Do IT Smart: Seven Rules for Superior Information Technology Performance - Hardcover

Kempis, Rolf-Dieter; Ringback, Jurgen

Hardcover

ISBN 10: 0684864258 ISBN 13: 9780684864259

Publisher: Free Press, 1999

Synopsis

Describes four typical corporate approaches to managing Information Technology, and shows how to use IT as a strategic tool

About this title

About the Author

Rolf-Dieter Kempis is a Director in the Düsseldorf office of McKinsey & Company, Inc. He has worked primarily in automotive, steel, chemicals, and machinery industry consulting, focusing on issues of logistics, cost reduction, sales stimulation, and organization.

Reviews

"It" is information technology (IT), and Kempis and Ringbeck are principals at consulting powerhouse McKinsey and Company. They and a team from McKinsey report the results of a 15-month research project that studied the relationship between the effectiveness of IT and corporate success for leading international companies. The authors make the distinction between IT effectiveness and IT efficiency, which they argue is easy to measure and which they define basically as the cost of IT as a percentage of revenues. IT effectiveness, on the other hand, is indicated by the "availability, functionality, and utilization rates of IT applications for each core business process." These core processes include research and development, sales, purchasing, production, and administration. Kempis and Ringbeck developed a tool to measure effectiveness and explain that they found four different "IT cultures": stars, big spenders, cautious spenders, and laggards. By focusing on 27 percent of the companies in the survey that were designated "stars," they distill seven rules for superior IT performance. The authors also consider future IT challenges and applications. David Rouse

Excerpt. © Reprinted by permission. All rights reserved.

INTRODUCTION

Over the past two decades, almost no other subject has been discussed in the manufacturing sector as passionately as the use of IT. IT enthusiasts paint the opportunities for IT in glowing colors; they wax poetic about paperless offices, fully automated plants, and virtual enterprises. The skeptics respond with sarcasm: "There are many different ways to ruin a company. Speculation is the fastest, IT the most reliable."

Quotations from survey interviewees quickly indicated how divided the camps are, from top management through to operations:

* R&D. "Our new engineering information system will offer on-line access to all patent databases. Users can learn to operate it in one day using a CAD interface," say the supporters. Using their IT, R&D has created so many variants that we can't handle them anymore," production complains.
* Sales. "The product configurator has significantly improved our customer service. It has reduced the number of special requests enormously," argues the one side. The other: "Our sales information system is so inflexible that it's hampering the vital restructuring of order processing."
* Purchasing. "For the first time, our integrated materials management system enables us to evaluate suppliers comprehensively on a daily basis, analyze make-or-buy decisions reliably, and optimize logistics planning." This is mirrored by the opposite opinion: "In our sector of industry, IT support for purchasing doesn't make any sense. Interfaces with our suppliers are so complex -- excellent personal staff contacts are all that count."
* Production. "The new integrated standard software will improve our production stability, boost our delivery reliability, and increase stock turnover tenfold," declares an IT protagonist, while an IT opponent replies: "Our production planners use their entire energy trying to outwit the enterprise resource planning system. It is totally inappropriate for a manufacturer of product variants."
* Administration. "Our extremely flexible executive information system is based on the data warehouse concept. It allows us to analyze problems systematically on screen in precise detail. This improves decision making -- and saves a mint on paper!" A colleague's reaction is the complete opposite: "Interfaces between the financial accounting systems of our plants are weak -- every transaction has to be checked again manually."

We constantly encountered these conflicting attitudes in the course of our interviews. Why is there such a gap between aspiration and reality across all lines of business in the manufacturing sector? Before our survey, no systematic correlation had been shown between the use of sophisticated hardware and software systems and the operating results of companies, although isolated cases have time and again demonstrated the cost and competitive advantages that can be captured from professional use of IT.

Our research project, Benefits of IT in the Manufacturing Industry, was designed to close this gap in the field of IT research.

Together with the Institute of Production Engineering and Machine Tools at Darmstadt University of Technology, we conducted in-depth interviews with top managers of over seventy leading industrial companies in the manufacturing sector from Europe, the United States, and Asia. The spectrum of industries ranged from component manufacturers, automotive suppliers, mechanical engineering companies, and electronics firms to companies in the process industry. We also interviewed experts at another thirty companies on specific themes, such as the use of integrated standard software, outsourcing, rapid prototyping, and product configurators, and held discussions with selected suppliers of these IT products and services.

We developed a new, strictly empirical methodology for measuring the impact of IT on corporate success. Analysis of the survey results revealed that although IT efficiency is important, IT effectiveness makes a particularly powerful contribution to a company's bottom line. We found that highly effective IT organizations seem to share an understanding of seven key principles.

This book describes those seven rules for superior IT performance. It is addressed to managers in the manufacturing sector who have to make fundamental decisions on IT strategy and investment, and to executives and users from departments and functions who wish to learn more about the strategic and operational benefits of IT. We hope the factors for success described in this book will help readers tap the enormous productivity reserves that can be opened up by smart IT management.

Copyright © 1998 by Wirtschaftsverlag C. Ueberreuter GmbH

Edition details

• Publisher: Free Press
• Publication date: 1999
• Language: English
• ISBN 10: 0684864258
• ISBN 13: 9780684864259
• Binding: Hardcover
• Edition number: 1
• Number of pages: 224