"IT productivity paradox"
One view is the paradox of IT productivity.
This view is mainly based on the fact that many companies have invested heavily in computers without improving productivity, and the labor productivity statistics released by the government show no signs of steady growth. Robert Soro (1987), winner of the Nobel Prize in Economics, summed up this phenomenon as: "You can see computers everywhere except productivity statistics", which is the so-called "IT productivity paradox". Before 1990, many famous scholars concluded that there was no correlation between IT and return on investment, and even thought that the decline of labor productivity in the United States from the 1970s to the mid-1980s was the result of over-investment in IT by the service sector. 200 1, 10, McKinsey & Company released "American Productivity Growth Report (1995-2000)". According to the report, out of a total of 59 industries, only 6 industries are closely related to IT investment. In the other 53 industries (accounting for about 70% of the total economy), the relationship between the improvement of production efficiency and IT investment can be ignored. This conclusion shows that the high investment in IT industry is not the main force to create the "myth" of American productivity growth, and even the large investment in IT in most economic fields has not played any role in helping productivity growth. This also shows that many enterprises seem to have encountered a huge "black hole" in the investment in IT applications, which makes the huge investment of enterprises unrewarded.
The point of view of "IT value-added theory", another point of view supports the point of view of "IT value-added theory". According to the survey on the ranking of the top 500 e-commerce companies in the United States for three consecutive years (1999, 2000, 200 1), it is found that the top 10 e-commerce companies are traditional enterprises. In the investigation of these enterprises, it is found that the financial income of e-commerce strategy is only a part of its pursuit goal, and manufacturers represented by IBM and Intel have used new standards to measure the return on investment of e-commerce. They analyze from the perspectives of supply chain, customers and resource utilization, and make full use of some factors traditionally regarded as "outside the enterprise" to think about the problem. For example, at present, 30% of Intel's total order processing capacity is done automatically after work. Although the company did not increase revenue, it facilitated upstream and downstream enterprises and customers. In this case, the financial statements are slow to respond, but this "externality" undoubtedly increases the competitiveness of enterprises. This view shows that there is a strong "externality" in the application of information technology when evaluating the contribution of information technology to the organization, and the "externality" effect can not be reflected in the financial statements of enterprises, so the traditional performance measurement system may bring the wrong direction to project managers. Because of the short-term and long-term return of IT cost, enterprises often ignore the evaluation of hidden benefits, human ability and consciousness, and long-term benefits when evaluating the value of IT. This evaluation system will give a misleading signal to continuous improvement and innovation, connive managers to weaken long-term investment in pursuit of short-term interests, and thus make enterprises lack the strength for long-term development.
Complexity of informatization performance evaluation
Let's not discuss the correctness of these two views for the time being, but what we need to know is that compared with the traditional performance evaluation of other physical investments, the performance evaluation and optimization of informatization is indeed more complicated. The traditional indicators of investment project value evaluation are easy to quantify, and the final evaluation is also easier. Its benefits are mainly reflected in the explicit benefits, while the implicit components of information-based value evaluation are relatively more, and its application is affected by many variables, so it is highly complementary to other factors. Therefore, when evaluating the informatization performance, it is necessary to comprehensively measure it.
At present, although enterprises have gradually realized the importance of informatization to enterprises, few enterprises can actively evaluate the performance of informatization or pay attention to the value generated by informatization, and carry out project analysis and planning, let alone evaluate and quantify the intangible benefits of informatization. Objectively, IT is also necessary to establish an information-based investment benefit analysis and risk assessment system to help enterprises get out of the "IT black hole". From the perspective of information management and control, how to ensure the effective operation and management of the whole IT system is the key to ensure the realization of information performance. However, in the eyes of many enterprise managers, investing in informatization and investing in a large number of IT construction projects is the only way to enhance the competitiveness and value of enterprises. They just regard the IT system as a magician's "black box" and have no idea about its internal structure and function. They just invest a lot of money, hoping that something good will happen miraculously.
However, there are complex "organs" hidden in the black box of IT system, which need experienced managers to plan and organize carefully and control effectively in the operation process. Otherwise, no matter how much money is invested in the construction stage, it will only be a dream to realize cost recovery and benefit in the application and operation stages.
One of the reasons for the lack of management and control system is that enterprise managers have not formed a correct understanding of it. Many business managers think that it is only a matter of technical departments or information centers, which is far from them. The information center only serves as a maintenance center, with only technical support functions, but no information management and technical management functions; The talents introduced by the information center are purely computer professionals, lacking technical management talents and information economy talents. Due to the lack of real IT departments and specialized organizations such as "information center", the operation of IT systems often lacks planning, and all departments of enterprises have become "computer princes" and "information islands", which makes IT operations often deviate from the correct track of the actual needs of enterprises, not oriented to enterprises and applications, but dominated by IT vendors.
The disconnect between IT technology and management is also a symptom of lack of information management and control. IT management departments have great authority to purchase and develop systems that they think are important, regardless of the efficiency and effectiveness of IT investment. Therefore, the application of IT system has not changed the backward process, and it is difficult to form information consistency and * * * sharing mechanism; The contradiction between the original business processing flow and the computer information processing flow is difficult to solve; The application of information technology can't achieve the expected effect at all. The contradiction between the original business processing flow and the computer information processing flow is difficult to solve; It is difficult to greatly improve the quality of employees and form team spirit. Therefore, it is difficult to make the management software system run normally, or even if the system is barely kept running, it is far from the expected goal.
IT can be seen that in order to make the IT system play a value-added role, it is necessary to solve the management and control problems in the process of IT operation and turn the "black box" into a "white box" through effective management and control means. On the one hand, the technology and management of IT system should be closely combined, on the other hand, the direction of IT system should be made clear, and the whole operation process should be made transparent by defining clear control objectives, thus improving the efficiency of IT system and ultimately improving the performance of enterprise informatization. From the perspective of enterprise informatization project construction, the success of project construction is related to the success or failure of informatization. At present, a large number of enterprises are keen to develop their own MIS systems and compete for ERP projects, but they are caught in a situation of repeated defeats, which is called "the quagmire of IT projects".
The informatization construction of some enterprises has even become a "performance project" for leaders, striving for huge informatization investment, but blindly building, with high technology consumption, purchasing advanced technology and equipment, but lagging far behind in operational performance. Because managers lack a deep understanding of it, they usually hand over the responsibility to technicians. In this case, IT application projects will soon be out of the control of managers. Due to the lack of strong promotion from business and management, the scope and objectives of the project will soon get out of control. As a result, the installation of the system far exceeds the scheduled time, and problems such as data loss and system response time delay frequently occur. According to experts' statistics, at least 90% of ERP systems have been implemented within the scheduled time or budget. In a company that invests more than $654.38+million in ERP system, the probability of opening it within the scheduled time and budget is equal to zero.
Because the implementation of information application projects such as ERP is very complicated, difficult, time-consuming and costly, many enterprises lack effective project management and process control, which is the direct cause of information projects out of control. Project management is a complex job, which requires high skills, including making a reasonable implementation plan, good organization and management, communication, integration and strong cost, time, quality and risk control. Especially for large-scale enterprise information projects, project management is a profound knowledge and superb art. If the project lacks effective monitoring and effective mechanism to ensure the actual input and benefit feedback of the information system after one-time investment, it will inevitably fall into the "quagmire" of information application.
The lack of specific reference standards for informatization project evaluation is also one of the fundamental reasons why the project is in a quagmire. Although the evaluation usually goes through the stages of project establishment, feasibility study, budget review, bidding, expert review, etc., to the planning meeting, selection meeting and technical scheme seminar in the middle of the project, and then to the test, acceptance, summary and award at the end of the project, when answering how valuable the information system project is or how much contribution it can make to the enterprise performance, it is usually only vaguely said that the work efficiency has improved, the business processing speed has improved, the use is more convenient and the data is easier. However, as far as the strategic position of informatization projects relative to enterprises is concerned, its value is not simply to answer such a general question as "Do you want to surf the Internet", but to clearly answer the question "Is it worth it?". This requires the establishment of project acceptance and performance evaluation standards, and the implementation of continuous process management and evaluation of information construction investment. Drucker, a master of management, once said that "you can't manage if you can't measure" and emphasized the significance of evaluation to enterprise management. By analyzing the symptoms of enterprise informatization, we can easily see the significance of evaluation to enterprise informatization construction. Whether it is the strategic investment, operation control or project management of information construction, it is inseparable from evaluation. Evaluation is not only a display of results, but also a navigation system for IT strategy implementation, a dashboard for system control and an indicator for project process management. Informatization performance evaluation can bring the following seven aspects of progress to informatization construction:
1, breaking through the bottleneck of information construction and application in China.
2. Comply with the requirements of relevant laws and regulations.
3. Establish good corporate governance and IT governance.
4. "Navigation" of enterprise informatization construction
5. Promote the implementation of information strategy.
6. Standardize information management control.
7. Strengthening the management of information projects Up to now, technical problems are no longer a problem, and local problems are no longer a problem. At present, the construction and development of China's informatization is also facing the problem of "passing the customs". In fact, as early as three years ago, we clearly pointed out that the difference of IT application level is not determined by the advanced nature of information technology, but caused by the level of IT management and control. Information management has become the bottleneck of information construction in China for a long time.
According to the long-term observation and research on informatization in China, we find that many companies have the same systems and software as their international competitors, and even better technology and equipment. Therefore, from the maturity and advancement of technology, our overall application level is not low, but why can't we be as good as each other? In fact, the reason is very simple. It is only a tool, and this tool is not a universal tool to improve management, business processes and business practices. Therefore, it, like other tools, must be effectively applied to reflect its value. In order to effectively use information technology and optimize the performance of information systems, the most fundamental thing is not to rely on advanced information technology and equipment, but to benefit from management. Therefore, China's informatization construction urgently needs to solve not technical problems, but to improve IT governance mechanism and IT management and control concept. As an institutional arrangement and management practice involving all stakeholders, IT governance and IT management and control have been highly valued by countries and international institutions, and a series of principles and standards have been formulated, forming a global IT governance and IT management and control reform movement. China's IT governance and IT management and control have attracted more and more attention from all walks of life, including government departments, regulatory authorities, academia and industry users. People are increasingly aware that a series of institutional arrangements in IT governance can effectively promote the consistency between IT strategy and enterprise strategy, improve the return on IT investment and reduce IT risk. This is the only way to build an efficient and sustainable information-based China.
In order to meet the requirements of SOX and other relevant laws and regulations, in July 2002, the United States promulgated the Public Company Accounting Reform and Investor Protection Act of 2002 (SOX Act for short), which will be gradually used for reference by China Securities Regulatory Commission. Section 302 of SOX Act requires CEO and CFO to report their internal control system and sign the report submitted to SEC as a guarantee. Therefore, this law will force the top management to ensure the appropriateness of its internal control system. Section 404 of the bill requires: explain the responsibility of management to establish and maintain appropriate internal control structure and financial reporting procedures; Evaluate the effectiveness of internal control and financial reporting procedures at the end of the financial year of listed companies. The significance of SOX Act is to directly clarify the legal responsibilities faced by the CEO/CFO of the company, provide a powerful legal weapon for the regulatory agencies to investigate and deal with financial fraud, make up for the loopholes in the regulatory system, and achieve a certain balance between the incentive mechanism and the accountability mechanism of the company. For example, the Act clearly stipulates the legal responsibilities of the CEO/CFO as follows:
L. If it is found in the company's periodic report that it is necessary to re-prepare the accounting statements due to major violations of regulatory laws and regulations, the CEO/CFO of the company shall refund all bonuses, bonuses, other forms of incentive remuneration and income from trading the company's stocks within 12 months;
L If the CEO/CFO of the company knows the violation in advance, but still submits the letter of commitment, the maximum penalty is 10 years imprisonment and a fine of 1 10,000 USD;
L those who intentionally make false promises can be imprisoned for up to 20 years and fined $5 million.
Since the promulgation of SOX Act, it is an unprecedented challenge for any company listed in the United States to comply with SOX Act. But at the same time, IT is "good" for CIO, because for companies that have begun to implement the compliance stage of the bill, the important role played by IT in their internal control is immediately highlighted. CIOs should seize this opportunity to advocate and establish their position and the importance of information management and control process. Therefore, IT personnel, especially the chief information officer, urgently need to master the internal control theory and abide by the SOX Act in practice.
According to the project experience we have consulted, the CIO should meet this new challenge in the following aspects:
L strengthen the theoretical level of internal control;
Understand the implementation plan of SOX Act of the company;
L design and implement information management and control plan;
L integrate information management and control planning with the organization's SOX Act implementation plan. A key issue of corporate governance and IT governance is whether the company's IT investment is consistent with the business strategic objectives, so as to build the necessary core competitiveness. Because the enterprise goals change too fast, IT is difficult to ensure that IT and business strategic goals are always consistent. Therefore, IT is necessary to coordinate in many aspects to ensure that IT governance continues to develop in the right direction, which is also a real concern of IT investors. For IT governance, it should reflect the strategic integration of future information technology and future enterprise organizations. It is necessary to maintain openness and long-term as much as possible to ensure the stability and continuity of the system; At the same time, because the planning can't keep up with the changes, it is difficult to ensure that the long-term planning can keep up with the changes in the enterprise environment. It is an indispensable and effective way to establish information management and control system and performance evaluation system. In view of this, the role of information management and control system and performance evaluation has become more and more critical. As the cornerstone of effective corporate governance, the board of directors, senior management and information system auditors will become an important part of the above key and necessary responsibilities.
This series of documents mainly elaborates the basic concepts, basic viewpoints, system construction, implementation methodology and operation methods of the informatization performance evaluation system. The recently published Serialization of Information Management and Control mainly expounds how to carry out effective IT governance from the information management and control system to support the realization of corporate governance concept.
How does performance evaluation "navigate" enterprise informatization construction? In the fierce competition in the information age, controlling an enterprise is as difficult as controlling an airplane in complex weather. Modern science and technology provide a scientific navigation system for pilots and make flying easier. Information construction also needs a scientific navigation system. The evaluation of enterprise informatization starts from the purpose and strategy of introducing IT into enterprises, and examines the influence of IT application on enterprise management, so as to "navigate" the informatization construction.
Navigation system can help enterprises to comprehensively evaluate the whole process of informatization construction, comprehensively check the current situation of enterprise informatization and determine the stage of informatization construction. Then, according to the quantifiable project construction objectives and success crITeria established in the early stage of project construction, the enterprise compares the achievements after project construction and analyzes the reasons for the results, so as to gradually eliminate the phenomena of "it investment black hole" and "it project quagmire" in the process of continuous improvement.
As early as 1992, the "2 1 Agenda" formulated by the United Nations Sustainable Development Summit pointed out that "governments should establish a mechanism to evaluate the value of existing information systems. Evaluating the value of an information system is not an idea when the system is completed, but a question that needs to be answered in the early stage of system construction. This evaluation system is an indispensable solid foundation in the process of enterprise informatization construction. "
This series of documents mainly elaborates the basic concepts, basic viewpoints, system construction, implementation methodology and operation methods of the informatization performance evaluation system. The recently published Serialization of Information Management and Control mainly expounds how to carry out effective IT governance from the information management and control system to support the realization of corporate governance concept. In the 1960s and 1970s, the initial application of information systems was mainly used to improve speed, accuracy and reduce costs. At this time, the information system is only used as a tool to improve productivity. In 1980s, information system began to become a supporting platform for improving service, enjoying information and improving quality. In the 1990s, information systems are no longer limited to faster, more accurate and low-cost data processing, but also have the following benefits: shortening time and space; Increase the memory of the organization; Contact organizations, customers and suppliers; Promote business process change. The benefits of these four aspects have shown that information systems have been used to improve and transform the business practices of organizations, and their importance is directly related to the organization's strategy. In order to gain competitive advantage, enterprises have invested heavily in informatization.
At present, all kinds of organizations are more and more dependent on information systems, even a short interruption of the system may make organizations unable to survive, because the capital flow in many organizations is closely related to information systems. With the increase of investment in information system, the system has developed from single-function automation to the whole enterprise level. All the value chains of an enterprise, including financing, supply and customer service, are integrated into a comprehensive information system network, which requires the integration of all business processes included in the key functions of the enterprise. It becomes a lever to effectively manage change to gain competitive advantage, so the risk of return and failure is greatly enhanced.
The shift of information system to strategic objectives also shifts the focus of information system evaluation to broader business performance (Galliers, 1995). IT evaluation tends to plan the whole system from a strategic perspective and evaluate the system according to business performance standards, not just the quality of the system itself. At present, the phenomenon of blind investment, lack of supervision, poor management and control and poor operation of enterprises in informatization is still widespread. The existence of these irregularities is also a problem of lack of management control and mechanism guidance. Information performance evaluation system is actually the dashboard of business owners and operators, which effectively guides and regulates business behavior.
With the deepening understanding of IT productivity paradox and IT black hole, people realize that if IT technology can't be combined with management, it can't contribute to the formation of enterprise's core competitiveness. Therefore, the focus of IT management has shifted from the early focus on hardware to the focus on software and technology management, and now IT has shifted to IT revenue management and service management. In order to provide these IT services flexibly, timely and effectively, IT is necessary to have a measurement system that can accurately calculate costs and ensure service quality, and can classify and solidify IT services to a certain extent. Therefore, performance evaluation and management is also an ideal way to meet these requirements and create a good environment for IT service management.
In short, the establishment of performance evaluation system can help enterprise managers to establish a scientific management control system, effectively control the process of informatization activities, fully understand and master the operational performance of informatization, thus contributing to the coordination and unity of informatization development and the overall goal of enterprises, helping to correctly guide and standardize the business behavior of enterprises, prompting enterprises to improve their management level, and effectively combining the short-term interests and long-term interests of enterprises. Although a large number of informatization projects are invested and constructed every year, the informatization project itself has the characteristics of strong forerunner, high risk and high income, which makes it a complex systematic project, involving business, technology, project management and other aspects of the enterprise, with a lot of professional knowledge, which requires not only the project participants to have comprehensive knowledge, such as the basic skills of the project manager in technology, business and project management, but also a deep understanding of a specific enterprise.
In addition, the information project process is also full of risks. The larger the system scale, the closer it is to management, the higher the integration, the greater the risk and the higher the failure probability. Every year, there are a lot of news about the mismatch between input and output of information projects, and the most obvious example is ERP. Therefore, how to evaluate the value of information technology and information system construction projects has become the focus of increasing attention of users.
As an investment project, enterprises must comprehensively and objectively analyze and estimate the investment return of the project in the early stage of construction to determine the feasibility of the project; In the process of construction, enterprises must understand and master many factors such as project schedule, resource demand, quality control and risk control, so as to control the time, cost and quality of project construction; After the project is completed and put into production, the enterprise must obtain an objective evaluation of the project value realization through detailed empirical analysis. Informatization projects should not be divorced from this basic framework, and value evaluation should be an activity that runs through the whole life cycle of informatization projects.