Simon Jacobson, senior research analyst, AMR Research, on how emerging businesses can move from tactical to strategic IT
by Aaron Lazenby, May 2008
It's a reality all growing companies have to face: at some point down the road, the size and complexity of your business will outgrow your current IT infrastructure. Simon Jacobson, senior research analyst at AMR Research, talks to Profit about how emerging companies can embrace a strategic view of enterprise systems.
PROFIT: For emerging companies, what are the issues that prevent IT from playing a strategic business role?
JACOBSON: : If you think about this in the context of a small or midsize company, there are different technology challenges. There may be a lack of IT resources—the IT manager might also be your accounts payable manager. Within other companies, the IT budget essentially competes against other corporate projects. There is also the duplication factor—different individuals, applications, and spreadsheets, preventing the company from acting on a single source of truth. Lastly, there is the need for ease of use—some companies invest in new software without regard for whether employees can use the new system appropriately without months of training.
PROFIT: Is mature, integrated IT a requirement for growing out of the midsize space?
JACOBSON: While it's not a core prerequisite, the automation of some IT-supported pieces of the business is needed—in particular using IT as a lever to track business performance across multiple facets of the company and predict/streamline growth. If you look at some companies, they're using fragmented IT systems with fragmented business processes. Just think about some of the traceability demands, some of the regulatory compliance demands from a data-gathering perspective. These current systems most likely don't have the ability to address these new requirements, let alone provide the simple flexibility for a sales order discount. Some of these companies are working with 15- or 20-year-old investments that are heavily customized, and in some cases those applications are sunsetted or sitting on unsupported legacy hardware. And if these companies want to remain competitive, then a severe systems overhaul from an IT perspective is needed.
Say you're bringing in a new ERP [enterprise resource planning] system. You want to have everyone in the organization—from the person on the dock doing inspection or shipping and logistics to the person in the back office doing financials—using the same system. You have to look at using technology as a process improvement project for the whole company, not just an IT project.
PROFIT: Making that transition can be hard if you have years of data trapped on your employees' desktops.
JACOBSON: The last thing you want to do is migrate all of your data from multiple legacy systems and siloed spreadsheets and realize you did a pretty bad job and spend the next year massaging and normalizing the data instead of using it. That said, the costs and time can add up fast. So that's where we'll see a lot of companies start to embrace a service-oriented architecture as a means to drive that visibility and usability of data in a cost-effective fashion. You can now put more-modern functionality atop a legacy ERP investment and still be able to use data from that source. You can preserve that datasource while still doing some more next-generation or futuristic business process orchestration atop that.