Future Management

IT Strategy: In the absence of a Business strategy

Business strategy drives IT strategy. But, what drives IT strategy in the absence of clearly defined business strategy?

Identification of successful business strategy in a dynamically evolving consumer and financial markets is extremely challenging and sometimes, it is impossible. Look back in few years, take business strategies of top companies and their result today, and hence the evidence of extreme complexity and challenge exist in defining successful business strategy for an organization in a dynamic market.

IT strategy supports business strategy in spite of the out come of the business strategy. True. However, the point is, some times business strategy can not be defined clearly or it does not exist and in that case, how the IT strategy should be defined.

In the absence of business strategy, IT strategy is to increase the value of IT organization.  Now the questions are, what is IT valuation and how to measure it, and finally how to increase it?

I had the opportunity to work with a purchase accounting project for a well known demerger in the auto industry.  I noticed, there is a significant market opportunity for a IT valuation model in spite of 3 of  big 4 consulting and accounting companies were heavily involved in that project. So I developed a simple IT valuation model to determine the fair market value of an IT organization to readjust the book value of IT assets.

To simplify it, let me put a different spin to IT valuation. Purchase accounting occurs after a merger or demerger occurs. But, before a merger or acquisitions occurs, an organization is evaluated for its market value. That includes tangible and intangible assets. The tangible assets are mostly fixed assets and over the years, valuation process for the tangible assets is more matured. Most of the IT valuation comes from intangible assets.  For a pure technology companies like Microsoft, Intel, the intangible assets of the organization can be quantified by patents, copy rights, trade mark and etc. For an IT organization supports a business function in banking and finance, oil and gas and etc, the intangible asset valuation is challenging.

In those scenarios, the intangible assets are:

  • An organization ability to adapt to market change in terms of capacity & capabilities. ie scale up or down infrastructure based on future requirements
  • An organization ability to develop a rapid applications for future requirement – skill set, processes, knowledge
  • An organization’s efficient operating cost mode –  in terms of license, hardware depreciation
  • An organization’s IT general controls and management – IT risk management, Security Management, compliance management

The above intangible assets of an organization improves the value of IT organization. It will be reflected  in case of merger or an acquisition.  In the absence of clearly defined business strategy, take the above strategic objectives of  IT strategy and plan.

The above IT strategy will reduce the cost, improve the over all reliability, flexibility, security and adaptability  of an IT organization. It requires investment and the question is how a CIO can justify the ROI for the above initiative.Biggest advantage of the above approach is, the initiative does not require any additional incremental cost. Since it has very high ROI, it will sponsor the project from its saving and improves the value of IT organization. When there is no clearly defined business strategy then the IT strategy is to improve the value of IT organization.

If any one interested to understand the granular details of the above IT strategy, practical difficulties of framing the strategy, actual results and etc. More blog postings will follow to provide the details of the above steps. Mean time, if you’re impatience and you need immediate information,  please do not hesitate to contact me.

2009 Economical-Magic

Flow of electron is current and flow of cash is economics. If no electron flow then there is no current and if there is no cash flow then there is no bright economy. It is as simple as that.

What is the solution for the current economic crisis?

Increase consumer confidence

Consumer confidence is measured by the consumer confidence index and it is record low now. Economics is a social science studies the production, distribution, consumption of good & services. Consumption is the driver for distribution and production. The consumer adapts a conservative approach for consumption of goods and services and hence there is a slow down in the whole cycle. The conservative approach chosen by the consumer due to bleak future.  Consumer are not spending due to uncertain future and current & near future depends on the consumer spend. I call this situation as “economical dead lock”. 

The lock only be released by consumers and it depends on creating HOPE in them. Any big events in first quarter of 2009 is going to create that hope in consumer. The big event could  categorically be under  geo-political, scientific invention, leadership, Government policy.

The president elect going to sworn in first quarter of 2009 and he already made clear that his top priority is to focus on economy. By introducing new policies, regulation and deregulation in certain areas, introducing all construction projects are likely would  provide confidence in consumer that there is a bright future ahead. That magic would release the economical dead lock. 

It is highly likely that global economy will turn around by 3rd or 4th quarter of 2009.

The next big ideas!!

We are in deep global economical crisis and most of the organization and individual are or will be focused on survival and sustainability. Human mind becomes sharper in survival and it has been proven since the formation of a single cell. Since we are in deep crisis, innovation, operational & cost efficiency, invention are not differentiator but ingredients of survival. Rate of change of innovation & invention will be in rapid phase in next few years. Top three big ideas will emerge in next few years in the modern  industrial world.

  • Stop that photon
  • Wireless power distribution
  • Quantum computers running in the data centers

What are the industrial applications possible if we could find a way to stop the photon:

  • Virtually there is no electronic screen required. That is, television, computer, projectors are not required instead we can project the display in the space. An average cell phone size device can project (around 50-55 inch) with very high resolution in space.

Wireless electric power transmission:

  • Due to the energy crisis and fossil fuel dependency there will be more focus on clean green energy and there will be progress made in that area. However, irrespective of the energy source, energy distribution will be major problem. Entanglement of the electric energy shall enable the electric power transmission with out physical wires. It will provide a foundation to transmit energy from space. It will lay foundation to eliminate the energy crisis permanently.

Quantum Computers

  • It may not be a replacement of electronic (silicon based) computers. It will be like laser to light bulb. We are using light bulbs even after the discovery of lasers. QC will be more powerful and faster. When it is availble for mass data processing in the data center then the availability of data, processing speed of data will increase alteast hundred folds than what we have today.