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by Ellen Pearlman
Strategic Thinker: Cynthia Rettig
Credentials: Rettig was the director of knowledge management for B2B consulting company Canopy International of Newton, Mass. She has been a consultant to software companies for over 20 years.
Big Idea: Enterprise software is too complex to deliver on its promises, and service-oriented architecture (SOA) is not the fix that some would like to believe it is.
Article: "The Trouble With Enterprise Software," MIT Sloan Management Review, Fall 2007
Rettig begins her provocative article, "The Trouble With Enterprise Software," with the statement that "technology has always been about hope." But unlike the business executives that, she contends, "do not like to hear about the downside of technology," her reality is filled with the knowledge that far too many technology implementations under-deliver. She finds much to criticize in the performance of enterprise software, its future promise and the fix (service-oriented architecture) that some are implementing to cure their system problems.
While a few companies may have come close to creating a fully integrated enterprise system that controls complex business processes and has the flexibility to adapt to changing business needs, most companies exist in a "looking-glass world," she says, "where everything is in fact the opposite of what one might expect."
What does that world look like? You probably know it well: A "patchwork of systems, containing 50 or more databases and hundreds of separate software programs installed over decades and interconnected by idiosyncratic, Byzantine and poorly documented customized processes."
The cost for all this has been high. It's not just the cost of ERP systems, which are expensive, but the added price tag for consultants needed to install and run the software. And there is another cost that is harder to measure-the breakdown in trust between business and IT. When systems don't perform as business expects, and costs go beyond budgeted amounts, the blame falls squarely on the shoulders of the CIO and the IT department. Never mind that the data that goes into the systems is often filled with errors or that mergers (that CIOs are often left out of until the deal is done) lead to duplicate systems or a hodgepodge of different ERP systems, the perception is that IT failed.
But that doesn't mean that hope in technology dies. Business executives, says Rettig, "simply want to continue to believe that technology will lower costs, improve processes and reduce the size of the workforce."
So what's the fix for all this? Well it's not a surprise that the solution being offered IT executives is a technical fix. Service-oriented architecture will address the problems inherent in updating and changing legacy systems by "building modular cross-system business processes," says Rettig. But there are difficult technical problems that must be solved," she adds, "before SOA can become the backbone for a new strategic architecture." In addition to the technical issues, there are also extensive organizational and cultural changes that must take place. And history suggests that businesses have not done particularly well when extensive technical and cultural change is required throughout an organization.
While the jury is still out on SOA-only 6% of companies have made it into the later stages of implementation and adaptation-there is one bit of advice that Rettig suggests could help in the long-term. "It may be time for business executives themselves to become more proactive" about educating themselves and their younger business team members about IT. But that's not an awful lot to hang your hat on, given the intractable problems that IT executives and business executives have had in overcoming their lack of communication, alignment of business goals, and ability to change their behavior.
Read more from Rettig.
Content excerpted with permission from MIT Sloan Management Review. Copyright Massachusetts Institute of Technology, 2007.
Also of interest:
- Rough Type, a blog from Nicholas Carr. Carr says about Rettig's article: "While some will argue that her indictment is at times overstated, she makes a compelling case that the traditional approach to corporate computing has become a dead end. We need to set a new course." Read more.
- The Impact of Information Technology on Businesses and Their Leaders, a blog from Harvard Business School, Associate Professor, Andrew McAfee. While McAfee agrees that enterprise systems have failed in many companies, he does not agree that researchers have been "unable to draw any coherent conclusions about these technologies." He recommends reading the paper from MIT Professor Erik Brynjolfsson, NYU Professor Sinan Aral, and Georgia Institute of Technology Professor D.J. Wu, "Which Came First, IT or Productivity? Virtuous Cycle of Investment and Use in Enterprise Systems".
CIOZ Question: Is enterprise software too complex to be effective? Can SOA help solve the problems of outdated systems? Post your ideas below.
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