The Problem With Naked Technology

By Dan Orzech

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George Colony, founder and CEO of Forrester Research, has been following technology trends for more than 20 years. In this exclusive interview with CIN, he explains his vision that technology by itself, without an accompanying change in business processes, doesn't make companies more competitive.

Let's start by asking exactly what you mean by naked technology.
Put simply, it's the idea that merely injecting technology into a company without changing the organization, without changing processes, creates waste and chaos.

What does that look like?
It's easy to write a big check to Siebel or write a big check to HP and bring all that stuff in those boxes and set all that equipment up, but it's damn hard to change the organization, change your process, change the way you fly an airline, change the way you distribute food. That's why the technology process fails, because you did not fundamentally change the organization.

Is this a task for IT departments then?
In my view, it's CEOs, in many cases, who don't have the guts or the vision to do that.

We work with large companies, firms which do more than a billion dollars a year, and working with these companies, to this day, it shocks me how little the CEO or CFO understand technology. They depend on CIOs to make the decisions, they trust the CIOs to make sure the expenditures are in the right place.

And yet the CEOs get burned over and over again. They got burned terribly by Y2K. There are lash marks on their backs from Y2K, and there are lash marks on their backs from the dotcom bubble. They would love to blame the CIOs, would love to point the fingers at the technologists in the companies.

My assertion is that it's the lack of guts on the part of CEOs to change their process and change their organization, which results at the end of the day in the low ROI from technology expenditures. If they just welcome the naked technology to the party, well, they're getting only a third of the job accomplished.

You've been talking publicly about this idea - what has the response been like?
The concept seems so utterly simplistic, but I can't tell you how many high-level people have called and said, that was such wisdom, it really helped us. It just shows you how immature the buying and the marketing of technology is. But it's a good way to understand the bubble, and why there was so much over spending in technology.

I think that the moroseness in tech spending right now is because you have CFOs or CEOs saying, gee, we didn't get anything from all the technology expenditures we made between 1995 and 2000, so we're not going to spend anything now. They don't realize that it was not the technology, it was their inability to change their organization.

So how do you decide when to bring in new technology?
If you have a process that works really well now, don't inject technology, because it may screw up that process.

SouthWest Airlines, for example, is not a great technology company, but the processes they've built work just fine without technology. And that's very acceptable. So my cautionary tale there is, if the process is great, if it's satisfying your customers, then don't inject technology. Because if you inject technology into a great process, you could destroy it. The word process is the one you want to focus on. If it can be improved using technology, then do it. If they'll be destroyed using technology, then don't do it.

How does this apply to, say, a company that's looking at bringing in new supply chain management software?
Keep in mind, as you move to supply chain management -- we call it adaptive supply management, or ASM -- you're not going to run your manufacturing process the same way. Many companies make this mistake, they will try to take their identical processes, and apply this new software technology to it. The result is that you're going to have a very unhappy CFO at the end of the day, who's going to say, you spent millions of dollars, and nothing really changed, production didn't go up, and returns didn't go down.

Look at Dell, look at Wal-Mart, look at the companies that are succeeding in this recession. These guys spend a lot of money on technology but they do not have the fear to change.

If you watched the way Dell tackled selling online, they didn't pay their sales people the same way, they didn't organize people the same way online they did for telesales, they didn't configure PCs the same way online they did over the telephone. They didn't just bring in online and try to do it the way telephone did. It was a new way to sell.

It's not just information technology -- all technology has been a story of technology changing the way enterprises work. Go back to Carnegie, the way he made steel was very different than his predecessors. He had smaller mills, he had faster mills, he used a different formula.

How do you see all this affecting technology vendors?
It's clear that vendors can no longer simply sell naked technologies to the companies. Either the vendor or a close partner is going to have to help those companies make the process change, and make the organizational change, before you can get a hard return from the technology.

What that means is that from Microsoft to Oracle -- IBM has already done this they've been on the cutting edge here -- every vendor will have to be in the services and consulting business, or be very heavily partnered with someone who is.