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Business management strategies used in adopting ICT

Of the DCITA research publications on productivity, three reports look at the nature of good business strategies in the adoption and development of ICT.

The first report, Productivity and organisational transformation: optimising investment in ICT, by Ovum, examines the experiences of 18 Australian organisations in various sectors that were seeking to extract maximum benefits from their ICT investments.

The report suggests that investment in ICT is not to be taken lightly. It requires consistent organisation and ICT strategies, effective internal and external communication and careful assessment of risk.

The report makes it clear that ICT is only an enabler—a necessary but not sufficient condition for productivity growth and transformational improvements. Unless organisations have appropriate policies and supportive environments in place, the desired outcomes will not necessarily occur.

Productivity growth will often depend on organisational transformation aimed at improving the capacity and capabilities of the organisation to address its future business environment more effectively than in the past. The organisational processes associated with ICT implementation, as well as the ICT system itself, may produce direct productivity improvements. There may be additional benefits in new and greater skills and knowledge, together with a culture more conducive to change and innovation.

The second report on this theme, Achieving value from ICT: key management strategies, by Opticon/Australian National University (ANU), is based on responses from 1050 Australian firms and organisations to a telephone survey, supplemented by 50 in-depth interviews.

The Opticon/ANU study identified four types of benefits from ICT to firm performance. They are:

  • informational benefits by way of more and better information;
  • strategic benefits such as creating a competitive advantage;
  • transactional benefits in reducing transaction costs; and
  • transformational benefits associated with positive organisational change.

While there was little difference in the amount of benefit obtained in each category, ICT provided informational benefits most frequently and transactional benefits least often.

The report identified three conditions that influence the value realised from ICT.

  • Being ICT aware. This includes elements such as good understanding by management of the benefits to be gained from ICT and their ability to carry out an effective ICT implementation strategy.
  • Being open to organisational transformation. Organisational transformation must be recognised as a necessary accompaniment to ICT implementation.
  • Being persistent and patient in realising ICT benefits. Because the successful use of ICT involves a continuous cycle of learning and change, there is often a time lag between the initial investment in ICT and the time when the full benefits from the investment are realised.

The study suggested that achieving business value from ICT is largely within an organisation’s control, irrespective of the size of organisation or the industrial sector. What is required, most importantly, is ‘ICT investment impetus’ derived from ‘ICT aware’ management, with a good understanding of the possible benefits that investment in ICT can bring about and the manner in which the realisation of transformational benefits can occur over time. The study revealed that organisations that treated ICT as a serious management issue would achieve better value from ICT.

For the report titled Digital factories: the hidden revolution in Australian manufacturing, Howard and Partners used interviews of managers of manufacturing firms to examine the impact of ICT on productivity growth. These firms were not part of the ICT sector, yet the report found that there is considerable ICT production ‘hidden’ in these firms. These companies are designing, developing and enhancing ICT applications that are incorporated into non-ICT products or services and internal business processes. This report highlights the importance of ICT components embedded into machinery and equipment, and the difficulties in classifying hybrid applications involving ICT.

The report found that the skills of managers in understanding the potential benefits from ICT and appropriate methods of applying it are strategically very important in ensuring the commercial success of ICT related applications.

  • Document ID: 68010 |
  • Last modified: 5 February 2008, 9:02am