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No innovation without information technology

Many business processes these days are controlled by information technology. Before a company even purchases an IT solution, it should be aware of how it can create more value, says Information Systems specialist Jan vom Brocke. Information technology is a tool for innovation.

Many business processes these days are controlled by information technology. Before a company even purchases an IT solution, it should be aware of how it can create more value, says Information Systems specialist Jan vom Brocke. Information technology is a tool for innovation.

Interview: Steffen Klatt

What questions should a company ask itself when it needs a new IT solution?

Jan vom Brocke: A company should take into account that it is not simply about an IT solution. It is also about business processes. Many companies make the mistake of looking at IT solutions from the technical side alone. The merit of every IT solution is judged on the effect it has on the processes and whether these will become quicker, better or more client-friendly. Only in this way is economic value created.
Doesn't the IT solution simply have to reflect the processes in a company so that management has a better understanding of them?

That depends on the processes and the solutions. If it comes to the management of a company's resources, this is more or less the case. This is what IT has done in the last 20 to 30 years. But IT allows for entirely new processes today.

Such as?

In customer relations, for instance: When a client calls, new IT solutions can provide me with all the information about him. This puts me "in the know" right away and I can therefore attend to the client quite differently. Another example: When I pass by a shop, I can receive a text message in which I will be offered a coffee. A third example is social networks, which have already dramatically altered the field of marketing.

Who in a company should define the requirements for new IT solutions?

IT solutions should emerge from the respective business models. All successful companies use IT solutions as an opportunity to bolster their business activities and introduce business innovations. Business informatics, as differentiated from information technology, precisely bridge the gap between business administration and the latest IT technologies.

Companies need tailor-made solutions. But which company can afford these?

The interplay between standardisation and individualisation has always been one of the pivotal questions. Three decades ago, companies began with individualised solutions because they kept their processes uniquely theirs. This is time-consuming. On top of everything else, these supposedly unique processes are also not necessarily the best. That's why providers such as SAP, Oracle, Microsoft or Avaloq have moved towards standard solutions which can be individualised. These solutions benefit from the strong research at large companies. There are more and more modular solutions today. You can purchase single modules without assuming the entire system. And it would be well worth determining where standardised solutions make sense and where individualised solutions would be preferred. Individual solutions are built around a standardised core and this is how companies stand out from others.

Does a company have to adapt to the IT solution or is it the opposite?

That depends on how much importance a company places on its own procedures and how much control it wants over them. In general, I would argue against purchasing an IT solution if it is not yet clear what purpose it is to concretely serve for the company and how it fits into its own procedures. At the same time, my experience as a consultant time and again is that even small companies want to purchase better processes with an IT solution, and this is also possible.

Do these companies therefore need consulting in the first place and only later the technology?

That is absolutely correct. This is where universities can play a role. We have an independent perspective and broad experience. We neither want to sell daily rates nor technology. Companies should only buy technology when they know precisely what it is that they require.

The knowledge that employees have forms part of a business' capital. How can this be managed?

This is true. A company always needs to be able to invent new products and solutions. The students that we are training today must one day solve problems that do not yet even exist. Companies therefore need personalities that bring this dynamic and ability to change. The half-life of knowledge will always get shorter. An IT solution must assist the business at the end of the day. Business itself is not carried out through the technology, but rather through the people who use the technology. Sometimes the technology can even be detrimental if it prescribes rigid procedures that do not contribute to completing the task or restricts creativity. Through research, we can today say precisely where the technology makes the most sense.

Does a company become bound to its processes for years to come by an IT solution?

The trend is increasingly that there is not one single solution that will be used over the years. We now prefer systems that integrate and dynamically use applications from entirely different providers according to need. It's a little bit like Lego: the pieces are the same, but the structure will always be completely individual.

How can companies make sure that they don't make their employees insecure through the constant changes?

This is an important point. Through IT management, companies must take into account the personality and culture of the company. IT is only one factor among many – a very important one, but still only one. The processes have to be known beforehand. The company has to make sure that a change in processes creates more value. This has to bring together many things: clearly defined responsibilities, the right competences and abilities, motivation, incentives, reliability. The overall values of an organisation have considerable weight. The companies that are successful are those that regard their processes holistically and constantly adapt them. Through many projects we now know what we need to think about how and how to connect the many points.

Are IT solutions therefore about corporate governance?

IT is about the organisation. We can no longer imagine an organisation without IT, and even innovation is more than 50 per cent facilitated by IT these days. IT is the central technology of our times. But it also has to be used correctly. It is not enough simply to buy it.

Jan vom Brocke is Hilti Chair of Business Process Management and Director of the Institute of Information Systems at the University of Liechtenstein. He has more than 10 years experience in IT projects and has published 16 books and more than 170 refereed papers. Jan vom Brocke studied Information Systems at the University of Münster, where he also completed his doctorate and post-doctorate. He teaches at the University of St. Gallen, among other institutes, and is serves as an advisor to a wide range of institutions.