Download (direct link):
1. The Internet. It is fast, efficient, and affordable.
2. UDDI (universal description, discovery, and integration), an XML-based Internet registry, helps businesses find each other. UDDI offers a framework for Web services integration.
3. XML. XML allows organizations to share information.
4. SOAP (simple object access protocol). SOAP allows organizations to conduct business with each other. It is a common protocol for enabling programs to call each other and return responses, regardless of the operating systems used at either company. SOAP uses HTTP (hypertext transfer protocol) and XML to perform its function.
XML Web services—and any platform that enables the sharing of applications and data between and among enterprises—will raise many technical issues regarding security, reliability, quality of service, payment tracking, and accountability (who is at fault if the application fails). Perhaps a bigger question from a business strategy perspective, however, is: What will the organizational impact be if everyone can easily connect to everyone? How will it impact the way the organization does business— or does not do business? What will it mean to the organization’s industry as a whole? How will it affect the way the organization looks at partnerships and vendor relations? How will the competition use the technology to gain advantages in the marketplace?
CLOSING THE GAP BETWEEN FINANCE AND INFORMATION TECHNOLOGY
In a Robert Half International survey, 27 percent of financial executives said their greatest challenge today is keeping up with technology.11 As businesses rely more and more on technology as a strategic tool, a need for a closer relationship between business representatives and information technology personnel continues to emerge.
Unfortunately, the relationship between finance and information technology within many organizations historically has been strained.
The Strategy Gap
Businesspeople often feel that information technology (IT) does not understand the business issues. Finance does not understand the reasons why complex IT initiatives come in late and over budget. They lament that IT solutions do not deliver the expected results. At the same time, IT professionals have long bristled at being the invisible stepchildren within organizations, cut off from decision making and strategy and constantly under pressure to cut costs and people.
Market intelligence and advisory firm IDC recognizes the gap between business strategy and IT strategy, and has defined four stages of the IT/business relationship. The first is an “uneasy alliance,” where IT is viewed as an efficiency tool and the technology executive has little connection with the rest of senior management. In the second stage, “supplier/consumer relationship,” IDC notes that IT has a strategic plan that is related to corporate strategy, but IT still is not valued as a strategic tool. The third level IDC defines is that of “co-dependence/ grudging respect.” At this level, there is some recognition that IT is a strategic tool, and the chief information officer is becoming more knowledgeable of cross-functional business processes. In the final stage, “united we succeed, divided we fail,” a single strategy exists that incorporates both business and IT.12
As a partner in driving strategic solutions, the CFO or business representative will be responsible for making certain that IT understands the business needs of proposed projects. The IT department will need to make sure the business representative understands how proposed solutions will or will not impact the business and its strategy. In addition, once purchasing decisions have been made, both disciplines will need to continue to work together to ensure that the business problems are solved and that strategy can be successfully executed, monitored, and adjusted.
In an article titled “Organizing to Create Value,” David P. Norton states: “‘Value’ has become synonymous with ‘intangible,’ which embodies far more than financial management.” He goes on to question who should own the value creation process within the organization and suggests that while CFOs have the general skill set to perform this function, few seem to be doing it. He suggests that a new role might emerge at the executive level to meet this challenge: chief value officer (CVO).13
What Lies Ahead
Regardless of who fills this role, today’s business professionals—like the early space explorers—live in an age that is both terribly exciting and terribly dangerous. Executives (and organizations) who develop and demonstrate strategic (financial and nonfinancial) thinking, understand how to apply technology to impact the organization’s strategy, and add value and communicate that value to shareholders will be able to bridge the gap from strategy to execution.
1. Stephen Barr, “You’re Fired,” CFO Magazine, April 1, 2000.
2. Ram Charan and Geoffrey Colvin, “Why CEOs Fail,” Fortune,June 21, 1999.