Concentrate On Business Value, Not Technological InnovationConcentrate On Business Value, Not Technological Innovation

There is a lot of continuing hype in the information technology industry as to the importance of enterprise resource planning, customer relationship management, and the E-channel of doing business. It isn't so much that these new tools and methods aren't valuable; they are. What concerns me is the frequent mistake of forgetting that executing the basics of a business model is more important than any new system that we can install.

Tens (and in some cases, hundreds) of millions of dollars were spent by large companies in installing enterprise resource planning systems. The justification was to provide information that would allow the business to operate more efficiently. I can relate to these expenditures and to the rationale, because I was intimately involved in one such massive project. Even though this particular effort, which lasted several years, actually came in on budget and on time, it was no easy feat to achieve the projected payback. That it did result in benefits was due to the hard work and skills of many dedicated people, both in the IT shop and in the user community.

To watch the organizational dynamics that occurred after the project was completed was as enlightening as participating in the system's planning and start-up. One group of the company executives wanted to move immediately to even newer and bigger technological feats. Another set of people had the idea that we should learn to live with what we had, and adjust our processes accordingly, before tackling yet another large endeavor. Because I had spent so many years completely convinced that business advantage comes from improving processes rather than buying new systems, I was firmly in the second camp.

My career has taught me that while competitors may be able to clone your products or services, they have a much more difficult time copying your low cost and innovative ways of simplifying your internal processes. In Detroit, they call this lean manufacturing; others call it the application of Occam's Razor: Entities should not be multiplied unnecessarily. Or, as Albert Einstein said, "Everything should be made as simple as possible, but no simpler."

Some years ago, I tried to communicate the importance of this systems design approach to several colleagues. They had appeared in my office, complaining that the IT department had refused to modify a key report used to reconcile the payroll and accounts payable systems. I couldn't understand what these two systems were doing being mentioned in the same breath, let alone being reconciled. I was informed that in the interest of efficiency, the payables group (which was responsible for employee expense accounts) used the A/P system to run expense account checks. The problem was that we were moving people into the company from a subsidiary and these new employees were getting their paychecks (the responsibility of a different group), but not necessarily their expense checks. The solution was a monthly reconciliation of the two systems. Now everyone concerned (except the IT people) wanted a more comprehensive and more frequently produced report.

Bewildered with what we were doing, I asked why we didn't just run everything out of payroll. That way, we could do away with the report instead of spending time enhancing it. That solution satisfied no one, since it would change hallowed organizational responsibilities. The dialogue went on for some days before it was finally resolved--in favor of a merged process--but only after a major amount of senior level discussion. It simply was too difficult for too many people to consider changing the way things worked.

To this day, I am convinced that many opportunities exist to improve service (to employees and customers alike) in even the best-run companies. They could be implemented without the necessity of spending a fortune on the latest and greatest computer system.

If you're shaking your head at our silly separation of payroll from expense accounts, look at your own company. If you get a paycheck and an expense account check that are printed on different stock or have a different format, most likely you are doing it the same way that we used to do it.

Robert M. Rubin is CEO of Valley Management Consultants, a firm specializing in E-business and information technology strategy, organizational design, and evaluation. Prior to joining VMC, he was senior vice president and CIO for Elf Atochem North America, a $2 billion diversified chemical company. The recipient of multiple industry awards, he is a contributing editor to information and a member of its advisory board. He can be reached at [email protected].