If there is one question that has been common throughout my time in computing it’s been whether or not computers, or more recently IT, do add value to a Business. Nicolas Carr has been the most incendiary contributor to the debate some years back and today still an active contributor. However in my usual way I want to look at this topic in a different way, questioning whether we have reached a point in the evolution of computing and business that it’s no longer about alignment, but total convergence. And if this is the case, are we really being radical enough in our thinking on how to use technology to create value, rather than reduce the cost of the current business processes.
Let’s just start with how I define value versus cost when talking about this topic; add technology to a call centre and handle more calls per hour with the same staff and it’s justifiable by cost reduction. Change the process with technology, make more sales per hour with the same number of staff and that’s value it is creating extra revenue at no extra cost. How do you do this? Better matching of the callers requirements with your products so they are more likely to buy; think of the online airline industry and flexibility in price, travel date, or time, now even destination, as perimeters for matching. Yup I know that this is done online, but it’s a handy well recognised example of rethinking not only the product, but the process on the assumption of total convergence. i.e. that the business processes are designed around the technology being pervasive, not an existing manual process being automated.
The result has been overwhelming success for the low cost carriers, reformation and enlargement of the overall market place for air travel, justification of the ‘long tail’ marketing concept, etc, etc. But when I look at this more thoughtfully what I see is a reversal of the existing process which started with a fixed product transaction, the ticket, and moved to a discussion, usually out of the agent’s earshot, as to whether or not this was acceptable. As it was usually out of the agent’s earshot then there was little ability to interact and influence the sale. The traditional transactional element of the product first, any interactional element second, and the role of IT based on automating the transactional element.
Let’s try this again with the payment of taxes to the state at the end of the year. The citizen files their return, the transaction, and then the tax authorities work out if it is accurate and acceptable, increasingly with the complications of taxes it’s not, so then the interaction to sort it out starts. Just to make this worse we decide to make a single common transaction date so focussing a whole year’s work into a few months!
Given that we live more, and more, online, paying bills, making commitments, etc., why not file information into your return throughout the year, with the opportunity of raising any enquiries as they come up. Could be the tax payer, or the inspector, who sees an issue that needs some interaction to understand and correct, then at the end of the year the final transaction should be made as an accurate return requiring no further work.
Radical? Sure, but then all governments are talking about tax reform because it’s an over complicated expensive business to administer plus their citizens aren’t happy, and tidying up a process built on paper in a simpler age isn’t going to fix it, nor align with the big change in the way the world now functions.
Why would I claim this to be value? Easy, because real time online interacting has more chance of finding the errors, and collecting the correct tax, than retrospective analysis of a one off transaction that is historical and difficult to track. With the increasing number of ‘online’ activities meaning the amount of ‘paper’ is going down with the amount of ‘e’ to administer going up there is a sort of inevitability about this, at the citizen, or self employed level as a starting point. Incidentally, there are probably cost savings too in being able to support the increasingly complicated administrative structure of taxation in addition.
Have a think about it, and next Blog will extend this further and question how many products are in fact priced for cost recovery to the seller versus sold on the value proposition to the buyer.