The Twelfth Man: Why software systems give companies the critical edge
Date: Friday, September 14, 2018
You are in a company. Your company does what your company does. All is good.
But the time comes when you realise you need a software system to make things better. So, you go out and buy one, like you bought that photocopier some years back. And like that photocopier, you plug in the new system, it goes, it does good things. The software makes things better, everyone's happy, you go home - job done!
There's just one more thing to add "... and they all lived happily ever after."
Why? Because that's the classic way we end stories that would be nice if they were true.
Integrating new IT systems into existing organisations has long been notoriously difficult, expensive and error-prone. Many reasons for this have been documented over the years. But as some of the more technical and procedural problems get ironed out, one stubborn issue seems to remain - us. Or more specifically, our corporate cultures and expectations.
That is what we will be tackling in this two-part article, some of the misconceptions about how IT systems fit into our organisations.
And in fact, that may be the first myth, that IT systems fit into our organisations. In other words, that an IT system is a commodity that you can attach to an organisation, plug it in and switch it on a bit like that photocopier we mentioned earlier. Whether its custom written software or an off-the-shelf solution, thinking like this could give rise to problems. Why? Well, let's take a look at an example
Toys 'R' Us vs. Amazon
Toys 'R' Us filed for bankruptcy in 2017. In short, the company, struggling under the weight of debt after a leveraged buy out in 2005 simply did not have the cash flow to adapt to changing market forces.
However, the seeds of their demise may have been sown back in the year 2000 when Toys 'R' Us essentially outsourced its online presence to an Internet start-up named Amazon. When the Amazon deal went sour, Toys 'R' Us had no online presence of their own and by then, it was too late.
It seems that the company felt that the Internet, rather than being a core part of its infrastructure and of its relationship with its customers, was something that could be bolted on and managed by a third party. To be fair, it would have taken considerable foresight to see this back in 2000 but it also underscores how important such critical thinking is.
It looks like what Toys 'R' Us, like so many other organisations, failed to realise was that there are only two types of company, technology companies and those that don't know they are.
Amazon knew this.
Amazon started off selling books but never viewed themselves as a 'bookstore'. Amazon was an Internet company, a technology company that happened to sell books. Because of this, their focus from the outset was on the digital experience they provided and then on following their customers into the online era. It also meant their mindset enabled them to easily diversify beyond books - and so they did. Because it was never really about books anyway. Amazon realised that rather than selling a tangible product they were actually selling an enabling technology to people. So from the start, they understood their fundamental relationship with the technology. However this understanding not only characterised how they served their customers but how they drove internal processes too. The market appeal and internal efficiencies that resulted have proved to be an unbeatable combination*.
Why I.T. Is So Critical
Perhaps we should be thinking of our information systems less as a product that gets grafted in and more as critical infrastructure. If communications are the lifeblood of an organisation then digital technology is surely its cardiovascular system, if people are at the nerve centre then software systems are the synapses, the connections between them.
Properly harnessed, digital technology :
- streamlines supplier relations
- improves efficiency within an organisation
- is where your customers are (or at least where they are going)
Even companies that have a strong product and sustainable business plan struggle if they fail to connect with their customers in a technologically valid way.
Many enterprises have realised that successfully harnessing technology can yield crucial competitive advantages in a changing world.
So, we have looked at why it is necessary for modern enterprises to understand - to really 'get' the technology available. But once an organisation has done this, is that the end of the story?
The next article will look at what attitudes corporations require to remain relevant in the digital economy.
*In fact, Amazon became so good at this that they started to rent out their technological infrastructure to others which spawned an industry in itself.
**Do check out the Forbes article 'Why Every Company Is A Technology Company'.