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For nearly a decade I have been aware of statistics which indicate that seventy percent of all business information technology investments fail to deliver anything whatsoever.
These statistics first came to my attention when I was lecturing a master of business administration programme and undertook a poll of the students. These students represented middle to senior management of major corporations and were therefore considered to be a useful indicator of overall performance. The result of the poll indicated that the management of seventy percent of the corporations represented on that course were dissatisfied with their information technology investments and considered that they were not meeting their requirements.
I subsequently encountered a report which indicated that out of an estimated three trillion United States dollars invested in information technology worldwide by 1995, two trillion had failed to produce anything that worked.
As time progressed, I encountered other reports and quoted the statistics in a number of presentations to conferences internationally relating to the theme of this book.
Consistently I found that the figure of seventy percent total failure was supported. The only real surprises came from people who challenged the numbers as being too low and stated that the failure rate was much higher than seventy percent.
Recently I encountered an article which made the statement "it is estimated that as many as 19 out of 20 enterprise resource planning system implementations do not deliver what is promised" (McLeod 2003). Given that enterprise resource planning (E.R.P.) systems are supposedly the flagships of corporate information technology today, this statistic is a damning confirmation of the severity of the problem.
Parallel with these findings I encountered statistics that indicated that seventy percent of all business process re-engineering (B.P.R.) projects fail totally and that ninety percent of all strategic plans fail. Progressively I came to realise that the factors contributing to the failure of these projects were the same as for information technology projects and that, in fact, all three types of projects were simply facets of one family of organizational improvement projects.
While I was acquiring this data I was undertaking my own projects as a consultant and experiencing great success in some cases and disconcerting failure in others.
I also undertook the development of an information technology strategy for a major government agency. This was undertaken using a market focussed approach in terms of which the middle, senior and executive management of the organization were surveyed in a series of workshops.
It was found that the information technology shop of this agency could justly claim to have world class technology and methodology in terms of the equipment in use and the systems development life cycle being employed. However, they only achieved a rating of 42% in terms of what management of that organization considered to be really important with regard to the use of information technology in support of the business of the organization.
As I gained this experience I found myself constantly analysing the causes of failure, developing a catalogue of factors to watch out for. I also developed my own approaches to overcoming the causes of failure. Sometimes I made use of established methodologies from other disciplines but frequently I found that there were no formal methodologies to overcome these factors.
In the process of acquiring information about failure I started to develop an approach to projects which was designed to eliminate failure. Of necessity this meant that I spent a considerable amount of my time investigating causes of failure and potential causes of failure. In doing this, I found that people as a whole were not receptive to this focus on failure - seemingly a positive outlook was a vital requirement for a successful project and looking for causes of failure was not well received.
Initially I wrestled with the approach I was adopting versus the criticism I was receiving. In doing this I reviewed my experience as an engineer, both as an undergraduate and as a practising professional engineer in the field of engineering geotechnics with particular emphasis on mine design and hazard management.
I soon realized that my whole training as an engineer was focussed on understanding the factors that could give rise to failure so that failure could be designed out of the solution.
Engineers are trained from the beginning of their undergraduate careers to design failure out of their solutions. They work with factors of safety against failure and, as they become more advanced, may work with probability of failure. All the time they are seeking to systematically analyse every part of the design against failure in order to make sure that failure does not happen within acceptable parameters.
For example, in the case of a bridge, earthquake forces are investigated and the bridge is designed against design levels of earthquake. Wind forces are investigated and the bridge is designed against design levels of wind force. Boreholes are drilled in the abutments and geologists meticulously examine the rock in the abutments for potential failure planes and zones of weakness, the abutments may well be reinforced as a result.
Engineers investigate overload conditions and design against overload. During construction, actions to prevent failure are ongoing, for example, concrete cylinders or cubes for strength testing and quality control are taken from every batch of concrete, carefully cured and tested. All this is done in conjunction with national and international standards, policy statements, etc which have developed over the years as engineers have experienced failure and sought to prevent recurrence.
In practice, the only way that engineers can cost-effectively design any structure not to fall down, is by designing similar types of structure repetitively. They thus attain a level of knowledge and experience which enables them to design and build whatever structures they specialize in, quickly, efficiently and cost-effectively.
I progressively recognized the extent to which my professional training had prepared me to instinctively seek to understand the causes of failure of information technology projects in order to prevent a recurrence of failure. I also came to understand that the information technology industry as a whole does not think this way. It seems that there are those who are firmly convinced that just because they can describe a system in loose and unstructured business language they can build what they specify and it will work and deliver specified business benefit. In practice many systems only work because one or two individuals who seemingly have an intuitive feel for what is really required work long hours, often on a trial and error basis, to deliver solutions that work. As indicated above, the majority of such systems never deliver.
1.1 The Business Context of Information Technology
The business context of information technology is frequently hands-off. Information technology professionals are not well regarded and frequently business executives do not take information technology seriously or else regard it as a necessary evil. Failures are almost taken for granted and frequently written off casually.
Correspondingly, information technology investment decisions frequently seem to be taken on a basis that does not soundly reflect a business case and decisions are often reversed at short notice if the slightest adversity is experienced.
Many business executives use "I'm not computer literate" as a sort of apology with which they prefix any discussion of information technology and then abdicate responsibility to others who are supposedly "literate" and are therefore in some manner better equipped to take decisions. This despite the fact that these other "better equipped" individuals do not have any knowledge of the corporate strategic view and therefore are handicapped in formulating solutions that have serious potential to work effectively.
In considering the overall business context of information technology in recent decades, it is important to recognize that twenty years ago and even ten years ago the technology was evolving fairly rapidly. Increasingly business was faced with technology options that a few years previously had not be available at all or had not been cost-effectively available.
Today that has changed. All the technology components necessary for effective and efficient solutions for the average business are readily available at costs that put them within the range of most corporations which have a real business case for them. The technology is not cheap and, as you will see later in this book, the real cost of the technology is very substantial relative to the visible costs of direct technical components.
However, there is a legacy mind set to the effect that information technology is changing so rapidly that it is not possible to keep up. This is fed by an information technology industry marketing machine that has generated great wealth out of generating fear of being left behind.
However, as evidenced by the year 2000 (Y2K) situation, the ethics of this marketing machine and the industry that it serves leave much to be desired.
Another aspect of the current business context of information technology is the tendency to seek quick fixes. Most businesses are largely focussed on their quarterly results and investments are made with a short-term focus. This is giving rise to other ailments in the business environment which have nothing to do with information technology.
The reality is that a long-term strategic focus is an essential component of long-term business profitability and this long-term focus is perhaps more necessary in the field of information technology than in any other aspect of business endeavour. The fact is that really effective business information system investments take a long time to develop and implement and even longer to deliver a real payback, IF they deliver any payback at all.
Professor Michael Porter, speaking on the subject of global competitive strategy made the statement that the world is "coming through an era where (there has been) a lot of confusion". He went on to say that "many ideas may prove not to be robust" and that "the more we learn of the last 5 to 10 years - (they were) not nearly as good as it seems" (Porter 2003).
Porter goes on to refer to "the myth of rapid change". He states that the "perception is that things are changing so fast" but that the "reality is that key measures persist for decades". He states that "profitability profiles of major players in the semi-conductor and airline industries have been stable over a decade". He attributes this to competitive advantage held by these major players (Porter 2003).
1.2 The Challenge for Information Technology Today
As I gained understanding of these issues, it became increasingly apparent that the challenge for information technology was to get the right information, to the right people, at the right time and in the right place in order to make the right decision. The last piece, in order to make the right decision, is profoundly important.
Frequently information systems are designed to deliver the available information, not the information that will result in effective strategic decision-making. This is an essential distinction and one that is lost in most information technology projects.
This should be seen in terms of current economic trends which in turn should be assessed relative to historical differentiators.
In the 1960's the big challenge for business in the boom years was whether they could produce enough to satisfy demand.
In the 1970's the challenge became whether they could sell all that they could produce.
In the 1980's issues of finance and costing became critical. Principles like activity based costing, just in time, etc were in favour.
By the 1990's and 2000's business was confronted with excess supply and business conditions which meant that no single division could solve the business challenges. It was essential that the production, sales and financial challenges of prior decades were fully catered for and this remains the case today.
It should be taken as a given that in designing and implementing any major integrated business information system today that it must provide efficient and effective facilities for managing production, sales, costs and all related operational aspects. It should not be necessary to specify this, it should be taken as a given. Yet, frequently, system implementations are sub-optimal in some or all of these aspects and really effective support and functionality relating to some or all of these factors is lacking or absent.
Real support for activity based costing is, in it's own right, a challenge. Very few major system implementations apply technology to effectively manage activity based costing as a routine component of the design and implementation of the financial components of the systems deployed.
In considering these aspects it is important to recognize that a boom similar to that of the 1960's and 1970's is highly unlikely. From this it can be concluded that strategic issues are vital. Further consideration indicates that this requires effective application of information technology and implies a holistic, integrated business approach including effective information technology
Information technology is not an end in itself. It is part of a holistic, integrated view of business which is strategically focussed and ensures that the business organization is effectively optimized and supported by effective information technology in support of strategic and operational objectives.
Further examination of the key differentiators in today indicates that market focussed strategy, effective utilization of the human resource and effective management decision-making are key differentiators in the decades ahead. All of these aspects require the effective application of information technology to fully support the business in achieving it's full potential in terms of differentiation in these areas.
The application of information technology in these areas is not necessarily textbook application of the technology, it is the application of the technology in a strategic manner which makes use of not just hard information but also soft information. Something that very few organizations really address.
This integrated, holistic view of information technology in support of the right business strategies and tactics requires information to make the right decisions at a diversity of levels in the business. This strategic and tactical deployment of information technology to address every facet of business in a holistic, integrated manner represents one of the biggest opportunities facing business today and is addressed in more detail in the chapters that follow.
Porter states "the essence of strategy is integration - the ability to see in a complex holistic way" (Porter 2003)
A comprehensively integrated business information solution is a necessary requirement for a holistic, integrated globally competitive business in other words a world class solution.
The next chapter (not on this web site) explains what I consider to be the attributes of a world class solution.
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In formulating an approach to effective strategic business solutions this book has looked at the shocking statistics that ninety percent of information technology projects under deliver and seventy percent fail totally. Ninety percent of strategic plans fail totally and seventy percent of business process re-engineering projects fail.
In other words, despite billions of dollars spent in each of these areas over the past few decades, failure is at epidemic proportions.
36.1 World Class Capability
Chapter 2 discussed at what a world class business information solution would look like and identified that an essential component of this solution was a world class strategic capability which enabled the corporation to achieve sustainable competitive advantage using information.
This began to establish the close correlation between information technology and strategy as two components of business effectiveness rather than as unrelated issues.
Chapter 3 discussed at the benefits of this approach and in chapter 4 examined the alternative scenarios that are available to most organizations with regard to the effective strategic application of information technology.
36.2 Causes of Failure
Part 2 examined in some detail the factors that give rise to the ninety percent information technology underperformance statistic and stressed that these factors were frequently the same factors that give rise to the failure of strategic plans and the failure of business optimization projects.
Issues of information technology mythology, lack of executive custody, policies, lack of strategic alignment, lack of an engineering approach, lack of data engineering, people and soft issues and technology issues are addressed.
Particular emphasis is placed on the need for an engineering approach. This is an approach that is geared to designing for success by engineering against failure. It recognizes that systematic, meticulous disciplines are the essence of the way in which engineering has reached the high standards of success that are taken for granted today.
The importance of a systematic, rigorous approach to data content, referred to as "data engineering" is also stressed and explained.
36.3 Achieving Success
Having established that engineers do not design bridges to stand up, but rather they design them not to fall down this book has presented a case for a robustly different approach to information technology, strategy and business optimization projects.
Part 3 outlines the requirements for such a radically different approach starting with a set of critical principles for success. This is followed by the definition of the critical stages for a project or programme for success, the critical factors for success, the critical technology components and the critical human foundation for success.
This last point, the human foundation, makes visible some of the key factors that give rise to failure and how they should be taken into account in designing for success. The net result of part 3 is a framework against which successful solutions can be designed.
36.4 Programme Design to Achieve Success
Part 4 provides detailed analysis of the components of a large successful strategic information technology programme.
Most of these components happen also to be what is required for a successful strategic programme or a successful business optimization programme. However, it is proposed that none of these in isolation represents a valid programme for any business in the real world.
Significant information technology investment cannot be undertaken without effective business strategic planning and business optimization. Business strategic planning cannot be undertaken without an undergirding of effective information technology and business optimization. Business optimization cannot be undertaken unless effectively undergirded by effective business strategy and strategic information technology.
Ultimately the business must end up in the place that is determined by the strategy, it must be organized and optimized to operate effectively in that future condition and it requires the right information at the right place at the right time in order to make the right business decisions. Effective information systems are an essential part of the solution.
Thus, in looking at effective strategic business solutions, one encounters a requirement for a comprehensive, holistic, integrated approach to developing and implementing solutions which is materially different from many of the approaches applied today.
Part 4 also outlines the basic staff complement required for a typical programme based on a design developed for a real world client.
36.5 Business and Strategic Issues
Part 5 wraps up with a range of specific chapters dealing with issues that require attention in order to complete the picture.
This part includes a detailed discussion of a governance model for managing large strategic business solution programmes such as those discussed in this book, it goes on to discuss a metaphor for systematically developing a business optimization programme.
There is then a diversion into the practical requirements for specifying software in such a way that there will be no surprises and the business will obtain the level of sophistication that is appropriate. The application of this concept is discussed in the following chapter and this is followed by a brief view of business solutions, including information technology, twenty to fifty years from now. It is suggested that the future will bring a situation in which the business improvement industry looks a lot more like the construction engineering industry than it does at present.
An approach to existing systems is outlined.
The book closes with a brief look at a systematic and effective means of strategic analysis and an overview of the overall approach to the development of large-scale strategic programmes in order to complete the picture of effective strategic business solutions which is an essential sub-theme of this book. This is followed by a brief assessment of realistic time and cost provisions.
Taken together, this book provides a framework for any organization that is truly seeking a more effective way of operating and of achieving real, effective strategic solutions involving information technology, to go about achieving the objective.
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DEDICATION vii
ABOUT THE COVER viii
FORWARD xv
PREFACE xvii
About the Author xviii
About the Book xix
Acknowledgements xx
CONTEXT SETTING xxi
PART 1
SETTING THE SCENE: AN INDUSTRY CHARACTERISED BY FAILURE AND WHAT IT SHOULD DELIVER 1
CHAPTER 1: THE CONTEXT OF INFORMATION TECHNOLOGY BUSINESS SOLUTIONS: AN INDUSTRY CHARACTERISED BY FAILURE 2
1.1 The Business Context of Information Technology 3
1.2 The Challenge for Information Technology Today 4
CHAPTER 2: WORLD CLASS BUSINESS INFORMATION SOLUTION DEFINED 6
2.1 Comprehensive Data Engineering 6
2.2 Appropriate Fully Integrated Systems At Data Level 7
2.3 High System Operational Efficiency And Precision 7
2.4 Strategic Alignment Of All Operational Systems 8
2.5 Integrated, Holistic Business Operations 8
2.6 Comprehensive Management Information With Full Drill Down 8
2.7 Comprehensive Strategic Analysis And Decision Support Capability 9
2.8 Conclusion: World Class Capability 9
CHAPTER 3: BENEFITS OF A WORLD CLASS BUSINESS SYSTEMS SOLUTION IMPLEMENTATION 11
3.1 Improved Corporate Competitiveness (40%) 11
3.2 Improved Corporate Profitability, Bonuses, Stock Options, Share Value, Dividends, etc (30%) 11
3.3 Effective Corporate Operation, Sustainability, Better Decisions (20%) 11
3.4 Improved Personal and Corporate Relationships For Executives, Management And Team Members (4%) 11
3.5 Improved Health, Quality Of Work Life and Family Life For Executives, Management, Team Members and Staff (3%) 11
3.6 Recognition, Differentiation and Promotion For Executives, Management And Team Members (2%) 11
3.7 Empowerment, Improved Remuneration, Job Security and Life Style For Executives, Management and Team Members (1%) 12
CHAPTER 4: SCENARIOS FOR A WORLD CLASS SOLUTION (Case Study) 13
PART 2
CAUSES OF INFORMATION TECHNOLOGY INVESTMENT FAILURE: CRITICAL MEASURES GENERALLY NEGLECTED 17
CHAPTER 5: FACTORS GIVING RISE TO INFORMATION TECHNOLOGY INVESTMENT FAILURE AND UNDER PERFORMANCE 18
CHAPTER 6: INFORMATION TECHNOLOGY MYTHOLOGY 20
6.1 Information Technology Can Destroy A Business 20
6.1.1 Temporary Staffing Company 20
6.1.2 Major Medical Insurance Administrator 21
6.1.3 Conclusion - Information Technology Failure That Impacts Customers Can Destroy An Organization 21
6.2 Abstractness and Complexity 22
6.3 Critical Lessons 24
6.3.1 The Information Technology Industry And Y2K - A Major Credibility Problem 24
6.3.2 The Internet Bubble That Burst 25
6.3.3 The 19 Out of 20 Enterprise Resource Planning System Failure Rate 25
6.3.4 Conclusion: Critical Lessons 26
6.4 Information Technology is Not About Technology 27
6.5 Long-Term Investments 27
6.6 Professional Standards 27
6.7 User Friendly Is Not About Technology 28
6.8 Conclusion: Information Technology Mythology 28
CHAPTER 7: EXECUTIVE CUSTODY AND POLICIES 29
7.1 Role of Executives in Strategic Leadership 29
7.2 Systems Support Decision Making and Do Not Make Decisions 30
7.3 The Issue is Support for Competitive Advantage Not Productivity 31
7.4 The Cost Experience Curve, Utilize Resources Effectively and Efficiently, Recognize True Cost, Where Errors Originate 31
7.5 The Fundamental Components of Information Technology 32
7.6 Cost Versus Quality Versus Speed 33
7.7 Inappropriate Policies 34
7.8 Conclusion: Executive Custody and Policies 34
CHAPTER 8: STRATEGIC ALIGNMENT 35
8.1 Professor Malcolm McDonald 35
8.2 Michel Robert 37
8.3 Professor Michael Porter 38
8.4 The Technology Life Cycle as Represented by McDonald 39
8.5 Strategy: Some Other Considerations 40
8.6 Strategic Alignment 41
8.7 An Example of Strategic Alignment 41
8.8 Conclusion: Strategic Alignment 42
CHAPTER 9: AN ENGINEERING APPROACH DEFINED 43
9.1 Executive Custody, Governance and Strategic Alignment 44
9.2 Programme Design 44
9.3 Design Against Failure 44
9.4 Solution Analysis And Design 44
9.5 Laboratory Testing 44
9.6 Data Engineering 45
9.7 Management Of Change 45
The Second Dimension of An Engineering Approach 45
9.A. Meticulous, Documented Design Detail 45
9.B. Meticulous, Documented Planning Detail and Costing 46
9.C. Multi-disciplinary Teams and Specialists 46
9.D. High Professional Standards and Legal Accountability 46
9.E. Cross Checking And Double Checking Of All Important Details 47
9.F. Physical World Metaphor and Impact Analysis 47
9.G. Engineers Know The Limitations Of Their Expertise And When To Call In Specialists 47
9.H. Conclusion: An Engineering Approach 48
CHAPTER 10: DATA ENGINEERING: WHAT IS REQUIRED TO TURN DATA INTO MEANINGFUL DECISION SUPPORT INFORMATION 49
10.1 Introduction 49
10.2 Some Basic Principles 49
10.3 Personal Experience 50
10.4 The Two Fundamental Components of Information Technology 50
10.5 Basic Concepts 50
10.6 Warehouse Analogy 51
10.7 Cubic Business and Data Models 51
10.8 Critical Components of Data Engineering 54
10.8.1 Data Modelling And Schemas 54
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