Friday, March 04, 2005

Technology Change and Business Change

The resemblance between technology and magic has been remarked by a number of writers, and provides a series of running jokes in the Harry Potter books. (Wizards cannot cope with the telephone, but communicate instead using owls and fireplaces.) For those who believe in technology as some kind of magic, the business benefits or social evils of a new technology appear automatically as soon as a new device is plugged in. The box in the corner of your office will magically cause your markets and profits to multiply, your customers to be eager and loyal, your employees to be happy and productive, your suppliers to be efficient and cheap, and your competitors to vanish in a puff of smoke.

Realistically, the connection between Web Services and the service-based business is neither necessary nor sufficient. It is theoretically possible to achieve the service-based business without using any technology at all - although in practice this option is likely to be uneconomic or otherwise unattractive. It is also possible to use the technology fully at the system level, without taking any steps towards the service-based business at the business level.

The relationship between technology and business is more subtle than this, but still important. Consider this: telephone, fax and email doesn't stop you writing old-fashioned letters to your friends - but as it happens, most people nowadays do most of their personal communication using telephone and email. Technology makes certain choices easier, and thus certain patterns of business and personal interaction are favored by technology, while others fall into relative disuse.

Incremental change can be very difficult to manage, especially when so many people are driven by short-term results. Large numbers of small steps may be taken, each one meaningful in isolation - but adding up to gross confusion and ultimately failing to meet the business requirements. In industry, longer-term strategic investment in organizational capability and learning may (at least theoretically, occasionally and approximately) be converted into tangible value by being reflected in the share price. In Government, there is no directly equivalent measure of tangible value, and the benefits of organizational learning can only be experienced indirectly, for example from the enhanced ability to develop and implement future policy.

But here is where the intelligent service-based approach potentially scores - by allowing large complex organizations to deliver short-term results while paying attention to longer-term issues of organizational adaptability and improvement. It supports organic planning, in which large-scale coherence can be developed without large-scale cost and disruption. While ill-considered and rigid service-based structures frequently lead to enormous problems, proper attention to flexible service-based structure can yield significant short-term and longer-term benefits.

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