INVESTING

Technology will help reap benefits

Neo Shabalala, director of management consulting at KPMG
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Information technology has become a primary driver for business investments in South Africa and around the world. But despite the millions spent, KPMG’s research indicates that senior management is largely unsatisfied with their return on investment.

Research and business interventions by KPMG’s advisory team in KZN, indicate that organisations are spending increasing amounts of money on technology without fully reaping or understanding the benefit they receive from the IT function.

Neo Shabalala, director of management consulting at KPMG, says that despite the importance of IT in most organisations and significant IT investments intended to boost the organisation’s agility and performance, senior leadership in many organisations remains unsatisfied. ”Executives complain that the implementation of information technology solutions takes too long, costs too much, and does not keep pace with quickly evolving strategic business goals,” she comments.

“Many organisations develop a range of individual IT solutions in response to localised needs and more often than not, they are independent of the organisation’s overall corporate strategy”.

In many cases, business processes are unknown, information is unreliable, and vertical information systems are created rather than integrated platforms for business execution.

Shabalala stresses that overcoming the problem is not a matter of simply adding more technology. The objective is to realise more business value from their IT organisations and assets so that IT contributes more directly to the goals of the business.

“The way to ensure that an organisations technology supports their corporate objectives is through IT strategy. IT cannot operate solo. It is an enabler designed to ensure that organisations deliver services effectively. It cannot do this unless the IT systems and products are driven and mandated by business goals.

“Strategy put this in place and plays a crucial and long-term role to ensure organisations make the most of their IT investments by integrating the right technologies to meet the goals of the corporate strategy.”

She adds that this is true regardless of the size of the organization, and every business should be making it a priority. The importance of an Information Technology strategy has been confirmed by the King Commission where Information Technology Strategy has for the first time been included as a key element of good IT governance.

The alignment and integration of IT with the business plan is explicitly recommended in the report. IT should serve overall business objectives, and, in particular, a responsible board will evaluate whether IT expenditure and investments deliver an adequate return on investment.

The following benefits are realised when IT Strategy is effectively implemented and maintained:

  • Continuous improvement of business and IT alignment
  • Increase in understanding of the business and IT
  • Clarity of where and how IT contributes to accomplishing business goals
  • Value is gained from IT spend
  • Forged shared vision and mission throughout the organisation
  • Improvement in the performance of the IT function
  • Improved IT enablement of business
  • Improved delivery of IT service quality
  • Improved stakeholder communication
  • Improved trust between IT and the business
  • Lower cost
  • Increased alignment of IT investment towards strategic goals
  • IT risks are managed in line with the priorities and appetite of the organisation
  • Improved management of business related IT projects
  • Improved management of information as it is managed on the same level as other resources such as people and finance
  • Improved IT resilience and agility to learn and adapt to changing circumstances
  • IT is executed in line with legislative and regulatory requirements

Shabalala warns that if a business does not have alignment, the risk is that IT will be operating alone and systems will be procured that will not be used.

The bottom line according to Shabalala is return on investment. “If you are going to buy and implement a system, you want direct return on investment in terms of efficiencies”.

Her advice is to utilise an independent provider who conducts a gap analysis to clearly understand the needs of a business and its people in order to help source applications and system to enable optimal efficiencies and secure a competitive advantage for that business.

Kerry Osborne

 

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