Jain Temple

Hot Spots

India Links
Call Home


Art & Culture
Book Shelf



About Us

Contact Us
About Us

Article by Mohan Babu


IT and business strategies

In most organisations, IT does not form the core competency; however, technology forms an integral part of the strategic mix. IT managers are beginning to realise the truth that some strategic decisions are best left to business unit managers, says MOHAN BABU

As the slowdown in the tech sector thaws, IT managers and business leaders are beginning to revisit their technology strategies. Alongside, business leaders are becoming aware of the need to be responsible for formulation of overall business strategies with IT in the mix, instead of passively observing their technology managers recommend IT solutions. Even IT managers and executives are beginning to realise the significance of this shift, knowing that their existence depends on the success of the overall business strategy of the company and business units they support.

During the past few years, a new reality has dawned among business mandarins—that IT alone cannot be the core competency for every business that it supports. Remember the furore and debate over Nicholas Carr’ Harvard Business Review article: “IT Doesn’t Matter?”. Core competencies are defined as: “Areas of expertise that may be in any area but are most likely to develop in the critical, central areas of the company where the most value is added to its products.”

For an auto manufacturer the core competency could be the manufacturing process or innovativeness in design. During the nineties, IT leaders were drumming up successes of a few niche applications in business strategies of companies like UPS’s customer relationship database and Wal-Mart’s datawarehouse could be replicated in any business. They were also busy hyping up the theory that software systems could be a panacea for all business problems. The fact of the matter is that in most organisations, IT does not form the core competency; however, technology forms an integral part of the strategic mix. This is something that IT managers are beginning to realise. An interesting Harvard Business Review article titled “Six IT decisions your IT people shouldn’t make” is perhaps a must-read for all managers. The article argues that the following six decisions, the first three strategic decisions, are best left to business unit managers:

1. How much to spend on IT?

2. Which business processes should receive our IT dollars?

3. Which IT capabilities need to be company-wide?

4. How good do our IT services really need to be?

5. What security and privacy risks will we accept?

6. Whom do we blame when IT initiatives fail?

The article goes on to successfully argue that “IT department should not be left to make, often by default the choices that determine the impact of IT on a company’s business strategy.” There are lessons here for leaders across the spectrum of the industry.

As the economy starts stabilising and businesses start increasing spending on core strategic initiatives, managers of high-tech companies need to recognise the emerging opportunities by moving up the value chain.

They need to realign their marketing strategies to focus on business problems at corporate strategic levels instead of being content to sell products and solutions to IT departments alone. Both technology vendors and IT departments can realign themselves to benefit from a shift in the strategic mindset of business leaders.

Business strategy and technology vendors

Technology vendors need to get more involved in strategic business processes of their clients. At the end of the day, most companies that use IT and software systems are looking for solutions to their business problems or ways to streamline their businesses processes to make them more efficient. For most business leaders, IT is yet another tool in their toolkit that they can use to ensure that their businesses generate higher revenues.

Maximising shareholder wealth still remains the number one priority. Case in point is Big Blue’s strategic move to merge business and IT consulting. IBM’s acquisition of PriceWate-rhouseCoopers (PWC), and its decision to spend over $1 billion on R&D in its Business Solutions division is a move towards positioning the company to sell business solutions using IT.

IT departments and data centres

Managers of IT departments need to realise that their very existence depends on the success of business unit(s) they are trying to support. No amount of technical innovation is going to buy a company anything till the company can sell more widgets, burgers (or whatever else that it sells). It does not matter if the new supply-chain, ERP, EAI or CRM initiative is successful unless more orders are processed, more customers are satisfied and more competitors thwarted.

As companies emerge from the current downturn, they are bound to rethink their overall corporate strategies.

IT managers can ensure the success of their departments by ensuring that the projects they are undertaking and the systems they are managing are closely aligned with the needs of their business sponsors.




About the Author

  • A Bio and profile of the author, Mohan Babu, can be found at his homepage
  • Mohan has authored a book on Offshoring and Outsourcing (Publisher McGraw Hill, India), a link to which can be found here
  • Mohan has also authored an Online book on "Life in the US," available for free download.
  • Sponsored Advert

    Advert: Visitor's Travel Insurance

    Click for free online Quotes


    For FAQ, Trivia and Information on Life in America, visit the Ask-A-Desi section

    ©Mohan Babu: All Rights Reserved 2005

    Mohan Babu is an international consultant trying to find the ‘sweet spot’ where IT meets business. E-mail: mohan He is also the author of a recent book on "Offshoring IT Services"

    All rights are reserved. Mohan Babu ("Author") hereby grants permission to use, copy and distribute this document for any NON-PROFIT purpose, provided that the article is used in its complete, UNMODIFIED form including both the above Copyright notice and this permission notice. Reproducing this article by any means, including (but not limited to) printing, copying existing prints, or publishing by electronic or other means, implies full agreement to the above non-profit-use clause. Exceptions to the above, such as including the article in a compendium to be sold for profit, are permitted only by EXPLICIT PRIOR WRITTEN CONSENT of Mohan Babu. 

    Disclaimer: This document represents the personal opinions of the Author, and does not necessarily represent the opinion of the Author's employer, nor anyone other than the Author. This Article was originally published in Express Computers


    GaramChai® 1999-2005