Smith & Fingar on Business Process Management: Is Carr Wrong? INFS 780 Rick Christoph

A review of our class  We have learned about competitive advantage We know that sustainable advantage comes from a proprietary technology We know that infrastructural systems do not usually provide competitive advantages  We learned about the Toyota Production System  So where does IT fit in all this?

Who are Smith and Fingar?  Authors of a book titled: IT Doesn't Matter—Business Processes Do Howard Smith and Peter Fingar  Provides an interesting rebuttal to Carr See

Is Carr Wrong?  "Carr's historical analogies to other infrastructure technologies are not convincing. Information technology has infinite and constantly expanding functionality." Lewis, M., Letter to the Editor, in "Does IT Matter? An HBR Debate," Harvard Business Review, June 2003

Is it Spring or winter for IT?  Carr suggests winter The glory years are over IT has become an infrastructure. It is critical to success but will not yield a sustainable advantage.  Smith & Fingar say spring IT is just starting – the next 50 years are where it is at! The real key is Business Process Management

Smith & Fingar on Scarcity  Carr states scarcity may be the basis for sustainable competitive advantage If not scarce, it is not proprietary  S & F state that is true -- in the physical world such as during the industrial revolution Carr’s examples of railroads, telegraph, etc.

Scarcity - today  Smith & Fingar say this is not so in: the realm of human creativity innovation in the information revolution.  In other words – HOW you use the data is the critical issue What do you think of that argument with respect to ERP?

S & F competitive advantage  Carr is really about the IT industry, not the use of IT for strategic advantage. They argue that Carr is focusing on the MACHINE – is that true?  Carr's article describes the last fifty years of the IT industry, more accurately called EDP. Carr’s focus was on TPS – is that true?

Infrastructural Advantage  Infrastructural technologies provide their users opportunities for competitive advantage when they approach critical mass, not early in their development. Do Infrastructural systems really provide a competitive advantage?

Business Processes are key  Carr's argument does not recognize the significance of the business process, instead focuses on "functional" IT applications and individual services.  Today's IT Utility is only the platform for tomorrow's BPM capability. Scale, standards, and access are valuable to store, process and transport unique business processes of distinction.

Web Services & Practices  Web services are an emerging technology related to application integration, not to selling commoditized applications by some third-party IT utility company.  Best practices aren't the only practices, as Carr implies.

So what is BPM?  “The problem is the separate stovepipe applications within most organizations with process choke points that cross the stovepipes.  The answer is to build and operate services at the intersections of the stovepipes to ease the process.” odds-of-success.html

What is BPM  In the simplest terms, it is running the organization to meet customer's needs  Why don’t we do this now? Functional silos Focus on my area – not the firm I can’t understand everything in the entire firm

Hey – wait a minute!  How does BPM compare to TPS? Sounds kind of familiar – doesn’t it?  Could automated BPS systems approach many of the TPS functions?

Well, who is right?  Let’s apply Smith & Fingar’s ideas to a mature technology – electricity Does how you use electricity provide you with a competitive advantage? Are the best practices the only practices? Does electricity provide opportunities for competitive advantage?

Carr might suggest  What are the keys to electric power: Critical infrastructure  Users do not care how it works – just that it does work Product is a commodity Best practices = availability  This will not yield competitive advantage

Carr Reviewed: Four Points to IT success  Spend Less  Follow, Don’t Lead  Innovate when risks are low  Focus on vulnerabilities over opportunities

Whoever is right:  We need to consider IT as another input Justify on business terms Focus on deliverables Not selling IT as the next dream  Consider that it may be an infrastructure Consider BPM opportunities