Mark McDonald

Since the 1980’s the dominant model for information technology (IT) has been an industrial one.  Modern industrial IT models have concentrated on building out the technical, application and information structures and infrastructures that have made the global interconnected economy possible.  Understanding the tenets of the modern industrial IT model provides a starting point for envisioning what the next ‘post-industrial’ model might look like.

Here are a few characteristics of that model:

Owner operated technology formed the technology industry business model.  The technology industry followed the modern industrial model in terms of its structure selling solutions that required constant upgrading systems and assets.  Supporting a model where companies needed a captive IT organization that was the captive customers of IT suppliers.

Enablement is the strategy that defines the relationship between IT and the rest of the enterprise.  In the modern industrial model, IT defines itself as a support function rather than a line function.  Enablement becomes a shield used to address issues of incomplete business cases, benefits realization and self imposed limitations on IT’s business impact.

Users are our customers as IT systems developed in house are provided to a captive customer base who does not really have a choice about the type or style of systems and support they receive.  Everyone can have the ERP they like provided is XYZ.

Symmetric Investment describes the idea that companies needed to invest heavily in IT to get significant benefits.  The size of the IT investment was symmetric with the size of the expected business return.  “You want more, then you have to pay more”

Capital Expenditure (CAPEX) intensive characterized the core financing model as companies capitalized IT investments and depreciated them over time just like the other capital asses required for industrial production.

Business Case/Benefits Realization is an administrative task required to approve the IT budget as the benefits of automation were seen as self evident and not readily measurable.  The inability to actively manage the enterprise causes managers to hope for the best in terms of IT benefits.

Complexity is the design result as individual needs were met with individual or heavily customized solutions.  Optimizing IT for each individual project built up complexity in small increments across all of IT.  People looked and designed in isolation, at a point in time, to meet an immediate need where duplication and redundancy was the quickest path to results.

Resource based management is the foundation of modern industrial IT that grew out of the early days of IT, when people who knew how to create technology were the scarcest resource.  You manage your most important resource and in modern industrial IT that was the time of your IT specialists, not the benefits stream of their work or other factors.

Multi year timelines for IT investment Modern industrial IT is the land of the multi-year program, the global deployment, the transformation initiative – many of which built up to the point where they were thought to be ‘too big to fail’.

On time, On budget defines success connecting resource based management with the responsibilities implied in an enablement strategy.  In a modern industrial model, the margin and strategic importance of production is so high, that it can readily subsidized its support functions.  Success for the support functions becomes based on them doing their job – their activities, rather than achieving results.

Business and IT defines the relationship between the two groups.  The AND separates IT making it distinct and different from the rest of the company.  This mechanism is related to the resource management approach as IT people were often segregated into a separate specialist group.

Prognosticators, including those at my company and others, often think about the future of IT by concentrating on the small part of IT – the IT organization, employment and skills.  Those are important considerations, but they are the result of changes in the fundamental model or IT.  Sorry to sound professorial, but people change for a reason and those reasons reflect deeper changes in the way things work.

I bring up these characteristics as economic, strategic and technical changes are eroding the efficacy of the Modern Industrial IT model.  This is not happening overnight, but a newer model is emerging based on different principles and producing different results.  The characteristics of a “Post Modern/Post Industrial” IT model are the subject for another post.

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Category: Strategic planning Strategy Technology     Tags: Business Strategy, CIO Leadership, IT and Business, IT strategy, Strategy, Strategy and Planning

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