Harvesting information technology.(Cover Story)

As we move firmly into the "information age" it seems daring to suggest to a large American firm that it postpone acquiring yet another new type of information technology (computers, networks, software and so on, hereafter known as IT). At least consider postponing acquiring it for a long enough time that its price comes down, some of the bugs get worked out and maybe someone figures out precisely what it's good for. Yet, that is exactly what almost all of the best performers in my recent comparative studies of IT in American industry are doing on a routine basis... and saving a bundle in the process.

Such outstanding performers, as you will have surmised, are hardly ever the "leading edge" kinds of places vendors are incessantly nagging us to become. "Leading edge" environments can be very valuable when successfully executed. One need look no further than FedEx in the mid 1980's to observe the enormous value of an advanced IT environment.

But after four long years of searching, it's really more a matter of being unable to find more than fifty or so American firms that have come anywhere near achieving true competitive advantage in this manner, despite the hundreds of firms that have evidently tried this risky strategy-

The rest of large American businesses (and by large I mean having annual sales of $350M and up regardless of industry and individual IT expenditure levels) are "soldiering" on with fairly mundane sets of aging administrative application systems running on mainframes and a lot of shiny new PC's sitting on people's desks (give or take a major new system here or there). More than 34 of these mainframe-based systems are already eight or more years old.

Far too often, these systems serve as obstacles to the reengineering and downsizing efforts now going on in many American firms. These systems are also becoming increasingly expensive to maintain and few firms have any concrete plans for their replacement. The vast personal computer networks that have sprung up over the last four or five years are mainly used for office automation purposes.

Together, this dual computer processing environment is costing American industry about three percent of every sales dollar, or about three times what we were spending on IT just a decade ago. Not surprisingly, management is quite frustrated, as evidenced by the outcome of one of my recent surveys of senior managers. More than 70% of respondents indicated that they thought IT was critical to their business achieving its strategic goals while only 30% indicated they were willing to spend substantially more money on it.

Personally, I have become increasingly convinced that most firms could be achieving the same or better IT results while spending a whole lot less in the process, if only they would adopt some of the philosophical approaches the best performers are employing so successfully.