Managing Automation - October 2007 - (Page 20)

joshua greenbaum NOTES A recent study by economists at Stanford University and the London School of Economics has an interesting premise: The rise in U.S. productivity in recent years — attributed to the increased use of IT — extends to the foreign subsidiaries of those companies. And, most important, those subsidiaries are more efficient and productive than comparable nonU.S. companies in their markets. The title of the study is “Americans Do IT Better,” but what the authors are really saying is American management culture, based on a largely decentralized structure, increases IT’s net effect on productivity. This premise begs a much larger set of questions as business process management (BPM) and the process-driven enterprise become essential to the intersection of business and IT: If Americanrun companies are better at using IT, will they also be better at using BPM? And will the BPM movement further the productivity gap between U.S. and non-U.S. companies? To many, such as myself, who have worked in Europe, these results are counterintuitive. European IT managers have always seemed more technically savvy than their U.S. counterparts. This meant that IT had an advantage in Europe, as reflected in IT adoption rates in banking, retail, transportation, telecom, and other sectors. This, I always figured, meant that Europe was leading the United States in the optimization of IT as well. Au contraire. The authors found something more important for productivity than overall technological expertise: the decentralization of organizational structure. The United States leads Europe by orders of magnitude in the adoption of decentralized organizational structures — and has since the 1980s. Interestingly, this time frame coincides with a massive push to create a “unified Europe,” based 2007 Reaping BPM’s Rewards josh@eaconsult.com Doing IT the American way — that is, with a decentralized management structure — adds considerable value, according to a recent study. on a highly centralized bureaucracy in Brussels. Europeans, pushed by the political reality of European integration, were centralizing at a time when the United States was pushing decentralization. The results of having different management cultures are striking. The authors calculated what they call the “mean value added per worker” of IT adoption across a range of industries. U.S. companies, particularly those that are “high-intensity” IT users, have a mean value added per worker of 34%, compared with 24% for their European counterparts. That 10-point difference translates into a significant advantage, making it easier for U.S. companies to compete globally. If this study is as good as it looks, it portends a rocky road for the success of BPM and its associated technologies in Europe. While BPM vendors will undoubtedly find paying customers, the question is whether those customers will see the kind of results they expect. Indeed, what may happen is that the productivity gap between the United States and Europe will widen with the adoption of BPM. Decentralized U.S. companies may be able to capitalize on BPM’s advantages more quickly than their highly centralized, and therefore less nimble, European rivals. The widespread adoption and subsequent success or failure of BPM will be an interesting laboratory in which to analyze this study’s premise: that large-scale management cultural differences influence IT success. If it’s true, then we’ll need to add business management reengineering to successful companies’ toolkits. This could be the best thing to happen to IT in a long time. ■ Joshua Greenbaum is principal of Enterprise Applications Consulting, based in Berkeley, CA. maonline managingautomation.com For more of Joshua Greenbaum’s views, visit: ❑ Regulate This www.managingautomation .com/notes42 ❑ Vive La Software www.managingautomation .com/notes41 ❑ SAP’s Vertical Advantage www.managingautomation .com/notes40 ma 20 October Photo: David Toerge http://www.managingautomation.com http://www.managingautomation.com/notes42 http://www.managingautomation.com/notes41 http://www.managingautomation.com/notes40

Table of Contents Feed for the Digital Edition of Managing Automation - October 2007

Contents Take 1 Mailbox New Selling and Fulfillment Product Leads Plan to Transform Sterling Commerce Comtrol Closes Bizarre Chapter Involving Founder New Omron COO Outlines Four-Part Growth Agenda New Mfg. ‘Czar’ Will Have a Full Plate of Issues Lawson Embraces The Trend of Fewer Upgrades Notes Wanted: A Unified Infrastructure Needed: Greater Reliability Special Report: Innovation: Why Are So Many Coming Up Short? Transforamation: Beating the Odds in Global Supply Industries: Metals: Tracking Carbon Footprints Product Scan Advertiser Index Next

Managing Automation - October 2007

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