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The Effective Organization.

The past few years have seen a lot of soul-searching about the value that IT contributes to the business. Much of that has been stirred by the so-called 'productivity paradox', which suggests that, when assessed against traditional metrics, IT has provided no real gains.

As Paul Strassmann, the renowned IT sector economist, concluded in 1999: "There has been no relationship between the costs of information technology and profitability." More recently, Nicholas Carr, the Harvard Business Review contributor, argued that IT can no longer provide sustainable, competitive differentiation.

While not disputing such observations, in The Effective Organization Lee Schlenker and Alan Matcham suggest the way organisations view 'business value' needs some refining. They argue that the notion of business value has evolved significantly over the past 15 years to the point where any direct association with measures of performance or productivity is just too simplistic - especially when considering IT's role in value creation.

The authors (Schlenker is a consultant and professor at the Lyon management school, Matcham is a director in charge of organisational change at Oracle in Europe) set about defining a matrix of that new business value. They then look at exactly where IT has added value, zooming in on various facets, including the role played by 'process-centric' applications for enterprise resource planning, supply chain management and customer relationship management. IT's impact on the organisation, they contest, depends upon how value is measured and which components of value are taken into account - efficiency, utilisation, quality, profitability, innovation, passion, knowledge and effectiveness. They also consider the role of IT in facilitating change and building business value.

The resulting discussion certainly provides a model for managers wrestling with this fundamental issue. But the text is also opaque and repetitive in places. There are too many statements such as: "The most significant contribution of IT is not its ability to precisely measure value, but its capacity to push us to think differently about the relationship between what we measure and how we wish to improve our business."

Unfortunately, there are few concrete, real-life examples backing up such broad statements. Nonetheless, this is a stimulating book that adds several layers of sophistication to the IT value debate.
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Publication:Information Age (London, UK)
Geographic Code:1USA
Date:Aug 10, 2005
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