Information Technology in the Service Society A Twenty-First Century Lever (1994) / Chapter Skim
Currently Skimming:
5 Improving Decision Making About Information Technology
5 Improving Decision Making About Information Technology
Pages 165-192
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 165... ...
Paul Strassmann, a former executive of the Xerox Corporation and director of defense information at the U.S. Department of Defense, analyzed the inconsistent relationship between investment in IT and service firm performance between 1977 and 1987 (Figure 5.1~.
|
From page 166... ...
66 100 tn ~n ~n 0 50 a, ~: ° O -50 20 a) Q ~, 10 ~r s ~O s u' INFORMATION TECHNOLOGY IN THE SERVICE SOCIETY o o o o o o o C~ o ° o o o oo ~ ~o° f f 0 ~° O8 0 o o o o o o o oo ~ o o o o o o o o o o 1 1 1 1 1 0 1 2 3 4 5 Expenditure on Information Technology as Percentage of Revenue · Bank of Boston Bank America ·Security Pacific First Interstate Bankers Trust '/ells Fargo ~ JP Morgan e Chase Manhattan .
|
From page 167... ...
FIGURE 5.1 Investment in information technology and service performance: an inconsistent relationship. SOURCE: Reproduced with permission from Strassmann, Paul.
|
From page 168... ...
Yet no professional service, retail, wholesale, entertainment, or international banking company mentioned these factors as relevant. Still, there is no question that more recent instances of restructuring in service industries have coincided with increased deregulation, cross-border trade, foreign direct trade, and depressed domestic markets.
|
From page 169... ...
As a result, job changes were made less smoothly, and changes in performance evaluation and reward systems unnecessarily lagged deployment of IT systems. Some respondents cited problems of underestimating incremental usage created by new systems that quickly exceeded acceptable utilization ratios in data centers later leading to unexpected costs for further central processing power.
|
From page 170... ...
Many said they had not yet found effective ways to stimulate or measure better communications through electronic mail or other computer communications systems. A serious challenge underestimated by several of the companies interviewed comes from the long time that it takes to change traditional work practices and corporate cultures.
|
From page 171... ...
(For details, see section below, "Compressing Project Scope and Payback Time.")
|
From page 172... ...
Substantial improvements in IT, falling costs of IT, increasing customization of IT to meet user needs, diffusion of IT expertise throughout the ranks of senior management, and a much broader base of experience with IT have increased user sophistication substantially in recent years. Difficulties in Software Development Given the widespread availability of IT hardware and "shrink-wrapped" software, the only significant technological advantage that most innovators can keep as proprietary is software developed in-house.
|
From page 173... ...
Software development managers have treated software too much like an art form whose process of creation cannot be improved through the application of sound design and engineering principles. However, developments in the 1980s suggest that understanding of how to build large software systems efficiently and well is improving, and companies are beginning to achieve significant returns on investments devoted to software development.
|
From page 174... ...
For the most part, programs were evaluated and prioritized as a part of divisional planning processes and subsequent procedures for allocating capital. Information technologies were regarded by a majority of the interviewed companies primarily as enablers for other desired divisional or corporate goals (e.g., cost reduction, new-product development, quality improvement)
|
From page 175... ...
Many interviewed companies said that they had hired at top levels professionally trained IT managers familiar with the business. But with only a few exceptions, neither top managers nor the new IT managers described genuine information strategies that (1)
|
From page 176... ...
Changing interfunctional processes usually requires readjusting organizational structures across those functions. Major restructuring, in turn, involves significant risk and takes time to accomplish smoothly.
|
From page 177... ...
If we had just put the automation in, because of the 25 percent of checks that still have to be done manually, we probably would not have generated any substantial savings. But by designing a statistically valid sampling technique that could ensure accuracy levels above 98 percent on this manual 25 percent, we have been able to generate tremendous savings.
|
From page 178... ...
We also find that we need fewer management supervisory people, and the ones we do have are in a facilitating mode, which is more rewarding to them as people get used to the process. Interviewed companies repeatedly reported that, when cross-functional reengineering is focused on specific problems, total processing times could drop from days or weeks to a few hours or minutes.
|
From page 179... ...
Several people handled each request: order takers, credit checkers, pricers, and the like. Idowe~fer, managers discover ereJ that the actual processing time for the typical credit request was 90 minutes: for most of the 6 days, the credit request sat on someone's desk.
|
From page 180... ...
For companies interviewed by the committee, such approaches frequently resulted in real-time (computer-based) interactions and much-enhanced (personnel-based)
|
From page 181... ...
. Many of the companies interviewed by the committee found that external customers also have a valuable role to play during the planning and installation of IT-based systems.
|
From page 182... ...
Several respondent companies had developed elaborate formal nonfinancial measures of service quality. The most straightforward of these involved internal engineering metrics.
|
From page 183... ...
of the companies interviewed by the committee had instituted such measures.7 Although companies try to collect as much data as possible through automated means, a complete evaluation procedure should also normally include some random visits, customer sampling, and personal observations as assessment tools. These are especially important in understanding certain significant dimensions of point-of-contact service performance like cheerfulness, creativeness, responsiveness, professionalism, or other key characteristics of personal service.
|
From page 184... ...
In its business communications division, MCI measures these quality factors by branch office at 132 branches. It also measures loss rates by customer segment and does an extensive employee satisfaction survey every 18 months, considering that to be an important factor in customer service.
|
From page 185... ...
For example, Chase Manhattan's Craig Goldman said, "In the data center arena, you have to pay project investments back in the year you make the investment. We are planning on reducing our absolute costs over the next 3 years, every year while we enjoy a 25 percent volume growth; there's a program to support it." At CIGNA Corporation, James Stewart, executive vice president and
|
From page 186... ...
using more systematic preproject analyses and postproject audits than in earlier years. Postproject Audits The committee found that virtually all interviewed companies reported using formal evaluation procedures for IT projects (which lent themselves to such analyses)
|
From page 187... ...
They thought that installing such procedures would undoubtedly force operating and information systems managers to concentrate more on specifying and achieving planned gains, and that this presumably would improve future measured performance gains from using IT. However, in the committee's interviews very few companies mentioned going to the next high-payoff step of systematically analyzing postproject audits to ascertain and catalog those success or failure patterns that could assist in selecting and managing future IT programs.
|
From page 188... ...
mentioned benchmarking against internal "best-in-class" activities in their own firms or in noncompeting external firms. Fewer still benchmarked against specialized external service providers like ADP Services, EDS, or ServiceMaster which have widespread reputations for efficiency.
|
From page 189... ...
One of the rules is that the prospects need to be Dallas-based so we have close proximity. Basically, participants must be at the corporate office level and hold the position of senior technology planner on the company team.
|
From page 190... ...
Including specialized external service providers in the comparison group can be especially useful, because such companies make their living by concentrating on an activity and providing it more efficiently or effectively than others. Customer- and Knowledge-driven Performance Evaluation and Reward Systems A company's prosperity in the long run is intimately linked to the way in which its reward structures are aligned with its corporate goals.
|
From page 191... ...
developing and obtaining top management commitment to genuine information and IT strategies focused on gaining strategic advantage, (2) more extensive cross-functional reengineering and reorganization of processes affected by IT, (3)
|
From page 192... ...
6A discussion of these organizational modes can be found in Quinn, James Brian, 1992, Intelligent Enterprise, Free Press, New York, Chapters 4 and 5. 70ther studies indicate that many service institutions lack such formal feedback techniques for measuring the quality of services.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.