Small decisions, big pay off
I fully agree with the research by industry analyst group Gartner, referenced in the conclusion of your article on the knowledge management technology sector (‘Beyond knowledge’, Information Age, November 2003). It argued that knowledge management is moving towards the use of smart components that are directly applicable to organisations’ different needs.
The economics behind this market direction are truly staggering. We have all known for some time knowledge management’s Holy Grail is to support ‘nano decisions’ by customers and information workers alike so that they can take informed actions. Every group of 10,000 information workers makes over a billion small decisions every year, but up to 70% of these nano-decisions are non-productive – they create no economic value.
This insight becomes crystal clear when examining the costs of complexity. As operational support struggles with increasing levels of product customisation within the service sector, their complexity costs are now spiralling out of control. The cause has been pinpointed to the inefficient and ineffective deployment of task-specific knowledge at the point of need. Our benchmarks show that by addressing these complexity costs, the top six banks in the UK, for instance, could remove £4.4 billion from their administrative expenses. The implications are profound if smart components become dynamically linked with everyday practices and services.
CEO and co-founder
With regard to the (Expert Advice, article supporting the use of escrow agreements (Information Age, November 2003), I am very hard pressed to see the real advantage of escrowing source code; it very much appears to be a form of insurance that will never pay off without huge, unexpected losses well beyond the ken of those who thought it was a good deal at first. When the average person insures, for example, their car, there are shops and parts readily available to make the car anew without too much delay. But when it comes to insuring software source code, what actually happens when the software “breaks” and nobody at the failed software company is there to even answer the phone?
First, the time, cost and risk of reviving thousands of lines of source code, with/without all of the development documentation would be enormous. And, to what end? A simple backup copy of the executable software would be protection enough… if a software company goes bust then it is time to migrate to a new solution ASAP… It does not mean that hundreds, if not thousands of users, get copies of the source code and each hires a software company or consultants to revise and update their systems software.
However, when something like this happens, the executable copy of the software does not fail to operate… life goes on… the software still works… and often, an old version of software, without support, will go on running for years only to be later cursed as the “legacy system” that doesn’t work with the new hardware and operating systems… And, therein lies the bigger risk, the software base that does not keep up with the ever flowing new systems architectures, not the software that loses its maker… where is the insurance for the legacy systems that don’t keep up with the system architecture?
I have posed this argument before with others offering escrow insurance and have never received a legitimate rebuttal argument supporting the tangible benefits of escrow insurance. If I am missing something here, I would very much like hear about how source code really benefits the end user and also hear of real examples from end users who have benefited from this type of insurance.
The right recipe
Your article on strategies to improve IT services and save money (‘An urgent refresh’, Information Age, October 2003) overlooks an important issue. Focusing on technology is a good way to cut costs, but often not the best way to improve the use of information. A key omission from your list is therefore any strategy that directly improves the use of information.
A useful analogy is to compare IT services with the utensils and cooking equipment in the kitchen of a top restaurant. While pots and pans are essential for cooking a meal, it is the chef’s knowledge of recipes and handing of ingredients that distinguish beans on toast from a sumptuous and nutritious banquet. (There is, of course, always a place for beans and toast.)
Harvard Business Review editor Nicholas Carr was only partly right with his recent article ‘IT doesn’t matter’ [which suggests that IT is now so ubiquitous that organisations can no longer expect it to deliver competitive advantage]. It is not that IT doesn’t matter, because in many situations it is a crucial enabler. But you can’t judge the quality of a meal by studying the pots used to make it. While you can save money through the careful management of IT services, this will only have an indirect impact on the effective use of information.
So what is missing from your list? Here are some suggestions: