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Training for Information System staff topped the list of ways to control IT complexity, followed closely by enforcing standards (both corporate and industry), and minimizing platforms (both those developed internally and those from purchased systems)
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The smart deployment of Complexity Reduction Principles can help drive the right decisions on your current IT and future IT expenditures Here are four principles you can use to understand what s driving your IT complexity and simplify its structure: #1: Don t rely on IT to fix a broken process (it won t!); find and eliminate the non-value-add activities #2: Reduce the complexity in your systems architecture (your customers won t pay for it!) #3: Outsource complexity where strategically desirable #4: Use modularity in your hardware and software
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13: Using IT to Deliver Complexity at Lower Cost
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Principle #1: Don t rely on IT to fix a broken process (it won t!)
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While IT can generate considerable advantage when integrated into good processes, it is unwise to rely on IT to fix a broken process To quote Albert Einstein, insanity is doing the same thing over and over again and expecting different results Equally, doing the same thing, only automated and faster, is unlikely to yield any better results In fact, IT applied to a bad process locks in the non-value-add in the given process, driving up the costs of correcting it Which is why we have to tackle the complexity in our organizations with a process view to identify the complexity and develop rational, rigorous strategies for taking complexity-related cost out of our infrastructure Before you make any move on IT, create a Complexity Value Stream Map of the process, find all the value-add and non-value-add activities and costs, and apply the Complexity Equation to understand the intrinsic PCE Consider a different IT solution only after you have driven up the PCE Don t be afraid of little solutions You don t have to buy a $100 million IT system to generate value; once the non-value-add steps are eliminated, you may not want or need to add new IT (which is good news from shareholders perspective)
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Principle #2: Reduce the complexity in your systems architecture (your customers won t pay for it!)
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The case to simplify IT systems is an easier case to make than the case to integrate them (the theme of the 1990s) The process of simplification is one of moving towards common standards and platforms with lower maintenance costs, rather than connecting proprietary systems If you re one of the companies spending huge amounts of money maintaining cumbersome systems, which solution would you prefer McKinsey estimates that pruning the number of technologies in use can lead to IT cost savings of up to 20%11
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Moreover, reducing the levels of complexity in your IT will establish an important platform for growth, and lower unit costs on future sales It will also make the function more responsive to future activity, as CIOs and CTOs spend less time battling day-to-day complexity and more on higher-value activities The ultimate arbiter of the level of technology required is the question of value The technology is the tool, not the jewel, in many cases We need to shift emphasis from considering what the technology does to how it helps our company create value In The Process Edge, Peter Keen says, Process investment says, Kick the benefits habit Benefits is a managerial concept; value is an economic concept A writer may call a firm an exemplar of excellence, laud its use of IT for competitive advantage, but none of this answers (the question): Does all this excellence actually increase the value of the firm
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Principle #3: Outsource complexity where strategically desirable
Capital One obviously benefited from keeping its IT in-house, but that s not always the case A common consequence of a complexity analysis of IT (using a method like that proposed in Part II) is the decision to outsource And as innovation has accelerated over the last 15 years, so have the demands on corporate IT groups to keep apace Even when the pace is maintained, it often makes sense to outsource nonstrategic IT functionality that creates complexity costs for the company In many cases, outsourcing the nonstrategic IT functions frees CIOs and CTOs to focus on the strategic IT applications in the company For example, during the late 1990s, FedEx s Laurie Tucker had decided that the company s VirtualOrder software, which had helped hundreds of companies with their ecommerce strategies, was not a strategic strength The FedEx sales force was better at convincing logistics managers to funnel more packages to FedEx than they were at selling ecommerce software FedEx would never be as determined a player in this field as other new entrants So Tucker pulled the plug on the IT product, despite
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