FT : TR Inventor Says Most Tech Debates “Just Wrong”

Wednesday, March 12, 2008

…..Now a sprightly 67, the inventor of the token ring network has a commercial pilot’s licence, flies his own Hawker jet, takes an interest in cosmology and worries about down-to-earth matters such as corporate computing.  “There is too much technology for its own sake,” he grumbles.  “Too much doing things because they are possible.”  Mr Söderblom is the founder and chairman of the Compass consulting group, now in its 28th year, a position that has given him a unique overview of the problems and possibilities of information technology in many of the world’s largest companies…..”With IT, it was possible to offer services to the customer that were not possible before.  But having started, you needed to follow up so you needed more IT to deliver what IT had made possible in the first place.”  He believes there is a depressing theme running through the development of IT, from the earliest times to the present day.  Corporate management, he says, has always treated IT as a cost rather than as a value: “The whole focus was, we must control exploding IT costs, and that has not changed.”  The irony, he argues, is that IT has been unbelievably successful in managing unit costs, giving as an example the change in data centre costs per thousand-user central processing unit seconds for three of Compass’s earliest clients, Ericsson, Volvo and ABB. In 1980, the cost was about Skr500: in 2000 it was Skr1.  “There is no other human enterprise that has done this.  Over the past five years, unit costs have continued to fall, while total costs have continued to rise.  The reason for this discrepancy is that volumes are just going through the roof and the chief information officer can do nothing about this growth.  “The CIO is being blamed for the increase in costs.  The debate is just wrong and it’s the same debate that has been going on for the past 30 years.”  Mr Söderblom’s colourful career – “from the late 1970s to the middle of the 1990s I was in constant patent battles” – provides the raw materials for his contention that many debates are “just wrong”…..He worked for IBM where he was the product launch manager for the database management system IMS.  This was when IBM was in its heyday – “an absolutely fantastic place to work, with money to burn”.  Eventually, he left for the kind of consultancy work which would eventually lead to the formation of Compass, a company which places emphasis on mathematical modelling and operational metrics of an organisation’s activities.  Companies that have been advised by Compass over the years are on average 27% more efficient than new clients, it claims.

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Mr Söderblom explains why IT departments are blamed for rising costs: “The IT department has been given responsibility for transformation projects that it obviously could not deliver.  Because IT was involved, the IT department was given the responsibility.  But the IT department never had the organisational mandate to make the changes that the IT solution required.”  He argues that the big mistake was that the CIO took on that responsibility rather than saying: “No, it’s not my business.”  “You would not expect the human resources department to take responsibility for a transformational project.  Why should you expect the IT department to do so.  And ERP (enterprise resource planning software) has multiplied the problem manyfold, because it requires more change in the business process than traditional, home grown applications.  “It’s clear that corporate management now understands that something has to be done.  We think the first step is that IT has to invoice for its services in business terms.  That will focus corporate minds on what IT is actually doing.  “It doesn’t solve any problems but it focuses the mind to see the invoice not in cost per megabyte but cost per transaction, cost per widget, cost per whatever.  Corporate management has to take responsibility for such an integral part of the business.”  Perhaps it will…..

Reference : http://www.ft.com/cms/s/92d94ba6-24e4-11d8-81c6-08209b00dd01,id=080305000301,print=yes.html

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