[Fulltext] The software vendors tell us that technology will transform business. But who can honestly say that they have ever seen a real profitable change because of technology? Disappointingly, not too many of us. More often than not, large system implementations have resulted in serious cost over-runs and added company stress. We all have heard stories of IT disasters. The purpose of this article is to examine technology hype / risk, and consider the potential ways in which accountants can play a role in managing such risk.
Customer Relationship Management (CRM) is a current 'hot topic', and one that is hyped within many Irish companies. CRM software helps companies manage their customer relationships. CRM vendors talk about the enormous benefits of CRM, and emphasis the low downside risks. If you listened to the vendor hype, you could be forgiven for thinking that all one has to do is to load the software and watch the money come in. However, current research indicates that the best CRM systems provide, at most, only 20% of customers' ultimate CRM vision. Therefore, even after a successful implementation of the best CRM software, there is still a long way to go before the full benefits are realised. The bottom line is that vendors, no matter how reputable, are in business to make money and therefore their independence and advice must always be tested rigorously.
When I recently asked a CEO what he thought about CRM packages, he said, "People sell products, not software". The truth of the matter is that CRM software, of itself, cannot sell a product. Multiple dependencies and processes are also required. For example, CRM implementations are only as good as the underlying data quality in the company. Loading data that is complete, consistent and standard across an organisation is a real challenge. Typically, this is treated as one task in a CRM project plan. In fact, for most large companies, it should be treated as a project in itself.
While CRM is just one example of IT software, I think the message is clear. Don't believe all the hype and spin, do your own research! This common sense principle applies to all strategic IT initiatives. With so much new technology around, the necessity for companies to think strategically about IT becomes all the more important. Failure to implement strategic IT disciplines usually results in time, money, and sometimes, jobs, being lost. Applying some basic disciplines to ensure better IT / business alignment will help avoid the technology mistakes that we hear about so often.
As skilled professionals, accountants have an important role to play in implementing some IT disciplines. I believe that all companies should consider the four actions listed below. By implementing these basic IT disciplines, the risks associated with large strategic IT initiatives will be dramatically reduced.
Basic IT Disciplines
1. All new IT initiatives should be jointly researched and planned by the business and IT professionals. The business and strategic reasons for doing the project, plus the associated risk factors, need to be documented, understood and agreed by everyone.
2. Document and sign-off clearly defined, measurable, and dated project success factors before any project commences. Too often 'soft benefits' are used in IT business cases. If the benefits aren't achieved, then appropriate action must be taken.
3. Ensure IT executives and staff understand ongoing business drivers. The more IT professionals understand what drives business profitability, the more successful they will be.
4. Ensure accountants and senior company executives forge stronger relationships with their IT counterparts. Often accountants are afraid of IT because it is technical and is 'not their area'.
One recent Eircom executive decided to research various IT initiatives, and ask a few 'why' questions. By comparing the costs incurred with the initial proposed benefits, a bleak picture soon emerged. He then took appropriate action. Although not an IT expert, he certainly wasn't afraid to take a view on technology projects. It's a good lesson for all us.
In conclusion, to answer my own title question, I think the response is, yes, accountants can manage technology risk better, by becoming more involved. It sounds obvious, but it rarely happens.
Frank Clohosey, ACA is an IT Strategy Consultant at Druid Consulting.
Accountancy Ireland Vol 34 No 4 August 2002