Dealing with Information Technology’s Complexity

Anyone who has used a desktop computer for more than a few years knows how
tremendously both processing power and storage capabilities have increased, while
their cost has plummeted. Yet raw power alone does not solve many of the more
intractable business problems people confront when they want to make better use of
the systems they have.
ERP has enabled richer, more centralized record-keeping and facilitated consistent
management of financial and other processes. These systems can collect not just
accounting data but a range of information
about orders, payments, inventories, fixed
assets and the like. They allow companies
to manage once-fragmented processes in
an end-to-end fashion. Yet ERP systems still
have significant shortcomings, inflexibility
being one of the most prominent.
Executives from a majority of participating
companies (58 percent) said that changing
their ERP system to adapt to new business
information needs is difficult or very difficult
(see Figure 6). These needs include new
kinds of information for reports, new types
of analysis or changes in the organizational
structure. But because making changes is
difficult is not an excuse for leaving things
as they are, especially when we note that
on average companies keep ERP systems in
place for about seven years.
While corporations have reaped many benefits from various kinds of IT systems, the
accumulation has created complex infrastructures, especially in larger companies.
Diagrams that track data flows required to complete processes can look like plates of
spaghetti. More than half of participants agreed or strongly agreed that in their
company, the complexity of the IT environment is a barrier to their ability to access
timely data, ensure data consistency or enable collaboration. Our research shows a
correlation between such complexity and being able to get to the information that,
for example, determines the factors behind a variance. Among those who said they
find IT complexity a barrier to accessing information, two-thirds said it is difficult or
very difficult to drill down to underlying data (compared to just 20 percent who find
it easy or very easy), and 74 percent of this group also said their revenue forecasting
process is inaccurate or very inaccurate. Similarly, half said it is difficult or very
difficult to determine the “what, why and how” about important numbers – the
numbers behind the numbers that would deepen insight into the context of the
information and its consequences. Finding ways to simplify systems is an ongoing
and unavoidable task.
We advise larger organizations to take a two-pronged approach to IT complexity:
manage the IT infrastructure continuously to limit or reduce complexity, and apply
technology effectively to adapt to the complexity. Understanding that these issues
are root causes of ineffective performance and taking steps to overcome them are
important first steps in elevating a company’s overall performance.