The recent months have shown two clear trends; the first that the users are dominating the agenda for technology driven business change; and the second is the type of change that they are adopting, and implementing, doesn’t use the same model for business cases as traditional IT solutions. The basic principle is that users can spot technology that produces personal value before business can spot how to use the technology for cost advantage.
It’s been true over the last twenty years or so, as in turn PCs, PDAs, the Internet, and of course, the Web, all appeared with this manner of adoption. It’s an interesting speculation that user driven adoption fostered broader levels of experimentation in a shorter period of time, and possibly even led to a more rapid appearance of ‘standards’, be they product based or genuine industry based. Personally I think this is certainly true with Web 1.0, Web 2.0, and in creating the mass market that has led to business opportunities to make business via this new channel.
However we are now moving to the time when business is making serious moves to adopt these new technologies, and that does mean being able to make a business case. The difficulty is that the IT industry is really only comfortable with making cost justified business cases via its usually boss, the CFO. Why is the CFO usually the boss? Because IT is part of the cost structure! The new uses for technology just don’t fit here at all, as they are about doing ‘smarter’ business within the market with customers, and suppliers, around creating ‘value’ as the justification rather than ‘cost’ reduction.
This leads straight to the need to define the two terms; cost justification is when a technology improvement allows the same number of call centre staff to handle more calls in a given period; value justification is when the technology improves the ability to have the right information to make a sale, to the extent that the same number of staff close more sales in the given period. The sales boss owns the business case, what is that case? It’s not going to be a recognisable one on reducing costs, though may be it can scrape by on the basis of cost per sale being reduced.
Geoffrey Moore in his book ‘Dealing with Darwin’ has a lot to say on this topic, and the book is well worth buying in my opinion for this alone. Geoffrey advises on three types of innovation each requiring a very different business case. The third is our old friend, cost, the other two apply firmly to the new world of doing better business with the market place.
1) Making your product more valuable so customers choose to pay more for it over competitive products
2) Defending market share by doing business better with customers so that they choose to buy from you.
Both are about what is becoming known as ‘intimacy’, the relationship or understanding between supplier and customer, the value it can deliver, the flexibility it can provide, and the capturing of the opportunity to sell. All the targets of the new capabilities that SOA and Web 2.0 are providing to businesses smart enough to use them, and discussed in a further business book . The answers it would appear are out there, the challenge is not only to understand them, but also to be able to prove the value they will deliver, and the question is who will be the champions of this in the business?