Information technology has been advancing rapidly for decades now. Businesses moved from literally having no technology to being loaded with it withing just a few decades. But do most businesses take the appropriate advantage of these new capabilities?

Unfortunately, my experience, shows they are not. And even worse than that, it is so very common for companies to take actions that ensure the power of this new technology is wasted. They do that, by the so very common process, called – customization.

The fact is that businesses existed before technology, and at that time did not have the capabilities the new IT is offering. Clearly, we were not aware to the “fact” – we do not have this technology (in a sense we could not even imagine it’s possible existence), nevertheless we had to do the exact same things this new technology is doing, only without it. So, we had to create rules enabling us to operate within this technology-less era. And we did.

An example – before we had technology, if we were in the business of inventory management, it would have been practically unfeasible to make all the calculations required for managing the inventory for all stocked items at all stock keeping locations. One of the ways we handled this complexity was by grouping items according to different considerations (like Pareto analysis for example) and join decisions for groups of stock items. How many of you, even though you are owners of modern technology that can calculate all required calculation, for any quantity of items and locations effortless, in zero time and with no cost, are still using classification for inventory decisions? Are still making decisions for groups of stock items instead for each stock item, at each stock keeping location? Is it not clear, that making decisions for groups of items is a compromise? (do all stock items in a group poses exactly the same supply time, the same reliability of resupply, the same consumption patterns, the same consumption uncertainty and in all locations?)

When we customize into our new advanced IT these old rules, we actively ensure it cannot deliver value! moving from managing stock items in groups to managing them individually leads to meaningful reduction in inventories coupled with increased availability. This is by far a grater value to the system vs the cost reduction of the IT department, or even the planning and control department, which is completely lost due to this “customization”.

This is just one example, there are ample such examples. Where “old” rules are customized into the new era IT castrating it’s potential benefits. Unfortunately, mostly the IT providers are not familiar with the rules that need to be changed, and businesses are oblivious to them as they were created when the IT solutions did not exist and without the awareness to the fact that IT can someday, relief us from the need to follow these rules.

The result is, that artfully, companies are investing huge amounts of money in advanced IT and are totally missing the huge benefits this IT can bring. When coming to implement new IT (or even if you already have advanced IT systems) it is absolutely crucial that you identify these old rules and avoid customizing them into the new system. This common practice can be compared to forcing airplanes to fly at a maximum speed equal to the speed that a boat can sale, not much value there, isn’t it?

Leave a Reply

Your email address will not be published. Required fields are marked *