Let’s Move On. To Where?


As a response to my article on how to adopt enterprise architecture, one of the comments was as under:

” If EA can provide an enterprise with the ability to remain a going concern and reward shareholders then it seems to me to be a useful endeavor. Absent that lets move on.”.

There are two operative parts to this comment. The first part is asking if EA can provide stability to organisations. As I had written earlier, EA is all about governance. Governance to ensure continuous creation of value and to stay sustained. Therefore, I do not understand the `IF’. The second operative part is ‘Absence let us move on’. Move where? The absence of EA has brought us to the abyss we are in today.

The situation at GE is there for all to see. There are many companies which are similarly vulnerable. There is a multi-national, well known, consumer goods company of over 2 centuries of existence, which is next in line. This is a huge company. The major reason for this is the top management is not in control of events. In this company there are over 5000 applications running. The top management gets it’s reports through a legacy application. The management is used to it and are comfortable with it. The input to this application is from EXCEL. Here is the catch. The EXCEL does not import the data from the ERP. Some officer is inputting manually into the EXCEL. (This is where cooking takes place. Because the systems in the organisation are not well integrated, the data needs reconciliation. Let me assure that these kinds of reconciliations are not easy. The officer who inputs the EXCEL, put in some data, say sale numbers for the month of January as 1 million, which in his estimation should be close to the truth. He does this because he does not have the luxury of time to properly reconcile. It may even that he may never be able to reconcile due to the maze of conflicting data in front of him. Unfortunately, at the end of February he would find a report showing the accumulated sales for both January and February to be 0.9 million. (Even this may not be the truth). The officer, confronted with such messy situation would put the number as 1.5 million because he has already given the January number as 1 million.) The management takes it’s decisions based on such unreliable inputs. None of the systems in that organisation is reliable. (By the way, this is not the only example, it is the same in almost all companies, all over the world).

Nicholas Carr wrote in 2003, his article `IT Doesn’t matter’ in which he says,

“In 1965, according to a study by the U.S. Department of Commerce’s Bureau of Economic Analysis, less than 5% of the capital expenditures of American companies went to information technology. After the introduction of the personal computer in the early 1980s, that percentage rose to 15%. By the early 1990s, it had reached more than 30%, and by the end of the decade it had hit nearly 50%.”

2003 itself, IT spend constituted 50% of total capital expenses of corporate. On top of this current expenses on IT to consider. Even if we assume that this ratio stayed at that level to date, can you see the skewed budget favouring IT?

What are the implications of all these?

  1. Investments in other capital items are reduced. Reasons are, because the management is not sure of the information that they get, are not confident of investments. They know that there is something wrong. But are not aware what it is. Compound to this is the constant innovation in technology makes the cost of production of materials as well as cost of services to reduce constantly. No management is confident of taking any investment decisions. It is a situation where no management can either acknowledge the situation or confidently move forward. They are numbed to lull. Today, there are big hue and cry about lack of private investments. There is an urgent need to visit these issues.
  2. Because IT is perceived, albeit strategic, all focus is on IT spend. The truth is IT spend is not a strategic. As it happens during budget allocations in governments, the corporate IT function too works overtime to spend allocations for IT every year, for, otherwise, the subsequent year’s allocations may get curtailed. Almost entire spend is unnecessary. To give an example, let us say, the sales manager expresses some dissatisfaction on the structure of a particular report, immediately, IT manager would suggest a `State of the Art’ report generator along with a new analytical tool both of which got released only a few days before, to be bought. They would cost big money. Costlier the product, higher the status. The board would ask no question as it is from IT. There will be no analysis to justify the expense. There will be no study to see if another report generator that is already in the system would be sufficient. Obviously, the white elephant will come with 1000 new problems like interoperability, bugs yet to be fixed (will be fixed only at the customers expense), etc,. Many times, these products may be irrelevant to the situation. SHHHH! These are IT expenses. But the poor Sales guy who originally requested for a small modification in his report will be blamed for all the failures of IT. `We have given you the most modern and most expensive tools. Yet, your reporting is bad’. Some 30 years ago, I saw a Dudley Moore movie. Forgotten the title. Dudley would have visited a family living in an isolated house in Nevada area. Dudley and the host would be chatting sitting in the bar and sipping beer. Near the bar there will be an old man sitting in a rocking chair. Next to the old man lying on the floor will be an equally old dog. Suddenly the old man will pass wind with a loud noise. Immediately the dog would run looking mortally scared. Amused Dudley will ask the host as to why the dog was so scared. The host will reply, `Whenever my dad passes wind, we don’t want him to feel guilty. So, we whip the dog.’ In a corporate there are so many fall guys available from sales, finance, HR, admin and so on. IT can keep passing wind. (I want to reiterate that I am not anti-IT. On the contrary, I am anti-management which ignores governance). .

 

The other implication of the comment `let’s move on’ is to suggest that I shut up. What is it off me that I should be agitating about this? In fact, one of my friends from my early morning walk in the beach group asked the same question to me. My answer is, when any professional worth his salt sees such nonsense, he is professionally bound to point out. Let it get discussed and debated. Let them crucify me if the fact is otherwise.

 

“There is surely nothing quite so useless as doing with great efficiency what should not be done at all”     Peter Drukker.

 


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