IT Addict, "High Tech made Simple" / This blog has moved to www.jeremyfain.net

Tuesday, July 25, 2006

IT as a business process optimizer: back in B-school tracks

Yesterday, I read an extremely interesting article in the British daily newspaper Financial Times. Basically, two NYU professors, namely Vasant Dhar & Arun Sundararajan, conducted a research about the importance of IT teachings in MBA programs.

After the bubble burst, IT suddenly become a separate area despite having been a superstar two-letters word during the net economy period.

I found really telling the parallel drawn in the article between finance and IT: market finance is a stand-alone set of skills that are very specific to people willing to work on capital markets; corporate finance is on the other hand a subject every single executive should know about, since investment decision-making science is based on such measurings as ROI, IRR, EVA, NPV, EPS, WACC, etc.
The same actually goes for IT: IT is both about studying technologies (like market finance: everybody doesn´t need to know about networks architecture, etc.) and the way technology apply to companies by driving business processes improvements. Henceforth, the impact of Information Technology in organizations should be an underlying topic in all business management courses. According to the article, the universities of Stanford & Harvard seem to have integrated IT as a performance driver in all its MBA course topics.

As far as I´m concerned, I enjoyed a very good exposure to the challenges and opportunities raised by the integration of technologies at HEC Paris: you get compulsory general MS Office training seminars, optimization and simulations on Excel, statistical marketing analysis on SPSS, Information Systems (ERP, networks, security, databases), and if you chose to, there are Visual Basic for Excel classes too. Furthermore, IT systems were often to referred to as potential competitive advantages in marketing (SRM, CRM, BI, etc.), supply chain (SCM, RFID), management accounting and control (tableaux de bord, balance score-card, etc.), financial economics (arbitrage, etc.), etc. Not bad, uh?

If I may add something, it looks as if the best IT-driven companies are most of the time the best performing and most respected corporations in their field. For instance, an e-Business investment plan made CISCO save 1.4bn$ last year (e-education, distance collaborative projects, billing, etc.); take a look on HP (IT-driven operations & logistics), Dell (a company that sell IT products through IT systems that had been providing its value chain a great advantage over the competition for several years), Home Depot, IBM, GE, Procter & Gamble, Decathlon, Toyota, Nissan, etc.

Basically every leading company is actually a leader thanks to a perfect fit between information systems & organizational structure. A good understanding of the integration of information technologies within corporations has become a key skill, one of these skills that will differentiate good people with excellent change agents.

But still, too many business management students believe IT is the designated area of all geeks and techies. Too bad!

9 Comments:

  • Let me say that first of all I'm happy to be part of the few students who see IT as something else than just a geeky hobby!
    There's actually no doubt about the business advantages of IT once you've looked at ERPs (SAP of course, Dynamics AX from Microsoft) or CRM for example, which are both tools for the manager and not the CIO. To be convinced (I'm still hoping though that most of your readers Jeremy don't need to be so) you should take a look at these peaces of research from Harvard and Keystone professors via the Microsoft people_ready site: http://www.microsoft.com/business/peopleready/innovation/insight/keystone_new.mspx

    May this help even though I'm hoping it won't!

    By Anonymous Hadrien, at 7/25/2006 05:06:00 PM  

  • Your link is extremely interesting. In fig. 2 of the Keystone survey summary, correlation between IT capabilities & business performance is clearly outlined.

    Many thanks for your valuable input: you´ve added credible figures to our thoughts!

    By Blogger Jeremy Fain, at 7/25/2006 05:45:00 PM  

  • Interesting perspective on integrating IT within a company. In the companies I worked for, IT seemed like it was doing it's own thing and opposed to other departments such as marketing. How can IT better align itself with other departments?

    By Anonymous Anonymous, at 7/25/2006 06:31:00 PM  

  • IT shouldn´t be a department. I believe that companies in a near future will switch to project management rather than divisional structures. Look at this post: http://itaddict.blogspot.com/2006/07/towards-project-management_115332136490454026.html#links

    Process optimization through improving information systems should be, like focusing on customer satisfaction, an underlying focus of all the stakeholders of an organization. Employees being of course major stakeholders, I hope I´m making a point answering your question.

    However, if you could be more accurate, I´d be glad to go ahead debating with you, dear Anonymous.

    By Blogger Jeremy Fain, at 7/25/2006 08:49:00 PM  

  • Ironically enough, the more engineer-driven the company, the more "geekier" the IT. My title at work is an umbrella-term "IT Specialist", and many people have asked what do I study at the (nearby) helsinki university of technology... conversely, as a economics graduate, i'm thought to know next to nothing about IT.
    One of my project owners was delighted that I knew XML schema...
    I can't blame them, when HSE doesn't offer any programming classes and most of its IT courses (what I've heard) are quite high-flying-no-computer-experience-necessary-kind. Also, the business stuff they teach at HUT (what I've hard) is also a bit too basic. (true story: friend: "Business stuff is so simplistic, as an engineer I can deduce all that myself." me: "Well, the stuff you were teught is part of required material for our entry exams...it gets better, really")
    I tempted, too, to believe that the gap between IT and business in companies is really due to academic programs... =)

    By Blogger Kari, at 7/27/2006 07:46:00 AM  

  • Hey Kari,

    Your experience is extremely telling. As an young Graduate from Helsinki School of Economics bearing an "IT Specialist" title, I find it funny that you do not undergo more discrimination from your Helsinky University of Technology. You must be very good!

    I study Management Science and I love IT-intensive environments; these environments are fast-changing, since innovation constantly rolls over which urge you to never take anything for granted. The thing is that not being a "geek" doesn´t help me interact best with engineers. I lack the IT-knowledge authority, and the credibility you have, Kari, since you´re really good in computer science.

    So I chose to do my HEC major next year in Ecole Centrale Paris (http://www.ecp.fr); I´ll be studying Computer Science, Telecommunications & Networks, Information Systems & Project Management. It´s going to be a challenging year, but I hope I´ll be able to understand engineers and be understood by them better afterwards.

    By the way Kari, what your friend told you is really funny)); but unfortunately it is common saying between engineers to believe business people don´t know anything. That is too bad as well.

    By Blogger Jeremy Fain, at 7/27/2006 10:22:00 AM  

  • Yeah, I majored in Management Science (how do you explain that subject in less than 100 words? I've struggled to explain it in every job interview) and Quantitative Methods, so of course my studies included quite a lot of *using* computers and programming (mainly math, spss, excel and R).

    And Jeremy, I do not study at Helsinki School of Technology, but many of my friends do and many people *think* that I have too - just because I happen to know a thing or too about computers. But I like decision siences and statistics and game theory more than the world of silicon and circuit boards... =)

    By Blogger Kari, at 7/27/2006 04:43:00 PM  

  • Jeremy:

    Well I'm looking at IT becoming more than just a cost center by being integrated with other departments such as marketing.

    interesting thought about companies switching to project management instead of silos though I doubt that most companies are only testing that but not implementing it ernestly yet.

    Do you mean focusing on customer satisfaction can align marketing and IT? How is that happening?

    Mr Anonymous

    By Anonymous Anonymous, at 7/31/2006 08:59:00 PM  

  • Mr Anonymous> I agree with you: in q near future, IT departments will tend to disappear and get integrated to operational departments.
    You should take a look at Nick Carr's "IT Doesn't Matter" Harvard Business Review article: http://www.amazon.com/gp/product/B00009MBYN/sr=8-2/qid=1154416033/ref=pd_bbs_2/102-5042737-4456145?ie=UTF8
    and also to "IT Doesn't Matter, Business Processes Do: a critical analysis of Nicholas Carr's IT article" by Howard Smith & Peter Fingar: http://www.amazon.com/gp/product/0929652355/sr=8-1/qid=1154416033/ref=pd_bbs_1/102-5042737-4456145?ie=UTF8

    About alignment: IT people are still the ones in the company to implement Customer Relationship Management, and collect information. However, there is a strong underlying trend pushing forward functional, non IT, employees to get the job done. Doing so, since these people work according operational objectives in a specific direction, the CRM system will probably result in aligning with their own interest (bonus, etc.). Hence the new task of the executive management: if functional people deal with IT, think well about the reward system of your employees and your informations systems will result in improving the performance of your organization.

    Strong alignment shouldn't thank an IT department but good, sensible management.

    By Blogger Jeremy Fain, at 8/01/2006 09:20:00 AM  

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