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Disruptive information and communications technologies (ICT) are forcing organisations to change their traditional business processes in-order to become competitive in the marketplace.
Organisations often fail to leverage the benefits of these technologies as they are unable to fathom the potential of the new-age ICT and translate them into tools to bring about desired efficiency within the organisation. Take the example of SMAC (social media, mobility, analytics and cloud computing) technologies. While organisations are aware of the benefits of these technologies, they are often found hesitant when it comes to adoption of SMAC within the organisation.
New ICT technologies cannot be adopted without ushering in changes in the traditional business processes, believes Prof. Paola Bielli, Professor of Information Systems, SDA Bocconi, Italy. Prof. Bielli’s core research interests are in application of ICT in business areas (such as traditional information systems, ERP platforms, etc), adoption of ICT in large and small organisations, ERP in supply chain management, IT governance framework, etc.
According to Prof. Bielli, people, and not the technology or cost, is the key challenge faced by organisations while adopting ICT-based innovative solutions. Organisations with people having know-how of ICT are in better position to integrate new IT systems in their business processes and face the complexities of the highly volatile and uncertain market conditions.
In conversation with Rakesh Rao, Prof Paola Bielli explores the potential of ICT for large and small businesses, and the strategy needed to maximise the benefits of ICT. She also touches upon the trends in offshoring.
What changes are taking place in the ICT space? Are these trends identical in the developed and emerging countries?
Historically, we have seen difference in expertise in ICT between developed and developing countries. Now we are seeing concentration of expertise in geographical areas independent of the state of economic development in the countries. So, we have centre of excellence (CoE) in developing economies and, at the same time, we have examples of not so developed ICT infrastructure in developed countries. Today, it is difficult to conclude that ICT is focussed just on developed countries. India is a clear example of this phenomenon.
ICT industry today has CoEs across the world having different competencies (focus). For examples, developed countries such as US, Germany, etc have CoEs for traditional technologies like ERPs, while in emerging economies innovations are taking place at consumer levels (single user level). It will be interesting to see in future how we can combine these two areas.
In the traditional ICT industry, very soon we will see innovations coming from the consumer industries, which are being developed in emerging economies. Now a days, it is quite interesting to see a polarisation – on one side you have large traditional ICT system companies and on other you have small-sized consumer-focussed companies (for instance for mobile applications). In the future, this polarisation will diminish, and probably they will have to converge as mobile and social media gain prominence in the traditional systems.
How are small & medium enterprises (SMEs) reacting to the changes in the ICT space?
It is said that SMEs in traditional countries lag behind in the adoption of ICT. But, I do not agree. Even very small organisations invest in ICT wherever they see a benefit. One can discover islands of innovations in SMEs, but they are focusing on fields that are relevant for the core business. SMEs do not invest (or do not understand) in cross-systems, in IT platforms because these systems require lot of time and expertise. SMEs more often lack human resources to implement these systems as they are unable to allocate dedicated resources only for one-time IT projects.
Hence, SMEs invest in ICT technologies wherever and whenever they find these systems are beneficial and the return on investment is quite visible. Lack of time and human resources are large problem areas for SMEs to innovate in ICT. However, SMEs do have an advantage, they can complete relevant ICT projects much faster than large organisations. So, small might mean flexible and quick.
However, the key question that SMEs need to ask themselves is: what is the profile of the industry they are operating in? If the SME player is in an industry dominated by large organisations setting the pace of innovation in ICT, then the SME will find it difficult to compete.
Another critical issue is the supply. In some cases, even IT vendors are not in a position to supply products and services to SMEs which have similar complexity to that of larger corporates, but on a small-scale.
So, finding the right internal and external resources are the key for the successful implementation of an ICT project in a SME.
According to you, which ICT-based innovations could have a profound effect on organizations in the future?
Quite a few ICT-based (innovative) products introduced in the market regularly are targeted at specific sectors or regions. In the future, the challenge will not be of product innovation, but of process innovations. The way in which new technologies or products are introduced in the existing or new business processes will hold the key. It is pertinent to ask - how the society or individuals would be able to use ICT-based innovations. We are witnessing it already in several fields such as public administration, healthcare, education, etc. Process streamlining is the key area, ICT is just an enabler.
What is driving the changes – ICT innovations or business needs?
Traditional organisations are realising the potential of ICT for their businesses, and are incorporating technologies in their organisations. After adopting these technologies, organisations realise that they have to change the way in which they operate, to be able to fully exploit the advantages of ICT adoption. So, to some extent, ICT is driving organisations to improve business processes (in some cases process changes are mandatory).
How do organisations train people to adopt these changes?
As a first, organizations have to take employees into confidence about the new IT systems to counter resistance to change and to create awareness about their potential benefits.
Secondly, training has to be an integral part of any IT project. In most of the cases, training is restricted to initial phases of the project implementation. Employees are often not aware of the full potential of the new ICT system as they are given superficial knowledge about the new technology. Hence, it is important to train the users (employees) on a continuous basis even after the new IT system is running and operational. This would result in improving efficiency across the organization.
How has role of CIOs evolved in the recent times?
It is said today, that a CIO is no longer a chief information officer but rather a chief ‘Innovation’ officer. It is true. Today’s CIOs are not just the custodians of IT infrastructure, they are also expected to play key role in driving innovation in business processes across the organization. ICT is core to innovation in any industry or organization. CIOs today, are an integral part of the management, which take key strategic decision for the organization. This helps in exploring the potentials and the limitations of the ICT at the planning stage so that the success rate of the IT project is high, with minimum challenges in the implementation stage.
While the role of CIOs has evolved to a strategic position, the question is: “can the same person operate and innovate simultaneously?” In some large organizations, the responsibility is divided amongst two individuals – one takes care of operating the existing IT infrastructure, while the other is responsible for exploring potential of ICT for innovations and improving business processes.
What has been the impact of SMAC (social media, mobility, analytics and cloud computing) technologies on organizations?
All these four areas (social media, mobility, analytics and cloud computing) are challenging the essence of today’s information system. Traditional IT systems were centrally located and managed - SMAC is challenging this status quo. Social media is giving more power to individual users, while mobility is enabling the user to access information independent of his/her physical location. Cloud is putting IT infrastructure outside the organization’s border for computing, as well as data storage and applications. Traditional organizations need to be careful about using SMAC technologies because it can be challenging to implement them in their present cultural environment. While the potential of SMAC is clear and obvious, organizations need to be aware of the high-risks associated with the implementation of these technologies.
These four technologies have different maturity levels (not from technological angle but from legal and social point-of-view).
The increased usage of business analytics and data analytics may not pose a challenge to the existing framework but in-fact, it can complement the existing processes. Hence, organizations are interested in analytics.
Usage of social media in an organization (especially traditional) is limited – mainly to customer interactions. But these may change as more and more employees join the organization from the social media generation.
Mobile and cloud computing are still considered by organizations as pilot projects aimed at experimenting new ways to optimize their usage. As is the case with any disruptive technologies, for mobile and cloud computing, to maintain a balance between the daily routine and new trends, organisations are creating separate teams to explore ways to utilize these technologies.
What is driving the demand for cloud computing? Is low cost-of-ownership a major factor?
For any successful innovation, cost can never be a real driver.It is the benefits that the new product or service has to offer – which leads to a wider adoption over a period of time. Cloud is a good example of this. May be cost could be a factor for adopting cloud-based technologies in a small scale business. But in large organizations, cloud is seen to be used in projects involving special needs, for example, for simulation tools in R&D. In such cases, cost is not a major factor, but a specific need is the key driver.
Cloud computing (i.e., public cloud) is not a mean to reduce cost, but the ICT tool reached via cloud networks is an enabler which can be used whenever there is peak of activities for specialised needs or projects. For the rest (i.e., routine work such as ERP systems), I do not think public cloud can be an ideal tool of choice for bigger players. Private cloud may be used by large organizations when they would like to use large scale IT competences that can be cost-effective compared to having a distributed infrastructure. So, private clouds are similar to traditional centralization efforts, while public cloud can also be useful, but for very specific purposes.
Are you seeing a visible change in the scale and type of work being outsourced (i.e, off-shoring) from developed markets to developing markets?
Originally, IT off-shoring by organizations from developed countries was viewed as a mean to bring down business processing cost by outsourcing IT-related work to low-labor-cost region/countries. Soon organizations realized that savings on IT-related resources (through off-shoring) was minuscule as they had to spend on other related expenditures such as travel, co-ordination, etc.
As a result, organizations divided off-shoring activities into two distinct categories – one for routine standardized operations and the other which requires innovation and continuous upgradations. In the first case, outsources are competing on costs. For the second category, organizations developed in-house expertise and rope in external IT service providers having domain knowledge in their respective areas.
We can conclude that organizations are leveraging IT offshoring to enhance their business processing efficiency while they improve their in-house competencies by collaborating with their world leading IT service providers.
(This story has not been created or edited by Business Standard editorial staff.)