The Golden Rule Of Business Technology Investments

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We all need help sometimes. Not long ago I needed help developing a high-level strategy for a company that wanted to rethink it’s business technology investments.

I was asked, “So if we’re going to invest in technology, what should be the big drivers, what should be the filters through which we send these potentially huge investments?”
I thought about the question for a while and came up with two words: “collaboration and integration.”

What does that mean? It means that investments in business technology should be made only if they’re consistent with collaborative business models and enable technology integration and interoperability.

The advice was pretty simple: Stay out of the red zone. Make investments in business models and technologies that facilitate collaboration and integration, nothing more, nothing less.

Collaborate – Or Else

Collaboration comes in many flavors. You have to prepare generally for collaboration that will occur inside and outside of your firewall. You have to think about continuous versus discrete business models and transactions. You have to think about supply-chain planning and management, customization, personalization and eventually even automation, where significant numbers of your transactions will be automated.

You need to think about customers and suppliers and even employees as “life cycles” to be managed and monetized. The notions of “whole customer management,” “whole supplier management” and “whole employee management” should anchor your collaborative discussions. Connectivity is the watchword now, not just because the Internet makes it possible, but because connectivity enhances reach, service, expense management and — therefore — profitability.

A key distinction? Continuous versus discrete transaction processing. Discrete transactions — like selling insurance policies, buying disk drives to be included in PC manufacturing, or buying or selling stock — used to be discrete transactions that one could begin in the morning and compete by afternoon (or the next morning after a good night’s sleep). Even today these transactions are continuous. One insurance policy is blended with another.

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Cross- and up-selling are continuous goals. Disk drive acquisition is integrated into PC manufacturing and buying and selling stock is simultaneously linked to tax calculations and estate planning. Tomorrow all of these transactions will be extended, continuous and automated.

Another way to think about all this is to imagine what would be possible if your company had immediate and continuous access to its employees, customers, suppliers and partners. What if you could communicate with all of these constituencies whenever you wanted? What if you could tell them about new deals, discounts and opportunities anytime at all?

One thing’s for sure. If we continue to think about business processes as discrete we’ll miss profitable opportunities for continuous transaction processing. Worse, if you keep making investments in plant, equipment, communications, data bases and applications that are inconsistent with the collaborative, continuous world, you’ll waste a ton of money positioning yourself to succeed in the past.

We’re at a different place now. Connectivity among employees, suppliers, customers and partners — though far from complete — is enabling interactive customer relationships, integrated supply chains and the business analytics that permit real-time tinkering with inventory, distribution and pricing. The strategies and business models were always there: For years we’ve imagined seamless connectivity and ubiquitous business. But the convergence of business and technology has made it more than just possible.

Integrate/Interoperate

This one’s a little simpler: applications, data, infrastructures and all of the rest of the gear that we buy has to integrate and inter-operate. This means that you need to focus on enterprise application integration (EAI) and even Internet applications integration (IAI), since we’re now replatforming first-generation Internet applications. Applications, data bases, content and knowledge must be integrated to support cross-selling, up-selling, supply chain planning and management, customization, personalization and automation. It’s great if there’s a business imperative to collaborate, but if the technology doesn’t integrate and inter-operate then it won’t happen.

It also means that you need to reduce variation in your environment because variation exacerbates integration problems. You therefore need to standardize your environment around some significant discipline which now becomes not just good management but necessary and sufficient to on-going integration (and therefore collaboration).

Architectures must also be assessed for their willingness to work together and with the enterprise applications and data bases you’ve selected. How about this: Would your computing and communications architectures look different if you were wearing glasses when you deployed them — glasses that had one collaboration and one integration lens? Of course they would.

Take That

So that’s the advice I gave to the client. Yes, it was high level. Yes, it was abstract. But it was also good advice: Investors in business models and enabling technologies must drink the collaboration/integration Kool-aid. Now you can take it the next level.

Steve Andriole is the Thomas G. Labrecque Professor of Business at Villanova University where he conducts applied research in business/technology convergence. He is also the founder & CTO of TechVestCo, a new economy consortium that focuses on optimizing investments in information technology. He is formerly the Senior Vice President & Chief Technology Officer of Safeguard Scientifics, Inc. and the Chief Technology Officer and Senior Vice President for Technology Strategy at CIGNA Corporation. He can be reached at stephen.andriole@villanova.edu.

Portions of this article are drawn from Stephen J. Andriole, The 2nd Digital Revolution: Candid Conversations About Business Technology Convergence (Financial Times | Prentice Hall 2003).