Managing Technology

In the late 1990s, companies often bought huge quantities of IT for reasons that had nothing to do with their business models or long-term strategies. There was a “follow the pack” approach to IT investment that continues, to a lesser degree, today. For managers seeking to break away from fear-driven IT investment, the author suggests that they consider the operations of Inditex Group, a clothing manufacturer and retailer based in northwestern Spain and best known for its Zara stores. Although few would think first of this industry or region in a search for IT leaders, Inditex’s experience demonstrates that it is possible to select, adopt and leverage IT masterfully while spending very little on it. Inditex has higher operating profit and much better recent stock-price performance than any of its competitors, and the author believes that there is a direct connection between its financial performance and its IT excellence. For managers weary of me-too IT investment, he lays out the five general principles that underlie Inditex’s approach to technology spending.

By one informed estimate from the late 1990s, three-quarters of the Fortune 100's total market capitalization was represented by intangible assets, such as patents, copyrights and trademarks. In this environment, cautions the author, IP management cannot be left to technology managers or corporate legal staff alone -- it must be a matter of concern for functional and business-unit leaders as well as a corporation's most senior officers. To realize the full value of their companies' intellectual property, top executives must seek answers to the following questions: How can the company use intellectual property rights to gain and sustain competitive advantage? How do IP rights affect the industry's structure? What options do IP rights offer vis-à-vis competitors? How can IP rights grant incumbency advantage and establish barriers to entry? How can IP rights help the company gain vertical power along the value chain? What organizational design accommodates an IP strategy most effectively? The author explores each question, drawing on such company examples as Nokia, Motorola, Novo Nordisk and Leo Pharma, in the process helping lead intellectual property rights out of their shadowy existence in patent and legal departments.

How can companies ensure that their data warehouse delivers as promised?

Wireless networks and microcharging will change the Internet as we know it.

What kinds of companies and products can benefit most from the use of new information technologies (NIT), such as the Internet, broadband networks and mobile communications? Books and airline tickets sell readily over the Web whereas automobiles do not. Furthermore, what types of business transformations does NIT enable? A company might, for example, use NIT to eliminate middlemen, such as distributors, that separate it from its customers (called classic disintermediation). Or, instead of getting rid of middlemen, it might choose to embrace them (remediation). Or it might build strategic alliances and partnerships with new and existing players in a tangle of complex relationships (network-based mediation). All three mediation strategies depend on various factors, such as a product's customizability and information content. By fully understanding those drivers of NIT, companies can begin to predict the potential transformations of their industries, especially in terms of how products are marketed and sold. To that end, the authors have developed a systematic framework that identifies which drivers are important for each of the three mediation approaches. Using this tool, companies can determine both the optimum ways to transform their businesses and the NIT investments required to accomplish such changes.

In recent years, large companies have invested a great deal of money & #8212; and faith & #8212; in process-enabling information technology, IT that facilitates the execution of entire business processes rather than individual tasks. But all too often, such investments fail to pay off: The new systems fail to live up to expectations, register a measurable financial impact, improve work processes or bring about organizational change. Technical snafus, a scarcity of good advice for managers and failure to follow such guidance are not the problems. The fundamental issue is that managers usually follow what amounts to a universal checklist, one that assumes that all implementations are basically alike. Taken as a whole, the list is merely a collection of undifferentiated findings and conclusions rather than a synthesis that would help with the particular implementation effort at hand. The executive in charge of the effort is left to discern which findings apply, under what circumstances and why. Instead of a longer or different list, this article offers a synthesis that highlights how big IT implementations differ from one another and how managers should handle the differences in order to realize the full promise of technological change.

Executives make few moves more critical than their decisions about which technology-infrastructure investments will promote future strategic agility. To pinpoint best practices, three IT experts marshaled 10 years of data from 89 leading enterprises. One finding was that when companies describe their IT-infrastructure capabilities as services instead of equipment (say, the provision of a fully maintained laptop computer with access to all company systems and the Internet), they do a better job of putting a value on what they are buying. Understanding the 70 IT-infrastructure services that emerge consistently from the research can help executives identify which investments will make sense for which strategic business initiative. And understanding whether the contemplated initiative is supply-side, internally focused or demand-side can help managers decide whether to make the infrastructure investment on a business-unit level or enterprisewide. The authors find that leading companies are making regular, systematic, modular and targeted IT-infrastructure investments on the basis of overall strategic direction. If other companies can learn to recognize which IT-infrastructure capabilities are needed for which kinds of initiatives, they can have some assurance that the investments they make today will serve the strategies of tomorrow.