IT has much more possibilities, then are now exploited...

Organisations don’t make the most of IT. The potential of IT is much larger than it is given, this is because organisations do not look at precisely enough to their cost structure and their company processes and do not define sharp enough what they find important.

Beginning 2003 pronounced the CEO of HP - Carly Fiorina - a remarkable sentence. She said that customers realise themselves more and more that the glamour of technology is not most important, but the ROI of it. In other words: companies have invested in IT without wondering what the ROI would be. The glamour of high tech monopolized the decision making of the purchase. A pronouncement, that can be related to the already long studied It-paradox. This paradox says that it never has been shown, that investments in IT will result in a measurable improvement of productivity.

If there is a cost category that has been increasing continuously the last decades, then it is especially the category of transaction costs. Transaction costs are costs which have to do with finding business partners, exchanging information, negotiating concerning conditions and contracts, making tenders, making deals, monitoring settlements, legal fighting’s, etc..

Therefore not production itself, but the connection between companies, company departments or individuals. It concerns internal and external co-ordination of economic activity. In the field of co-ordination remarkable cases of high costs are well-known. In the Dutch construction industry the avoidable failure costs, calculated by the Stichting Bouw Research are 2 up to 3 billion euro per year. It concerns the costs which are made because co-operating parties have lack of the correct information or have it late. That should no longer be possible in this time of all the communication possibilities.

If organisations want to become more productive by It-investments, then they must reduce their transaction costs and their internal co-ordination costs by the application of technology and that is unfortunately what they hardly do. At this time companies provide themselves with systems which succeed each other in the market as hypes. ERP, CRM, SCM, are one after the other applications used by organisations especially because other companies do also. In the world of the Internet we have experienced this movement even more reinforced. Most of the dotcoms have then been disappeared, the Internet wave has conducted however, that even traditional companies meanwhile are supplied with web- and application servers. But research shows that most of the companies don’t make the most of this technology, when it comes to deceasing operation- and co-ordination costs. Publishers do top everything and exploit on average only 9 per cent of the commercial possibilities of the Internet, whereas however they have all technology needed. Companies do have the technology concerned and have the corresponding costs, but they do not use it for the right things.

There is up to this point in fact no other conclusion possibly then that organisations obtain too little return on their IT investments, because they think most of all in technology and not in business processes. There has not been made use of an independent information architect, who knows that technology is only appropriate, if it supports a certain manner of work. 

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After a duch article: Creemers, M.R. "Waar zijn de Henry Fords van deze tijd?", Management & Informatie, 11e jaargang, nr. 2, (2003) pag. 9-13.)