Friday, July 08, 2005
Does Computer Spending Really Matter?
My first graduate degree was in Management Information Systems, and from my earliest experiences in corporate life I started to wonder if MIS was a bunch of smoke and mirrors. Sometimes it is.
As I researched the printing business, I thought it was quite funny how the most profitable printers were the ones often considered to be the most neanderthal when it came to computing. I was always taught that bad information systems once computerized became worse or deadly. Good management made a real difference.
When studying the lack of MIS investment in the printing business, it became clear to me that printers could not "see" the benefits of MIS because they always had a sense that they could make certain tweaks in their business that would yield better results. This would range from getting a more modern press to finding a hot sales rep or cutting waste and spoilage. Indeed, printers would see tangible and quick results from implementing total quality management programs (TQM), even if these approaches were not fully implemented. How one could think that an industry that can't make money because of "overcapacity" (whatever that is) could suddenly justify having "overcapacity and MIS systems" just seemed beyond thought. We know, or at least people who agree with me know, overcapacity doesn't matter. Good management does. Good management with good tools matters even more.
Finally, some proof from international consulting organization McKinsey. (If it doesn't come from a big consulting outfit, it's not true, supposedly).
"...a study of 100 manufacturing companies in France, Germany, the United Kingdom, and the United States found that IT investments have little impact unless they are accompanied by first-rate management practices, which, by contrast, can boost productivity on their own. We rated companies on how well they used three important management practices: lean manufacturing, which cuts waste in the production process; performance management, which sets clear goals and rewards employees who reach them; and talent management, which attracts and develops high-caliber people. The companies that had the highest marks in these areas became more productive, with or without higher spending on IT. Those that combined good management practices with IT investments did best of all."
What a surprise :)
http://www.mckinseyquarterly.com/newsletters/chartfocus/2005_06.htm
As I researched the printing business, I thought it was quite funny how the most profitable printers were the ones often considered to be the most neanderthal when it came to computing. I was always taught that bad information systems once computerized became worse or deadly. Good management made a real difference.
When studying the lack of MIS investment in the printing business, it became clear to me that printers could not "see" the benefits of MIS because they always had a sense that they could make certain tweaks in their business that would yield better results. This would range from getting a more modern press to finding a hot sales rep or cutting waste and spoilage. Indeed, printers would see tangible and quick results from implementing total quality management programs (TQM), even if these approaches were not fully implemented. How one could think that an industry that can't make money because of "overcapacity" (whatever that is) could suddenly justify having "overcapacity and MIS systems" just seemed beyond thought. We know, or at least people who agree with me know, overcapacity doesn't matter. Good management does. Good management with good tools matters even more.
Finally, some proof from international consulting organization McKinsey. (If it doesn't come from a big consulting outfit, it's not true, supposedly).
"...a study of 100 manufacturing companies in France, Germany, the United Kingdom, and the United States found that IT investments have little impact unless they are accompanied by first-rate management practices, which, by contrast, can boost productivity on their own. We rated companies on how well they used three important management practices: lean manufacturing, which cuts waste in the production process; performance management, which sets clear goals and rewards employees who reach them; and talent management, which attracts and develops high-caliber people. The companies that had the highest marks in these areas became more productive, with or without higher spending on IT. Those that combined good management practices with IT investments did best of all."
What a surprise :)
http://www.mckinseyquarterly.com/newsletters/chartfocus/2005_06.htm
