A Consultant's View
Prairie Trail Software, Inc. ............................................................. June 2007
The March issue of the "Communications of the ACM" includes an article about the 7 habits of highly effective technology leaders. The list of those 7 habits is valuable enough to quote here.
* Business technology leaders focus on business models and processes before they focus on technology infrastructure or applications.
Most technology people focus on technology, which is why their voices are not heard at the top level. By focusing on the business issues, knowledge of the technology becomes a value.
* Business technology leaders track technology that matters by focusing on the distinction between operational and strategic technology and the chasm between technology concepts, prototypes, and bona fide technology clusters.
It is so easy to be caught up in the fad of the day–whether that fad be moving to Linux, going offshore for development, or Service Oriented Architecture. The real value is in determining what technology can really do, when that technology is really available for use, and how to make a profit from technology investments.
* Business technology leaders identify and prioritize business pain – and approaches to pain relief – as they move toward the creation of business pleasure.
The cost of relieving business pain keeps changing. Often the costs are more than the pain until some change happens in the technology. Thus, the solutions that were available last year might not be the only solutions this year. It is a constant challenge to keep up with not only the current business pain, but also the way that such pain can be relieved.
* Business technology leaders optimize the value of shared services in centralized and decentralized companies and they organize around the distinction between operational and strategic technology. Technology leaders also champion governance above and below the operational and strategic line.
While a lot of time can be spent on trying to optimize IT services, the first order of business has to be to properly manage IT actions.
* Business technology leaders manage computing and communications infrastructure professionally and cost effectively through negotiated service level agreements (SLAs) and measurement best practices.
Many IT projects and processes are not measured. That means that they are not being managed. On the contrary, leaders measure what is going on internally, and negotiate the measurement of projects.
* Business technology leaders com-municate often and predictably; leaders communicate good news and bad news in business terms and provide transparent insight into technology initiatives through tools.
Communication on business terms is key to helping non technical people understand what is being done and why the costs are important to pay.
* Business technology leaders actively market their roles in the company as well as technology's ongoing contribution to the business through a variety of tools and techniques.
Technology people are rarely business leaders. Why? Too often they focus so hard on the technology that few know what they (we) do, and business leaders don't understand our function.
When others understand what we do, and why we exist, they are much more likely to work with us on future projects. Effective leaders market our value to others, and express what we do in simple terms.
In the last 20 years, more than 50% of all banks in the country have merged or been bought. Verifone absorbed several of its competitors. Bell South has eaten up many of the other former AT&T companies (and has now taken the name of AT&T). Exxon and Mobile merged... The argument for getting bigger is that the companies can produce more with less overhead,
But is that always better?
GM got to be the biggest automotive company in the world and is now struggling to survive. Steel company after steel company grew to massive size only to go bankrupt. A number of studies on bank mergers show that there are no, or even negative, benefits.
Why are bigger companies not getting better results? 1) People take more from larger companies, and 2) Competition changes the landscape while the managers focus on the merger process.
GM, Ford, and Chrysler all signed agreements with their managers and workers to pay them rich salaries and benefits. The result is that these companies now sell vehicles to fund their real business: the medical and pension business. The workers have taken all the value out of those companies.
Pilloff and Santomero[1] argue that banking mergers may not be profitable because of the ways in which managers take money out of the deals.
Then there's competition. HP and Compaq worked hard to manage their merger, but it cost them quite a bit as their competitors worked to change the market while they were merging. It took several years for the company to regain its status. Similarly, smaller steel companies are very competitive in the world market while the larger ones fail.
It's true that Bigger may has advantages, but it's not always Better
1. Steven J. Pilloff & Anthony M. Santomero, 1996. "The Value Effects of Bank Mergers and Acquisitions," Center for Financial Institutions Working Papers 97-07, Wharton School Center for Financial Institutions, University of Pennsylvania.
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Dave Randolph,
President, Prairie Trail Software