Building Competitiveness and Business Performance with ICT

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The ResearchModel andGlossary of KeyTermsBased on the results of a survey completedby over 225 technology leaders, representingfirms from North America, Europe and the Asia-Pacific region and from a variety of industrialsectors, this report discusses the potentialbusiness value of three important technologies,namely mobility, cloud-based services,and unified communications and unifiedcommunications and collaboration platforms(collaboration tools). The work focuses on thefactors – what we call “key business enablers”– than enable organizations to achieve higherreturns on their investments in these threetechnologies.Figure 1 represents the research model and thetypes of data that were collected. The modelbuilds on the most relevant and latest academicliterature about the relationship betweentechnology and business performance. Inaddition to collecting survey data, severalChief Information Officers of leading Europeanmultinationals were interviewed. Throughoutthis report, their insights into how they usetechnology to enhance business performanceand competitiveness are summarized in shortcase studies, titled “Real Successes.”Several key terms related to the researchmodel are used in this report to describe theresearch findings. Below, they are summarizedfor easy reference. In subsequent sectionsbeginning with the title “Definition,” the termsare described in greater detail.Three types of information andcommunication technologies (ICT)Mobility refers to the usage of portable devicesconnecting to the Internet through mobiletelephone networks. Portable devices refer toportable computers: notebooks, netbooks,laptops, Ultra Mobile PC-UMPCs, tablet PCs; aswell as portable devices such as Smartphonesand customized PDA phones.Cloud-based services have the followingcharacteristics: pay per use; external resourcepooling; rapid scalability; flexibility; andubiquitous network access. They includesoftware-as-a-service; platform-as-a-service;infrastructure-as-a-service; and businessprocess-as-a-service.Collaboration tools merge multiple toolsincluding instant messaging, conferencing,email and unified messaging to teamcollaboration and voice calling with presencebehind a single user interface – easily accessiblefrom almost any device and from virtuallyanywhere – to increase personal productivityand business efficiency in ways no single toolever could before. collaboration tools mayconsist of tele-presence, web conferencing,messaging, and voice.High Investors and Low InvestorsOne of the key distinguishing variables that wasexamined was the percentage of the total ICTbudget that a firm spent on each of the threetypes of technology: mobility, cloud-basedservices; and collaboration tools.• High Investors in Mobility: firms that spentmore than 10% of their total ICT budgeton Mobility;• High Investors in Cloud-based services:firms that spent more than 10% of theirtotal ICT budget on Cloud-based services;• High Investors in collaboration tools: firmsthat spent more than 10% of their total ICTbudget on collaboration tools; and• Low Investors: firms that spent less than10% of their total ICT budget on a giventype or types of technology.It is important to note that investmentsin mobility, cloud-based services, andcollaboration tools are not mutually exclusive,with some solutions involving one, two or evenall three technologies.Strong Business EnablersThe research focused on four key businessenablers. The results reveal that strong businessenablers are critical to increasing the likelihoodof high performance and mitigating the risks ofwasting investments in ICT. The enablers are:• Strong business involvement: firmswith sufficient participation by businessunit managers and senior executives intechnology investment and managementdecisions;• Sufficient technology-focused talent:firms with sufficient access to peoplewho can perform well in predominantlytechnical activities;• Sufficient management-focused talent:firms with sufficient access to peoplewho can perform well in predominantlymanagerial activities; and• Mature digitized platform: firms withefficient levels of standardization andsharing across their organization in termsof technology, business processes anddata.High Performers and Low PerformersAt the end of the day, business leaders want toknow what the best performing firms are doingand how they are outperforming their peers.The research focused on 20 performanceindicators, representing three general aspectsof business performance: business processperformance, agility, and organizational changeand performance. High performers are firmsthat perform better than average with regardsto a single performance indicator or a set ofperformance indicators.Figure 1: Survey data were collected on firm investments and uses of technology, key enablers, and a variety ofperformance indicators.Firm CharacteristicsINvestments in ICTWhat types of ICT:• Mobility• Cloud• Unified Communications andCollaboration (UCC)+xkey enablers &constraintsBusiness InvolvementAccess to Talent• Management-focused• Technology-focusedDigitized Platform Maturity• ICT• Business Process• Data=Business Process PerformanceAgilityproductivity &competitvenessOrganizational Change &Performance6 INSEAD eLab ICT Report
FindingUses of technologycan become a doubleedgedswordOrganizations are continuously learning how touse technology to operate and innovate moreeffectively and efficiently. A few examples froman annual award recognizing Europe’s bestChief Information Officers (CIOs) illustrate howorganizations are using technology to enhancetheir performance. 1José Manuel Inchausti, CIO of MAPFRE, aleading insurance company in Spain andLatin America, introduced an integrated dataplatform to enable business units withinMAPFRE to engage with customers througha variety of channels in a consistent andcoordinated manner. In the process, Inchaustideveloped business and customer intelligence.Furthermore, smarter analysis of existingcompany data enabled Inchausti and his teamto better understand why specific clients wereunhappy with their insurance policies and as aresult the business units were able to developeffective retention strategies.At the Coca-Cola Company, Europe CIO SabineEveraet and her IT team of 45 ICT specialistshandle all non-outsourced ICT needs in Europe.For a global firm that generated revenues ofmore than EUR 46.5 billion in 2011, Everaet andher group are considered key business partnersfor identifying risks and interdependencies forcomplex programs, with a scope well beyondthat of the classical IT projects. They earnedtheir enhanced strategic roles only afterimproving ICT operations and enhancing keybusiness processes.In 2009, when Pieter Schoehuijs became theCIO of Akzo Nobel, the largest decorativepaints and performance coatings company inthe world, the Dutch firm was suffering fromuncoordinated ICT development. 2 With 15separate business units, Akzo Nobel had “avery diverse systems landscape with literallythousands of systems on even more servers,”Schoehuijs said. Instead of implementing asingle instance of an enterprise resourcesplanning (ERP) system across the entire firm,Schoehuijs decided to support six differentsystems to give individual business units greateragility. Said Schoehuijs, “When I joined threeyears ago, Akzo Nobel had 183 ERP systems.Today we have 96. And we’ve establishedroadmaps and strategy plans to go to six.Which means that in the last three years wehave retired more than two ERP systems permonth on average, and we are planning tocontinue to do so for the next four years.” 3By rapidly harmonizing both ICT systems andbusiness processes, Schoehuijs has reducedAkzo Nobel’s operation costs and enhancedthe customer experience.This research report strives tounderstand how successful firms cantake advantage of new technologieswhile mitigating any risks associatedwith such investments.However, uses of technology can becomea double-edged sword—it can enableopportunities but can also introduce risks.Uses of technology enable organizations toconnect and engage with their stakeholders innew and significantly faster and cheaper ways.As a result, organizations can have access toimportant resources without necessarily havingto own them, for example, through businessprocesses outsourcing. However in theprocess of connecting and engaging, uses oftechnology introduce new interdependenciesthat, if improperly managed, can lead to costlyand inefficient operations and can ultimatelyreduce agility and hurt performance.1Fonstad, N. (2012). 2012 IT Enabled Leadership Report.2By 2011, each business unit generated 1bn EUR on average, for a total of 15.7bn EUR.3Fonstad 2012: p. 19.Building Business Performance and Competitiveness with ICT7
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