In five years, the IT industry has undergone a sea-change that has ended both the hype and touting of "killer apps". In a view echoed across the industry, Arnold Garber, Compu-Clearing Outsourcing CEO and a veteran of 41 years in the sector, says: "The imaginative nonsense is gone."
"The bursting of the tech bubble brought everyone down to earth. People are now relooking at how to use technology to deliver real benefits to their business," says Peter Forsyth, CEO of IT consulting and services firm ERP.Com.
Chris Norton, SA country manager of information access group Citrix Systems, says: "Today it's all about IT economics. Real benefits are measured in terms of the total cost of ownership and return on investment that an IT solution can deliver."
For most companies today, it is mainly about making better use of the systems and data they already have, says Deloitte special services partner Kris Budnik. He says: "Increasingly, companies are no longer viewing IT as a separate utility function but as an integral part of the business. Over the past year, we have seen a resurgence in companies engaging consultants to create IT governance frameworks."
It is proving to be an unnerving situation for many chief information officers (CIOs), who are faced with tough questions about where the benefits of IT systems lie.
In late-2004, US research and advisory firm Gartner conducted a survey among 300 CIOs in more than 30 countries. The survey showed that two-thirds considered their positions to be "at risk", based on CEOs' views of IT and its performance.
To justify their positions, CIOs must focus on supporting business efficiency and growth, and achieve this without large upfront investments, says Gartner. For IT vendors and service providers, this means that clients are demanding increasing value for money, says Bytes Technology CEO David Redshaw. "This is placing pressure on margins."
In their quest for solutions, CIOs are turning to business process management (BPM) and business intelligence (BI). In the BPM arena, automation is an important element.
"If a process is rule based, rather automate it and free up staff," says John Olsson, marketing director of enterprise resource planning software firm Ability Solutions.
Potential savings from this are huge, according to research by US financial services consulting firm Benchmark Consulting International (BCI).
In its research BCI found that clerical staff spent almost 500 hours a year, or 25% of their working year, searching for files and information. A misplaced document costs US$120 in expenses and lost productivity.
It was inefficiencies such as these that prompted General Electric to initiate its digitalisation initiative with the aim of automating and integrating as many processes as practicable.
In its survey of CIOs, Gartner found that improving BPM was ranked as the priority for 2005. SA firms are also realising the importance that BPM plays and are placing it at the top of their corporate agendas, says Gys Hyman, consulting services director at process, content and integration specialist Ovations.
Hyman believes the focus of BPM should be on areas that have the highest positive impact on customers. This is particularly true in industries such as banking, where the level of client service is the primary differentiator.
But, he says, BPM cannot work unless companies first implement effective and integrated content management across all their divisions.
Ideally, content management should be automated and it is in this area that Ovations deploys software developed by US firm FileNet Corp, says Hyman. A typical application of FileNet is one used by Standard Bank in its mortgage loan application processing.
The system serves 1 400 users in multiple sites and facilitates the automatic processing of applications. All information is saved to an imaging record system. All applications, whether complete or in progress, are accessible to all system users with a resultant productivity increase of 87%.
Hyman says another big obstacle to many companies is the fact that their operations are disparate and function in independent silos, each operating its own legacy IT system.
It can take two or three years to move from a silo to a single integrated process-driven platform, says Hyman. He says the manufacturing sector is well advanced in this regard and smaller financial firms - such as mortgage originator MortgageSA and insurance firm OUTsurance - have impressive process-driven systems, but few large corporations have made successful transitions.
Hyman says that to move on to a single platform represents "a huge cultural shift" for companies and there is often a lack of executive commitment to make the change, with many big firms locked in the "analysis and paralysis phase".
He says the big banks, which are struggling with legacy systems, are in the process of developing "road maps".
As part of the quest to enhance business processes, another challenge facing CIOs is how to transform IT systems from being data-recording systems into process systems providing BI.
"In the past, everything was about storing data, but that is useless if you can't use the data effectively," says Norton.
Companies must move from a reporting culture to one in which information extracted from a database provides answers to questions that are pertinent to running the business, says Harvey Jones Systems MD Keith Jones.
"There is a big renewal of interest in databases and data warehousing," says Redshaw.
He says a large data warehouse project can cost up to R70m.
The view of data as a business enabler is likely to lead to the much-maligned customer relationship management (CRM) coming of age.
"Technology has matured and so have the providers of CRM solutions," says Steven Howe, enterprise application solutions division manager for Business Connexion.
He adds, however, that though CRM has many technological aspects, thinking of it in purely IT terms is a mistake. He says CRM is a process that brings together information about customers, sales, marketing efficiencies, responsiveness and market trends, and enables customer-service staff to address client needs effectively.
A CRM implementation must be supported by systems integration. "With advances in integration technology, it is possible to create the enabling infrastructure for effective CRM. But to deliver true value, it has to be done in a customer-focused organisation," says Howe.
