Ch 3: Less Bang for the IT Buck

I am glad to see, as this chapter demonstrates, disturbing stories of IT spending finally emerging in the news. Management needed a wake-up call, and hopefully these horror stories encouraged management to pay closer attention to the business and costs of technology.
First, the headings of the horror stories all point to a faulty system or implementation provided by a software company. From this, buyers should realize that sellers may not have their best interests in mind. The chapter discusses references as an important tool in analyzing how software functioned for a previous client, but they could also be used to analyze the seller. Sellers refusing to offer references should be considered risky. They are hiding something; either that the software has not yet been tested, that it performed poorly, or some other hidden reason.
Next, the horror stories printed the costs of associated failures. This is interesting since management rarely considered costs, just benefits, before adopting new technologies, but as the headings point out, the “guaranteed” benefits never came. Massive losses printed in headings will shift the focus from derived benefits to technology costs, but management must not forget to include costs of internal and external customization, cost overruns, maintenance, and any other associated costs. Sometimes management is so mesmerized by a new technology, that their calculation of total cost is biased. Forecasts by an unbiased employee with financial expertise may be more accurate. A final thought in improving the cost estimation could be to use sensitivity analysis. Potential benefits and losses of the technology for the best, worst, and probable scenario could be computed. Therefore, before spending large amounts on new technologies, the company will know of potential risks or losses.
A final section that caught my attention was the Survival Guide for Buyers’ advice that technology knowledge is not as important as operational capabilities. I think the two are equally important. Operational capabilities are important because managers must identify the business process the technology will be designed for and determine if business goals can be met by the technology’s operational capabilities. Technology knowledge is just as important because management must understand the difficult details of what it takes to get the system working. I understand that sometimes sellers create technology investments too complicated in order to baffle buyers, but a combination of business knowledge with knowledge of the technology improves decision making. Lack of technology knowledge in my opinion led to many of the irresponsible purchases in the 1990’s.