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2.6 The knowledge base of ICT investments
The businesses consulted for this study indicate that ICT investment is tightly controlled. This contrasts sharply with the technology boom of the 1990s when technology spending was relatively unrestrained. Technology investments were heavily marketed by vendors, service providers and consultants on the basis of ‘must have’ selling strategies. This approach was particularly prevalent in corporate ICT.
The study found that the manufacturing companies consulted now adopt a more deliberative approach and invest in ICT as part of their overall capital expenditure decision process and innovation strategies. Often ICT is part and parcel of a production, processing or analytical capability that is being acquired and may not even be identified in the decision making process as ICT. Processors, sensors and operating systems are embedded in the machinery that not only drive operations but also deliver information about performance – and may even suggest corrective action.
In contemporary business journals, ICT is increasingly being seen as an infrastructure investment and approached on the same basis as other corporate investment decisions (Carr 2003, 2004).
To ensure it is focused on business outcomes, and not technology, Simplot has consciously chosen to label ICT activities as ‘information services’ (IS). It employs ‘business analysts’, not ICT specialists, to reinforce the focus on understanding requirements and outcomes.
The company also has an ICT investment ‘rule’: 8 of every 10 ICT projects must be driven by business needs – only 2 of 10 may be ICT driven or IS initiated. The business case must be made for all proposals. The introduction of Internet Protocol (IP) phones was given as an example of an IS initiated project that was implemented because it produced dollar savings.
It is important, however, for companies to be aware that ICT differs from other infrastructure assets in that it supports the generation, transfer and sharing of knowledge that can be adopted, applied and used for innovation in business and manufacturing processes and in enhancing the functionality of products and services.
The ability of ICT to support continuous monitoring, fast data processing and sophisticated data analysis has led to an improvement in the availability of critical management information. The scope and amount of information that can be extracted from business (corporate and production) processes has increased and frequently can be analysed in real time.
Business process information can then be used to improve business efficiency (managing inputs, increased coordination both internally and externally), effectiveness (product design and quality) and flexibility (mass customisation, new products and services) of various business processes including procurement planning, production, marketing and distribution.
In several of the businesses consulted for the study, process by-product data is aggregated and analysed using statistical packages (such as SAS) to identify inherent relationships and linkages, which is then used for process optimization – that is, to reduce variability, enable better control, enable lean manufacturing and eliminate waste.