A Continued Surge in IT Investment

In recent posts, I have noted previous articles on how the recovery in the US has been a ‘jobless’ recovery yet one with stronger investment in equipment and IT. This peculiar effect in the latest reporting appears to be even more pronounced, perhaps even running in ‘overdrive’. According to yesterday’s Wall Street Journal article, the investment in labor savings in the US stepped up at the beginning of the decade, but with the recession, companies found bigger opportunities to automate even more with machinery and software.  Timothy Aeppel, the author notes, this investment and spending level has continued broadly through the fourth quarter. And while certainly investment in technology will cause employment subsequently to rise, I think it appears that CEOs are investing in technology far more than adding staff as in previous recoveries. And they are doing this for a reason — they can get better returns from the machinery and robotics and software than before. Part of this is due to low interest rates and unique tax breaks, but I believe that technology is enabling greater returns on reducing costs and improving productivity than previously. Further, I think fundamental changes in IT capabilities and robotics are fueling improved returns from automation even more than has occurred in the past, spurring even greater investment in IT.

Historically, IT applications and systems were applied to domains with large amounts of the routine work, often done by hundreds if not thousands of staff. These were the areas that justified the cost of IT and provided the greatest return. Improvements in application and database technology enabled technology to tackle tougher and more complex problems. It also enabled leverage of technology on medium scale processes. Basic toolsets like email and Sharepoint tackled the least complex and departmental processes. This progress is represented in the diagram below.

The introduction of client server platforms allowed solutions to be applied to routine work on a smaller scale, to large departments and medium sized companies rather than just divisions and large corporations. This accelerated with the internet and the advent of virtualization.

But the cumulative and accelerating effect of new development technologies and methods, new toolsets, new client devices, cloud infrastructure, and advancing data and analytics capabilities has enabled a far broader range of solutions to be applied easily and effectively across a wide range of institutions and problem sets. Small and medium sized companies through cloud services can now leverage similar infrastructure capabilities that previously could only be implemented and afforded by the largest corporations. This step change in progression is represented by the chart below.

The increase of automation scope with new Tech toolsets

The new lightweight workflow tools like IBM’s Lombardi toolset and many others open up almost any departmental process to be easily and rapidly automated and achieve a decent ROI.  The proliferation of client interfaces through the internet and mobile allow customers to self serve intelligently for almost any product and service, enabling the elimination of large amounts of front office and back office work. This cumulative and compounding effect is truly a step change in what can be done by IT to automate the work within medium and large companies. And yet, despite this sea change in capabilities, you still find many IT departments focused almost wholely on their traditional scope. The projection initiation and selection process is laborious and even arduous, oriented towards doing large (and fewer) projects. The amount of overhead required to execute almost any typical project would overwhelm lightweight automation for departmental-sized efforts. And yet, there are huge new areas of scope and automation that are possible now in almost every company. And so how do you start to prove out these new areas and adapt your processes to enable them to get done?

I think there are several ways to get started here, some of which I mentioned briefly in my December post on  ‘A few things to add to your technology plans’.

1. Improve customer signup or account opening: Unless your company has redone these functions within the past 24 months, it is doubtful that this area is up to the latest expectations of customers.  Enable account opening from the web and mobile devices, leverage the app stores to provide mobile clients that have additional, useful and cool functions (nearest store, nearest ATM, or if you are a climbing gear company, the current temperature and weather at base camp on Mount Everest). Make them easy to navigate and progress through the application with  progress bar and associated menu. Ensure the physical process at the store or branch is as easy as the internet version (i.e., not twenty pages of forms). And tighten up the security with strong passwords (many sites today have a strength indicator as you type in the new password) and two factor security on critical transactions (e.g. wire transfers or bill payments). Remember you can now deliver the two factor security through the customer’s mobile device and not a separate token.

2. Fix two or three process issues that are basic transactions for customers: Just as you need to continually cycle back through your customer interfaces to keep them fresh and take advantage of the latest consumer technology, you should also need to revisit some of the basic transactions that business typically fail to put on their list to invest and yet become problematic service areas for customers. These would be areas like change of address or statement reprints or getting a replacement card. Because they are never on the project list, these services remain backwaters of process and automation with predictable frustration for the customers, high error rates, and disproportionate manual effort to complete. Work with a strong business partner (perhaps the COO or someone close to the customer experience) to tee these up. Use the latest workflow tools to tackle the process piece. Leverage the latest data warehouse and ETL capabilities to integrate the customer data across business units and applications so that the process can be once and done. If you are not sure on what basic customer process to start, then talk to the unit handling customer complaints and look for those processes that have the highest number of issues yet the customer is trying to do something quite basic. Remember, every customer complaint requires expensive responses that by eliminating, you drive material improvements in productivity and cost.

3. Implement more self-service: An oft-neglected area is the improvement of corporate support functions and their productivity and service. In a typical corporation almost every employee is touched by the HR and Fiance processes, which can be heavily manual and archaic (again they rarely show up on the project list) By working with your Finance and HR functions you can reduce their costs and improve their delivery to their users through implementation of automation and self-service. The advanced workflow toolsets (IBM’s BPM) mean you can do far more with incremental, small tiger team efforts than ever before. Your scope to automate and move to self service on your intranet is much greater. More and more minor business processes than ever before can be automated at far less cost and effort. The end results are higher productivity for your business, lower operations costs in HR and Finance, a more satisfied user base, and a better perception of IT.

4. Get to a modern production and service toolset for IT: For the past twenty years, there have been two traditional toolsets that most companies leveraged for production processes and service requests (Remedy and Peregrine). And most of us have implemented (with some struggle) reasonable implementations that met the bulk of our needs. But the latest generation of these toolsets (e.g., ServiceNow) make our previous implementations look like dinosaurs. And when you consider the 60 or 70% of your staff and service desk are using these tools every day, and you can make them far more productive with a new toolset, it is worth taking a look at. Further, your business users, will love the new IT ordering facilities on the intranet that are better than ordering a book from Amazon. By the way, the all-in operating cost of the new tools should be substantially less than your current costs for Remedy or Peregrine. And your team will be operating at a step level improvement in efficiency and productivity.

5. Get Going in Business intelligence: One last item to make sure your company is capitalizing on is leveraging the data you already have to know your customer better, improve your products or services, and reduce your costs. Why have advertising for customers who never click through or buy? Why do customers call your call center when they should be able to do it easier online? Wade through all the unstructured data being generated on social about your company to figure out how to improve your brand. Knowing the mood of the market, understanding your customers and the perspectives on your products and services requires IT to partner with the business to leverage the data you have to obtain intelligence. Investing in this area can now be tackled with the new big data tools on the market. If you are not doing much here, then I recommend finding out what your competitors are doing and sitting down with your business partners to sort through what you must do.

So, there’s 5 things that five years ago, would have never made any list. Yet if you make real progress in 3 of the 5, you can hit home runs in customer satisfaction, service quality, and a much better view of IT. And most important, you can ensure your company stays ahead of the game to achieve greater productivity and lower costs.

Any views or alternate perspectives on the progression of IT tools and solutions? Do you see the same sea change that I am calling out here for us to take advantage of?

Let me know. Best, Jim

About Jim D

Jim has worked in the IT field for over 25 years and as a senior leader for over 15 years. He has successfully turned around a number of IT shops to become high performing teams and a competitive advantage for their companies.
This entry was posted in Best Practices, Efficiency and Cost Reduction, Looking Ahead, Vision and Leadership and tagged , , . Bookmark the permalink.

2 Responses to A Continued Surge in IT Investment

  1. Amit says:

    Very insightful.

    Thanks for sharing the blog information yesterday. I just read the most recent post, but will now read others as well.


  2. Pingback: Building a Responsive and Effective Service Desk | Recipes for IT

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