The role that IT plays in corporate performance is becoming increasingly important. Companies are continuously looking for ways to put themselves ahead of the competition in serving the customer. In the past competitive advantage was the result of internally-focused production process improvement— creating more efficient cells and improving material flow. Over the last decade, this has not been enough, and companies have concentrated more and more on improving management processes and transactional activities such as controlling the supply chain, reducing inventory and manufacturing to customer demand. IT management systems are now an essential component of a company’s competitive strength.
The problem is that the cost of commercialized applications ranges from tens of thousands of dollars to hundreds of millions of dollars. Most companies (small- and medium-sized businesses in particular) cannot afford the investment, especially during economic downturns. This puts them at an immediate disadvantage in the marketplace.
Those that can afford the investment face a second problem—whether to invest in an off-the-shelf system or whether to invest in the most expensive system they can afford. Companies are distinct in many ways—a system that might be perfect for one company could be detrimental to another. Therefore, off-the-shelf IT solutions rarely exactly meet the peculiarities of the business’s management requirements, often falling short in some areas (thereby neutralizing the company’s core strength) and providing features they do not need in others.
These surplus capabilities contained within the package do not come for free—not only do they dilute the return on investment and reduce profitability, but they also create unnecessary complexity (additional data capture needs, higher skills requirements, increased maintenance effort, etc.) which drive up costs, further neutralizing competitive advantage.
Customized management operating systems avoid the functionality that is not needed, enabling the company to go directly to the root of its requirements. There are many companies willing to make the huge investment called for by custom-designed systems. However, IT is not always the silver bullet it is made out to be and investing in the most expensive software they can afford often doesn’t make sense. During its infancy years, the company’s learning curve is steep, its needs and wants shift continuously and it is required to operate in a fast-changing environment. Over-investment in an inflexible management system during the early stages of a company’s lifecycle can hinder optimal development, reduce corporate agility and tie the company to a management system or business model that becomes obsolete a few years down the road.
IT investment decisions are usually long-term choices. The Gartner Group reports that more than half of companies are dissatisfied with the returns on their IT investments. Therefore, the less the available IT budget or the less certain the direction in which the company will develop or grow, the more sense it makes to minimize capital expenditure on IT, and maximize the flexibility of the solution.
It is possible to achieve just that by using Excel as a platform for the company’s management operating system. Microsoft estimates the number of Excel users worldwide exceeds 400 million, most of whom use less than 10% of the software’s capabilities—that makes up a lot of unutilized IT capacity, already in place, waiting to be used. The benefits of using Excel as the basis for IT management systems are many: it does not require additional capital expenditure, it can be customized to suit the company’s exact needs, systems can be streamlined by stripping out unnecessary features, systems can evolve as the company matures, user training is minimal, etc. See Customized Low-cost Excel-based IT Solutions.