- Opinion & Analysis
- Read Time: 24 min
After pouring millions of dollars into in-house data centers, companies may soon find that it’s time to start shutting them down. IT is shifting from being an asset companies own to a service they purchase.
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For managers seeking to abandon follow-the-pack IT investment, the author offers the example of Inditex Group, a clothing manufacturer in northwestern Spain, best known for its Zara stores. Inditex demonstrates that a company can select, adopt and leverage IT while spending very little on it. He lays out five general principles that underlie Inditex”s remarkable success with targeted technology spending.
Managers are continually being confronted with new and ever-changing competitive pressures from deregulation, globalization, ubiquitous connectivity and the convergence of industries and technologies.
After nearly two decades, technologists and strategists are still working out a productive alliance in the business world. Many companies accept that information technology enables their competitive edge, but their efforts to partner it with business are failing.
New information technologies bring new business challenges: threats from new competitors and opportunities to change focus and practices. The business impact of new technology usually receives the most attention —appropriately — but managers shouldn’t overlook the rippling effects on the company’s IT function.
Current models of organizational strategy and structure fail to meet the challenges of the information age. Based on field study, the authors conceptualize an architecture, or guide, for virtual organizing that focuses on the importance of knowledge and intellect in creating value. Information technology lies at the heart of this business model for the twenty-first century.
In recent years, there have been calls and prescriptions for business transformation.1 There has also been growing pressure for radical change in how the IT function is organized and managed. Rockart et al. captured the consequences of an agenda for reform in the IT function, and Cross et al.
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.
Assessing the value of information technology (IT) has never been easy. Delayed benefits, unintended uses, business changes, and hidden support costs inhibit meaningful evaluation of individual IT investments. This was true when most investments were focused on the support of a single business process or functional area.
When Eastman Kodak turned over the bulk of its IT operations to three outsourcing partners in 1989, outsourcing was a $4 billion a year business.1 Today, that number has grown to nearly $40 billion a year, according to the estimates of industry watchers Frost & Sullivan.
Long-term sustained management of a strategic alliance is turning out to be the dominant challenge of effective IT outsourcing. From a relatively unusual entrepreneurial activity, IT outsourcing has recently exploded across the global corporate landscape.1
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