Business missing out on technology benefits

Mar 05 2007 by Nic Paton Print This Article

Executives love spending money on new technology but too often don't really understand what their new toys can do, so missing out on a great opportunity to transform their business for the better.

Research by the UK-based Chartered Management Institute has found that while chief executives generally recognise the value of technological advances, they are often unprepared to put in the personal time and effort to understand the full potential of new technologies.

They are also far eager to pass the buck for bringing in cutting-edge technological changes to their IT specialists.

This makes it more likely that their change programme will lose momentum further down the line and that the wider strategic value of the programme will be overlooked, ignored or misunderstood, warned the CMI.

This lack of focus and leadership at the top also meant change programmes were more likely to become "tired" and run out of steam, commonly at around the 18 month point, because CEOs fail to rejuvenate them.

With nearly three quarters of IT projects estimated to have failed in 2005 (a proportion unchanged since 1980), the CMI has identified some of the key challenges CEOs must overcome to gain strategic advantage through technological progress.

The research, which looked at 1,000 IT projects included detailed interviews with 20 CEOs and chief information officers.

It found that, when looking at change/IT projects, it was important to ask how they would transform the business and add value in the long term, not just how the technology was going to work on a one-off basis.

Fragmentation or a loss of focus could happen if the CEO and CIO simply passed responsibility for implementation down the line to divisional or functional managers.

CEOs needed to understand that new IT was just one part of a bigger picture when it comes to shaping new business models, and should not be the business model itself.

It was important CIOs had business as well as technical skills, so they could see the wider picture, but at the same time the CEO needed to understand the new IT issues facing the business so that any IT change was being driven from the top down.

CEOs also needed to recognise there was a difference between installation and implementation, with the latter requiring organisational as well as technological change.

There needed, too, to be a climate of open communication to ensure there proper "buy-in" for the whole change programme, not just the technological side of it, said the CMI.

Mary Chapman, CMI chief executive, said: "There are too many examples where large amounts of money have been written off with little achieved.

"Often it is due to the ambivalence of senior executives who leave their CIOs and IT managers to explore the options and take the appropriate action.

"This risk inherent in this approach is of a leadership vacuum. CEOs who fail to provide strategic direction or show personal interest are unlikely to create the drive and inspiration in others that is required change to succeed," she added.