Bring IT on board

Information technology is no longer just a useful tool. It's essential for any go-getting company wanting to gain a competitive edge, writes Kay Henning

IT seems that in the field of technology, as in many areas of business life, we are caught wrong- footed by our own prejudices. It seems senior executives still regard technology in general and IT in particular, as an esoteric outpost on the boundaries of the company, tucked away in a back office where it can do no real harm nor offer any strategic advantage.

So says a survey, published at the end of January, and carried out by the Bathwick Group. It interviewed chairmen, chief executives and board- level directors without responsibility for IT. The companies, all with turnovers greater than pounds 100m, were based in the UK, Germany, Singapore and the US.

The survey reveals that Britain ranks lowest in executive use of computers compared with other countries, that most UK boards relegate IT strategy to their finance director, and that executives believe they do not get competitive advantage from their IT systems.

So, we conclude, a laptop is not regarded as a ubiquitous virtual companion by senior management. Evidently, too, a director of technology automatically assuming a seat on the company board still seems relatively rare. I would suggest that as we move into a digital economy this must change. There are three compelling reasons why this is inevitable.

First, wisely applied technology provides competitive advantage. This is obviously the case for technology and telecommunications companies themselves - the Ciscos, Dells, Psions, Compaqs, Nokias, BTs, WorldComs and Microsofts. The application of technology has ceased to be solely a way of optimising the efficiency of existing business processes.

The rise of the Internet in the early 1990s was pivotal in the final transition from local area networks, which were confined within the boundaries of the corporation, to intranets and extranets. The latter extends a company's web of electronic communications, via Internet-like computer links, to its corporate suppliers and business partners. This connectivity provides strategic leverage.

Thus, for example, the companies, Royal Doulton and Wedgwood, regularly transit electronically-generated prototype ceramic designs to their clients in New York, subsequently discussing the finer points of the prototype via video-conferencing. Train builders, ADTranz of Derby, has used a virtual reality system to prototype their new fleet of Electrostar trains. The trains run on virtual tracks and stop at cyberstations where the virtual doors open. The system simulates the accumulative effect of wear- and- tear over a 20-year operating life, modifies the design in the light of the simulation results and provides the customer with a maintenance programme.

Meanwhile, in the film and television industries digital technology affects working practices, the economics of production, the nature of creative partnerships and makes geographical proximity less important for collaborative work. Thus multiple ISDN phone lines and a large-capacity data line allowed Hollywood and London animators to work simultaneously on the film Space Jam. Nightly video-conferencing sessions were important to the success of the film both creatively and financially. The film was completed in nine months, a process which, without the technology, would have taken about two years.

The second reason why technology is assuming a strategic importance is that some companies have created their businesses entirely on the lnternet. Technical competence has become a core competence. Thus, for example, Electronic Share Information offers direct on-line access to share data for private investors, and Virtual Vineyards offers premium wine from lesser-known artisan wine producers, conducting its product promotion, virtual high street presence and order processing over the Internet.

Thirdly, digital technology will affect the structure of a company and thus its operating costs, its corporate ethos and its capacity for flexibility and innovation. The deployment of IT can reshape company structure.

The IT consultancy firm, Gartner Group, estimates that by 2000, 55 million laptop computer users will work outside the boundaries of the enterprise. They will do so without the benefit of local area networks or high-speed wide-area network connections, at least 20 per cent of the time. Where transient and ad hoc team-working becomes the norm the office environment may become so temporary the concept of office accommodation loses meaning.

Though they may have personal disadvantages, these nomadic arrangements have clear benefits to a competitive company, not least because they enable it to move forward, transfer energy and re-focus in response to market changes.

Before, companies tended to talk about IT as a way of cutting costs through the automation of manual tasks. But, as we see, the role of computing is changing rapidly. As electronic communications and networked arrangements become central to business, so the IT function becomes more strategic. As Philip Crawford, Oracle's managing director said in connection with the research: "IT is no longer about bytes and bandwidth. It is about competitiveness, innovation and vision."

The next wave of developments - electronic commerce, online home shopping and fully networked computing - will make this strategic move more apparent. Business executives realise the way to increase profits is no longer through automation and efficiency, but through efficacy. It is also through applying technology to create new products, new services, attract new partners or adopt new working practices. So, we ask ourselves, if there is no director of technology on the board, then why not?

Kay Henning is Director of Catalyst Media. Her book, The Digital Enterprise, is published by Random House, price pounds 16 99.