The Journey to IS Capability

06 Mar 2011

At the heart of this blog is the concept of IS Capability. So, it’s essential to explain that before we can move on to methods and stories regarding achieving it. It’s a founding concept. This post provides a historical context for IS Capability, in the future we will begin to define it in detail then, at a later date, we can start addressing how.

An IT History

Like almost everything in life, IT has a history, a narrative of how it has influenced the world and organisations. It’s a relatively short history, of course, consisting of about 40-50 years, but a history nevertheless. Ideally, history also constitutes a learning process, and this has certainly been the case regarding the use of IT within organisations.

To describe this history we are going to use the three era model. It’s a simplification. The history of anything is complicated, chaotic and bathed in blood, well, maybe not the last one in the case of IT, but you get my drift. History is not easily divisible. Still, we divide history into eras, epochs and periods all the time, as a way to understand, discuss and analyse, so I’m going to stick with the model. The three eras are:-

Data Processing Era (DP)
Management Information Systems Era (MIS)
Strategic Information Systems Era (SIS)

In discussing the three eras, we are specifically addressing the impact of IT on the business, the eras also build on each other. The eras are still with us, even if we’ve left the technological elements of them behind.

As an example, isn’t business intelligence just the latest tool to deliver the goals of the MIS era? In a way, that’s IT in a nutshell, sell a concept and then only really deliver on it easily a couple of decades later. It’s easy to see where the cautionary tales regarding IT come from.

Thankfully, the hype to reality cycle has radically shortened, just like most product life-cycles.

Data Processing Era

The DP era was focused on improving operational efficiency by automating information-based processes, this is the era when, in a lot of cases, IT was influenced, if not led, by the finance department. The DP era can be said to cover the 1960s onward. It was viewed in the same way as introducing a new piece of manufacturing equipment to produce output more efficiently and cheaper. It’s easy to see why this was the case, because computers were like an expensive piece of manufacturing equipment, consisting of big iron, humming away in a special room. We are talking mainframes, minicomputers and workstations. Significant capital investment was involved.

Management Information Systems Era

The MIS era focused on increasing management effectiveness by satisfying their information requirements for decision making, as it was realised that a potential cornucopia of data was being stored in the DP systems. The MIS era can be said to cover the 1970s onwards. The MIS era was traumatic, trying to wrestle data from fragmented systems which, unlike now, didn’t necessarily have common standards in common. Everything was proprietary. The DP era was focused on process, and resulted in fragmented data. The era at least saw a shift to trying to meet management needs and support the business, and being significantly less technology driven. Eventually we got 4GL languages and tools like spreadsheets to make life easier. As an aside, my dissertation for my degree was an analysis of traditional and 4GL languages as it pertained to organisations (essentially organisational agility).

Strategic Information Systems Era

The SIS era focused on improving competitiveness by changing the nature of conducting business, the goal being to achieve competitive advantage. The SIS era can be said to cover the 1980s onwards. As with the previous two eras, we haven’t thrown out the goals of DP and MIS, they are still very much present in the SIS era, it’s the impact on the business that is different. We also moved into personal computers and networks over big iron, on a wave of personal computing computer freedom (something that ‘reversed’ in the late 90′s to get the advantages of both big iron and personal computers – one useful IT Supply element of the IS Capability).

IT doesn’t exist in a vacuum, and during this period Porter held the dominant theory on corporate strategy, and that was very much an external view based on market structure and gaining competitive advantage. Is it really only the fault of IT hype that organisations looked for a silver bullet to gain this competitive advantage? To change the market structure, gain dominance and lock-in customers, etc. When you look back, it is a very eighties, testosterone fuelled view. Just like the action heroes popular in the cinema at the time. How much of the IT issues were caused by the dominant strategy theory of the same period? As organisations attempted to use technology to deliver on the dominant view of corporate strategy? The book Does IT Matter? argues that strategy is everything, if that’s true it goes both ways, and strategy in the eighties has something to answer for as well (with respect to IT).

The Gold Rush 90′s

You’ve got to love the 90′s, but then I’m biased because I may have been a teenager in the 80′s, but I spent the first, formative years of my career in the 90′s. The 90′s is great because it’s when everything went into hyper-speed. The 90′s was a bit confused. Not only did we head into the 90′s laden with the despair that the SIS approach of the 80′s might not be nirvana and investment in technology isn’t a direct route to competitive advantage. Globalization was taking hold. The mosaic browser was released in 1993 and the Netscape browser in 1994 and the world went crazy. The 6-7 years running up to the end of the millennium were undoubtedly crazy times. We had the internet gold rush and Y2K all at once.

The proliferation of computer and internet use in the home was making the world smaller, as well as increasing the IS capability of staff. I know I benefited from this significantly during my tenure at the OBC Group. IT departments complain about the consumerisation of IT now, it’s nothing new, the same was happening in the 90′s when individuals compared their home facilities with their corporate ones.

We don’t like bubbles because of boom and bust, but innovation happens during bubbles. True, the people who make the true money may often be those coming after the bubble, or the people using the tools, techniques and infrastructure born from the frenetic period of innovation, rather than those who innovated, but bubbles are a creative firmament. As an example, we have global outsourcing now because of the ‘rails being laid’ during the .com boom, allowing developing nations, like India, to connect to the world. The cables got laid across the globe during the boom, often by companies that went bust doing it.

The .com bubble ended the late 90′s, ensuring we started the millennium under another heavy cloud of IT self-reflection. It’s obviously time for another era to come along?

The IS Capability Era

So, what is an IS Capability?

The ability of an organisation to deliver business value from investments in IS/IT contunuously.

That’s an official definition, provided by Ward & Peppard, as a colleague of mine is prone to say, it’s about doing better, faster and cheaper. It’s a way of enabling continual innovation through people and technology, which in turns results in better, faster and cheaper. It’s about seeing through the IT hype and fog, to make effective investments. IT has gone down as being too slow, and we need it to be as innovative, as agile and as quick as the rest of the organisation. That’s an IS Capability. As you can appreciate there is no one tool, technique, idea or technology to achieve that, it’s a mosaic of things, recognising the nature of IT Supply and IS Demand being a first step on that road.

Complex positioning advantages – those derived from broad and tightly integrated combinations of processes, capabilities, and, yes, technologies -will continue to resist rapid emulation.

Guess where that quote came from? That’s right, Does IT Matter? Despite the books ‘negative context’ and the focus on telling a cautionary tale, it’s actually advocating the IS Capability, without actually going on to tell that positive story.

The concept of an IS Capability is built on two principles. First, the view of strategy has shifted away from just being about external market structures and positioning to incorporate the internal, resource-based view of the firm. Second, IT is becoming more infrastructural and the replication times for IT-only advantage is very short.

…And Finally

That’s the history and context. We are where are today because organisations have been learning and there is two sides to it. Organisations have been learning how to execute their disciplines, be it marketing, human resources or strategy. IT is no exception, this is what some people miss. It’s not a special snowflake in this regard. Not only that, IT is impacted by how strategy is approached and it can enable new strategies.

In the future we’ll move on to what constitutes the IS capability. The goal being to set out some areas at a high level view to establish some of the problems and topics for future posts. It’s a big area, but that’s a challenge for another day.