Focus resources on what really matters

A firm’s success is generally not because of its efficiency. This may sound like blasphemy, but it is true. What makes a firm successful is customer preference for its products and services, and that it participates in growing markets. Everything else is secondary. I’m not saying efficiency is unimportant, it is just not critical.

We only have to look at US automakers to see the truth of this. One of these failing giants has spent in excess of $2bn (£1.2bn) on the global rollout of a large application suite ­ to realise process efficiencies. Meanwhile, it continued to produce cars that people did not want – ­ albeit very efficiently.

If we can accept that products, services and markets are the really important issues, we should expect our IT investments to shadow this fact. Marketing information systems (MIS), product lifecycle management, competitive intelligence and any other systems that help management deal with these issues would surely take priority. Clearly, this is not the case. Instead, we have a myopic fascination with process efficiency almost to the exclusion of everything else.

Business process management, corporate performance management (CPM), enterprise resource planning, governance, compliance and myriad other internally focused applications consume the majority of the IT budget.

We can blame this on the fact that the first IT systems dealt almost exclusively with internal processes such as billing, accounts and payroll. Forty years on and we cannot shake off this first love affair with IT ­ it colours everything we do. The IT industry does not even offer marketing information systems as a mature, developed product, even though this should rank as number one in IT investment priorities.

There is some recognition of the fact that MIS is necessary, but the current emphasis is largely directed at tracking the performance of discount coupons or similar processes. MIS as the primary component in the success of an o rganisation is not widely debated, although an article I read suggested that accounts and finance were simply inputs to an MIS system. I am not sure the chief financial officer would like to hear this, but there may be more than a grain of truth in it.

Implementing an MIS has taken on a new urgency with the emergence of social media ­ – specifically Facebook and Twitter. Mars successfully created a Facebook entry for its Skittles product ­ – hundreds of thousands of Skittles fans linked to this entry and discussed the nuances of different flavours ­ – sad but true. British Airways has created a forum for some of its more well-heeled passengers ­ clearly an opportunity to network.

The myopic spiral of systems labelled with the words “management”, “process” and “enterprise” seems to continue unabated. I had a conversation with a consultant who worked for a supplier of such systems and without any prompting from me complained that it all seemed “a bit incestuous with no real output” ­ his words not mine.

An interview with the IT leader of a large corporation that had just deployed a CPM system revealed that he had been able to reduce the number of reports he needed from 12 to six. This was cause for celebration ­ but at such a cost.

If we continue to invest in IT purely as a means of managing internal processes, we can expect to see more large corporations go the way of the large US automakers. The emerging economies will happily supply the products and services that we all want if our traditional suppliers are busy navel gazing, using ever more sophisticated systems that help them produce unwanted products with breathtaking efficiency.

Martin Butler is the founder of analyst Martin Butler Research