Core IS Capabilities for Exploiting Information Technology
As managers experience more volatile marketplaces, global competition, shortened product life cycles, customer pressures for tailored offerings and tighter performance standards, they increasingly depend on new information systems. The IS components in business solutions must be constructed rapidly and effectively despite the massive changes in IT (information technology) product capability, a restructured supply industry, potential shifts in system development approaches, and new ambiguities in terms of what should be regarded as a business-side versus a technical specialist task. Rockart et al. suggest that the IT organization must address “eight imperatives” that represent a combination of organizational arrangements and target achievements.1 And Ross et al. argue that companies must build and sustain three key IT assets: a strong IT staff, a reusable technology base, and a partnership between IT and business management.2
Our own analysis links the idea of a strong IT staff with two developments that have been prominent in the recent literature and in the thinking of managers with whom we have worked: the concept of core competencies and the potential for IT outsourcing. Consider first the rationale for core competencies. In an increasingly complex, fast-changing world, businesses succeed, it is claimed, through sustained commitment to excellence within a narrow domain. It is simply not possible for any organization to remain competitive, let alone world-class, if it dissipates managers’ attention across many diverse markets and activities when each is subject to potential transformation. Thus we see corporations divesting subsidiaries in order to focus on fewer businesses that exploit their core competencies.3 Phrases such as “virtual” and “hollow” corporations and examples such as Benetton and Nike capture the prescriptions of Quinn and others: successful businesses focus on creating advantage through a small number of core activities, while other activities are outsourced to world-class supplier-partners.4 Hence managers are debating whether IS is core or noncore and peripheral to the future of their business.
Next is the potential for IT outsourcing. The IS/IT domain arguably represents an extreme example of growing complexity and rapid change. Can any business, however rich in resources, manage IS/IT activity through this turbulence as well as third-party providers with wholly dedicated managers? Organizations such as General Dynamics, Xerox, and the UK’s Inland Revenue have concluded huge IS outsourcing deals.
References (38)
1. J.F. Rockart, M.J. Earl, and J.W. Ross, “Eight Imperatives for the New IT Organization,” Sloan Management Review, volume 38, Fall 1996, pp. 43–55.
2. J.W. Ross, C.M. Beath, and D.L. Goodhue, “Develop Long-Term Competitiveness through IT Assets,” Sloan Management Review, volume 38, Fall 1996, pp. 31–42.
