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Questioning the IT Arms Race

(originally published by Booz & Company)

Technology was the great liberator of the 1990s. It opened new spheres of competition. It taught every company to reconsider the way it did business. It made doing business faster, smarter, and more personalized. But today, many companies have discovered that keeping pace with the technology “arms race” can be an unwieldy proposition.

Most technology managers are understandably torn: Should I invest in a promising new product? How can I afford to invest in the future and support my current technology base? For executives struggling with such decisions, I recommend three simple questions to ask before spending more technology dollars.

1. Do my customers really want this? Letting your customers drive technology, rather than the reverse, is one of the most important but most neglected principles of New Economy management. Every good technology department ought to be doing dozens of far-flung IT experiments.

But do new ideas — as brilliant as they may be — make things easier for the customer? Many customer-relationship management software packages are available, along with tools designed to make the most of them. But if, after interacting with your online tools, your customers still call your 800 number, then either you haven’t implemented the technology correctly, or it’s the wrong technology for you.

2. Is this overkill? Wireless technology is the most exciting technology frontier, and it has the capacity to transform business. But don’t make the common mistake of assuming a wireless device is simply a mobile version of a PC. Many companies are bringing the same cumbersome processes designed for PC-based Web access to the new generation of wireless devices. This is overkill. Much of what businesses offer customers on the Web is redundant or unnecessary on wireless. Most wireless customers want easy access to basic real-time information. Excessive data and functions only makes wireless less helpful and more difficult to manage.

3. Do we have to do it here? Most technology executives feel proprietary about their best products and services. As a result, they’re loath to outsource what they rightly regard as the heart and lungs of their business. But just because it’s a technology project doesn’t mean it can’t be handled more efficiently and just as effectively outside your company. There are always functions that can be outsourced — especially offshore — where the time and financial savings can be substantial, and there is no intellectual property threat.

Companies should be eager to ship legacy systems maintenance abroad. At home, a company should not be reluctant to find a good strategic partner for peripheral but valuable technology projects. Then the more important, future-oriented projects can be kept in-house and receive a lot more attention and more “management bandwidth.”

These three questions don’t completely relieve all the strains on today’s IT departments. But they point to the best way to keep focused on priorities and ensure that technology investments stay strategic.

Dawn Lapore, Dawn Lapore is chief information officer for the Charles Schwab Corporation, a position she has held since 1993, and serves on the board of directors for eBay Inc.
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