IT is shaping business strategy

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TECHNOLOGY is fast becoming the main driver behind business strategy, says KPMG Management Consulting. Graham Nixon, a partner specialising in IT strategy, claims that many organisations are adopting new technologies and then altering businesses' processes and structures accordingly.

As he points out in the latest edition of the firm's journal, Consulting Matters, this reverses the previous practice and blurs the distinction between IT and business strategy. "As technology providers move towards forming alliances with organisations across sectors, an increasing number of products are being developed and implemented as joint ventures."

As a result, he says, technology is becoming a more important driver behind organisational development. In the past, strategy was seen as driving everything else, with IT following. However, these are no longer distinct entities, but two sides of the same coin. In some cases, IT and the product are inseparable, as with on-line banking.

Nevertheless, few organisations have learned how to integrate the formulation of business and IT strategy successfully. For this to work, integrated management is vital.

"As business change becomes increasingly led by IT, it is essential that disparate technology suppliers are drawn together in as seamless a way as possible, in order to ensure the end product is customer-friendly," says Mr Nixon.

It is essential that the customer is presented with a simple way of dealing with the supplier, no matter how complex the operation. For example, the introduction of ticketing kiosks by airlines brings together several processes and partners, such as ticket sales, flight reservation, seat allocation and credit card authorisation. Care must also be taken to design and manage the mechanisms that hold this type of alliance together.

Mr Nixon says that technology's use as a driver of business change will lead to opportunities and innovative organisational forms. But it also means new responsibilities. "When companies adopt new technologies and subsequently adapt their business processes to fit, it is vital that board members responsible for IT recognise their responsibility to develop a corresponding approach to IT governance."