The Information Technology Problem and Solution
Information Technology is one of the top 10 problems of 20th century management!
Information Technology incorporates a wide variety of unsolvable problems
Information Technology (IT) employed today has many inherent problems that many expensive solutions have never been able to solve:
- Information technology is managed as technology, rather than as capital preventing integration with the business
- Information technology employs large monolithic information systems that are laid over the business, instead of information processing solutions that are utilized by the business
- Information Technology defines different architectures to define and align the business, systems, hardware and networks, and data and information, rather than integrating each with the business
- Different categories of information capital are mixed in many systems using different entity names and definitions producing information complexity and preventing proper information capital management
- Since the business is not organized, information systems manage information related to structures laid over the business and do not capture, process, or report actual business data and management information
- Information Technology is difficult to manage because it mixes business, facility, and management capital that require diverse management and operating capabilities
- It is difficult to manage return on IT investments since the investments are lumped together and do not produce direct measured business improvements
- Information Technology has grown into a large expensive empire that involves much unnecessary processing, extensive overheads, and unsolvable problems
These problems can never be solved with 20th century management that tries to improve the enterprise by laying new or improved structures over the business.
Information Technology problems disappear when using R-pM to organize the business for 21st Century Management
The only way to eliminate the Information Technology problems is by organizing the business with Result-performance Management (R-pM) to enable 21st Century Management. R-pM integrates information technology in the business as capital defined as specific performance solutions utilized to produce specific business results. R-pM provides the following measures to eliminate the unsolvable Information Technology problem:
- R-pM organizes the actual business as specific performance solutions, including IT solutions, to produce specific business results
- Information system solutions are defined and integrated with the business process as modules to produce a specific result or a chain of results
- Information systems focus on managing actual business data in result value and quality, performance cost and effectiveness, capital worth, and return on capital investments that is not processed today
- Information Technology is defined and organized as capital, with other capital of the same category, for proper capital management by those with the professional capability
- Information capital is defined and managed as business data, human knowledge, facility records, and management intelligence to produce information solutions needed by the business
- Enterprise information is integrated by performance solution utilized, result produced, supplier, customer, time period, business transaction, etc in an enterprise Business Information Base for one set of complete and accurate business information
- Information systems and processing devoted to managing arbitrary structures laid over the business and special systems to address problems in data reconciliation, information integration and extraction, and management reporting are discontinued, if not directly needed by the business
- New information system implementation integrates business and information processing with other performance solutions to produce specific output results needed by the business
- The business is organized for a new generation of 21st Century Management systems and business-information process modules, to process the actual business result by result, and provide one set of consistently-defined management information
Using R-pM to manage information technology as capital utilized by the actual business eliminates the unsolvable IT problems in business alignment, information complexity, data reconciliation, unknown costs and value, unknown capital worth and returns, CIO and IT management capabilities, data integration and control, and on and on.
The Information Technology Problem
Enterprise information systems include a wide variety of systems that are laid over the business
Since the business is not organized, different management structures must by laid over the business to manage the enterprise. Information systems are another set of overlaid structures that process and report the system structure, plus overlaid organization, business process, account, administrative, cost, quality, performance, and other structures, instead of directly managing the business.
Enterprise information systems include material control, production control and manufacturing resource planning systems, supply chain and customer relationship management systems, cost and quality management, operational management information, and other systems that support revenue result management. Capital result management systems include human resource management, financial management, general ledger, accounts payable and receivable, asset management, IT architecture management, inventory, purchasing, strategic planning, executive information, and other administration systems. Investment result management systems include investment analysis and planning, project management, portfolio management, shareholder management, etc. Each system is laid over the business, rather that being utilized as a solution by the business to produce the managed revenue, capital, or investment results.
Overlaid information systems define the enterprise with different entities that must be integrated
Each of the systems defines the enterprise with different information entities creating a large information cross-referencing and integration problem. Systems manage such enterprise entities as department, center, station, responsibility, unit, function, process, object, activity, etc, instead of specific business results. The enterprise is left with a large problem to sort out the information, integrate like information, and relate information to the business. The problem is addressed to some degree by implementing an enterprise application architecture from a single vendor. Most enterprises still must make additional investments in information integration and data reconciliation systems for performance management, management and executive reporting, and strategic enterprise management. Even with all this such actual business data as result value and quality, performance costs and effectiveness, capital worth and utilization, investment utilization and return, etc cannot be captured and processed.
Business process re-engineering often creates a gap between information systems and the business
Business process re-engineering tended to create a gap between business processing and information processing. Instead of integrating the processing, Enterprise Resource Planning (ERP) systems were overlaid on the business process. The selling point was that best practices incorporated in the ERP system would automatically solve the problem. But this proved difficult to do in practice, since best practices need to integrate all the solutions utilized in the complete business.
Enterprises have difficulty defining business requirements for information systems
Since the business is not managed, it is difficult for the enterprise to identify how to gain specific benefit from information systems. Most enterprise information systems are sold by vendors who promise many benefits. Few enterprises really understand how to gain from the system. Enterprise system implementation is a large undertaking. Invariably, system implementation is restricted to putting the system into operation as a monolithic structure laid over the existing business. Even if the objective of system acquisition was business improvement, the objective usually gets redefined to “implement the system”. The enterprise is left on its own to make changes to gain benefits from the system.
Information system implementation consultants usually employ a methodology to implement systems over the existing business
Most implementation consultants employ a methodology that allows them to implement systems with staff that do not need to understand the enterprise business. The emphasis is on “doing what the customer wants” and satisfying “user requirements”, which is difficult to argue against. The administrative department is defined as the user, rather than result users, who use the system to produce results or face the customer. Usually, the main requirement of the administrative department is “no change”. These users often benefit from existing methods, and cannot visualize advanced ways to utilize systems to benefit other users. To minimize problems and delays in implementation, methodologies convert existing practices and utilities convert existing data. Utilization to achieve benefit is “up to the users” meaning result users. Training covers system operation rather than using the system for business benefit.
Information systems are managed by Information Technology that does not take responsibility for business benefit
Many enterprises view system business performance as a responsibility of Information Technology. But, IT will take responsibility only for the internal operational performance of the system as it is set up. Problems exist because neither IT, nor anyone else, was ever made responsible for the business benefit provided by the system. Enterprises often try to solve the lack-of-business-benefit problem with new more-complicated systems, rather than solving the IT and business problems and improving the utilization of existing systems.
Most information system implementations are cost projects that provide marginal benefit
Most enterprise system implementations are “cost projects”. Implementation itself provides little benefit to the real users and limited return on the investment. Enterprise performance problems are converted to the new system, in effect casting the problems in concrete, making change much more difficult, and escalating the cost of future performance improvement. IT investments are lumped, rather than defining and implementing the specific business, human, facility, and management solutions that must be utilized by the business to provide the return. The business that utilizes IT is not defined to enable measurement of the value added to the business by IT investments.
Information systems, hardware, and strategy are managed as technology rather than capital to be utilized for benefit
These problems are topped off by the problems of managing information as technology rather than as capital. This keeps information processing and business data separate from the business organization and processing. Data, knowledge, records, and intelligence are not managed by the proper human capability, and are not integrated to deliver solutions to be utilized by the business. IT facilities are operated separate from other facility equipment capital such as telephone networks, and the enterprise equipment infrastructure. IT strategies are planned and managed separate from other enterprise strategies creating future alignment problems.
The Information Technology Solution
Result-performance Management (R-pM) addresses the many problems in information system investments and the utilization of information technology to produce benefit.
R-pM manages information technology as business, facility, and management capital
Investment in enterprise systems and technology must be to enable significant result and performance improvement and not be an end in itself. Information system utilization is a result management responsibility to utilize the system to achieve business result value-added. Information system performance is the responsibility of specific capital management to provide the IT infrastructure and deliver accurate data, knowledge, records, and intelligence solutions to support achieving results at an acceptable cost. The analysis, processing, and data parts of IT are business capital and is managed with other business capital. The enterprise service architecture, hardware, software, and networks are facilities that must be managed with other facility capital. IT strategies are integrated with other capital development and management strategies to produce strategic results as management strategy capital. Other information capital must be managed as human knowledge, facility records, and management intelligence.
R-pM implements and utilizes information technology to produce value-quality business results
The solution to information system investment is through R-pM to understand and plan significant result and performance improvements using the system as the enabling technology. Result value-added provides the justification and payback for enterprise systems. R-pM addresses the results the enterprise must achieve utilizing the system. Performance problems are analyzed to make beneficial business changes that maximize the value-quality of results produced, improve the functionality of the system, and create an integrated Business Information Base. Application systems are not addressed as isolated performance solutions, but as a component of the business process solution. The application is first integrated into each business process utilized to produce results. The improved business process is then integrated with other needed solutions and implemented to produce higher value-quality results, result by result. R-pM consultants use the R-pM consulting model and 21st Century Management conventions to help the enterprise integrate and implement the full set of solutions needed to produce high value-quality results across the scope of a system.
R-pM utilizes information technology to provide the return on investment
R-pM organizes and manages the business to remove overlaid structures and apply information technology for the benefit of the business. R-pM provides many features to ensure successful system investments.
- Information is organized and managed as capital, not as technology
- Information system capital is split between business capital for the application logic and processing and data utilization, and facility equipment for the service architecture
- Existing systems and business processes are redefined as solutions to produce specific output results needed by the business
- Systems are never implemented directly, but are implemented as part of an improved business process
- System investments are analyzed and planned as a part of improved business process solutions to produce itemized result value-added benefits
- System utilization to produce result value-added is required by result manager goals and capital performance manager follow up to meet expectations
- Information solutions are developed as business data, human knowledge, facility records, and management intelligence solutions and not as technical solutions
- Information systems are implemented to manage results and performance solutions as integrating entities to define the business and utilize information systems to directly manage the business
- All information brought in, produced in, or leaving the business including emails and Internet downloads must reference a business data entity for control against the business
- Information is integrated by reference to a business data entity into an Business Information Base to deliver data, knowledge, records, and intelligence as solutions to produce specific results
R-pM takes the mystery out of information system investments and provides a disciplined path to gain a documented and planned return.
21st Century Management eliminates 20th century problems
Result-performance Management (R-pM) eliminates the top ten problems and other costly 20th century problems. Slash costs, simplify business management, and boost competitive advantage through R-pM, the conventional method for 21st Century Management.
Download your 21st Century Management Manual today
Your 21st Century Management Manual, The R-pM Toolkit, is available today and is under continual development to expand and refine 21st Century Management. Get your R-pM Toolkit, and future updates, at result-performance-management.com.
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