Executive Summary
The nine case studies1 in this research span a wide variety of business size, type, sector, product and focus. Together, they provide some cogent lessons for both businesses and policy-makers
Lessons for Businesses
There is no one single formula for successfully investing and implementing ICTs. However, the one factor linking all the successful firms was quality of their human capital. There is no substitute for business managers and decision-makers knowing their own business and industry, as this enables them to select, customise and prioritise the development. There is also no substitute for having knowledgeable and experienced staff participating in the development and implementation of ICT applications, and an organisational commitment to ongoing training and learning in both ICT and other organisational systems. Investing in ICTs without the requisite level of business, industry and environmental understanding, and staff knowledge and commitment, is little better than investing in a lottery.
Successful implementation and use of ICTs is contingent upon the extent to which managers and decision-makers first know and understand the characteristics of their product, business, industry and trading environment. If managers and decision-makers understand their individual "value chain", then they will be clear about the ways in which they derive value from their businesses, how information contributes to this process, and therefore have a much clearer understanding of both where the ICTs will fit in their individual value chain, and the extent to which they can add to the value created. This positions them to be better able to manage the costs, risks and opportunities that they face in their businesses.
When this degree of clarity is present, then it is much more likely that the firm has both a clear strategy to guide its decisions and operations, and a fuller understanding of the ways in which any technology fits into the value-creating process. Thus, the technology purchase and implementation becomes an integral part of the firm's strategy, whether it is the use of a technology to gain a competitive advantage or investment being undertaken merely to "keep up with the state of play in the industry".
Firms with this level of understanding will be better placed to implement ANY new technology successfully. The technology purchase is much more likely to be based upon a well-reasoned analysis, and implementation planned and prioritised in such a way that the most valuable or the most fundamental components are installed first. Thus, success is more likely. Notably, well-reasoned analysis also reduces the probability of a firm investing in a technology merely because it exists or because it has been implemented elsewhere. Knowledge of specific firm and industry characteristics will mean that reasoned abstention from specific purchases can be a profitable strategy in some circumstances. Knowing what these circumstances are is critical.
Whilst none of these characteristics are unique to ICT investment, if these mechanisms are in place, then the probability of a successful ICT investment and implementation is increased. If the purposes underpinning ICT investment are well understood, then it is more likely that the firm is both receptive to the need to invest in complementary systems in order to make the ICT investment work successfully, and has put in place processes to monitor and adjust complementary systems to align with the new investment.
The quality of business analysis and decision-making available to businesses is critical to successful ICT implementations. However, the requisite human skills are generic business skills, not specialist ICT technology skills. There is little evidence from the case study companies of difficulty in accessing ICT specialists, yet almost all noted a significant difficulty in recruiting staff with sufficient business and industry knowledge, experience and skills, particularly in risk management, change management, and process analysis and improvement. The significant problem for New Zealand appears to be lack of skilled and experienced business "knowledge workers". Whilst firms were prepared "grow their own" knowledge workers, they are vulnerable to loss of these skills to other markets with higher salaries, compromising the total knowledge and experience level of the New Zealand management stock and hence the calibre of decision-making, and raising internal training costs. Poor decision-making undoubtedly increases the costs of both implementation and failure in ICT investments.
Lessons for Policy
The businesses that participated in the case studies were unanimous in their opinion that there was little that the government has or could have done by way of an ICT policy that would have made any difference at all to the ways in which they undertook the decision to invest in ICTs or the implementation of their respective systems. The consensus was that the government had no role to play beyond its broad responsibilities to provide a sound and certain legal and commercial environment in which they could undertake their business operations. Principally, the participating companies reported few problems with accessing infrastructures necessary for their activities, and none reported inability to access sufficient suitably qualified technical staff for their activities. Thus, there was little apparent need for policy intervention in the infrastructure or ICT technical skills markets.
However, the participants do see a role for Government in promoting an educational environment and national culture where "commercial literacy" is as fundamental to educational achievement as general literacy and numeracy. Unless all participants in the economy have an understanding of the interrelationships between business activity and living standards, then it will be difficult to overcome the difficulties of owners, managers, policy-makers, employees, voters and consumers making less than optimal decisions and operational actions as a consequence of lacking the skills to effectively analyse their position, their business, its industry and the environment. This is vital for any economy, but the need for greater understanding is highlighted by the emergence of a "knowledge economy" that is causing all businesses to refocus on the ways in which wealth is created.
Participants also saw a role for government in promoting information exchange and education about the ways in which information contributes to value as a fundamental underpinning of the move from an economy based upon measuring tangible outputs made by machines to one based upon the use of information by knowledge workers to create knowledge outputs. This understanding needs to be technology-agnostic: computers are only one form of ICT - human beings are information processors, and skilled humans are an integral part of growing value in an information economy.
"Knowing one's business" is especially important for Government, which must balance its responsibilities as policy-maker, regulator and participant in markets where information is fundamental to value-creation. Unless government understands these issues, then the participants perceive a risk of government intervention harming, rather than helping, progress. To this end, participants have cited cases where legislative barriers are impeding the accrual of benefits: specifically in relation to electronic authentication within government activities, and where the lack of understanding of how information-based companies generate revenue in an information economy is biasing the funds available to support the "knowledge economy" towards equipment and software makers ("things") at the expense of firms that use knowledge to make information products.
One of the participants draws particular attention to the role conflict of government as the owner of information, which can stimulate the creation of new knowledge products and wealth-creating opportunities, whilst simultaneously owning the research-based Crown Research Institutes from which it requires a profit. This dual responsibility creates a tension that draws into sharp relief the responsibility of the government as promoter of research and development using that information for the public good, with its role as owner of information property developed from that information that may result in the information being kept from those who might compete with the government research entities to create and commercialise new and different applications based upon the same information.
As the major participant in the knowledge-intensive health and education sectors in New Zealand, the Government has the responsibility to act as a knowledgeable operator in its own right. By acting as a role model, and building its own knowledge-based industries, the government can contribute to the total knowledge base in New Zealand. It can also take a lead role in enabling and modelling new industry forms, such as joint ventures and pilot projects, in these areas, that reflect the different approaches required to the research and development of knowledge-based products, which necessitate a different approach to risk management to the research and development required for tangible products.
These actions will provide the underpinnings not just of a sound economy utilising electronic ICTs, but also for a sound "information and knowledge-based economy" from which all New Zealanders will benefit.
1Whilst nine organisations were studied, due to confidentiality requirements, only eight studies are reported in the public version of the paper.
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