In May 2003, Nicholas Carr made a big splash in the IT world by writing an article for the Harvard Business Review titled "IT Doesn't Matter." Without getting into details, Carr differentiated between IT as an infrastructure commodity, like electricity, with no competitive advantage, and proprietary technology investments, which can be the foundation for competitive advantage. The commotion over this article among my clients was noteworthy. Among his conclusions, Carr argued for "managing costs and risks meticulously" and limiting spending (on commodity IT infrastructure).By the fall of 2003, I was giving presentations to clients that explained Carr's thesis and how they should think about their IT investments. My conclusion was that IT was still relevant and would not fade away as a priority. Rather, IT investments going forward need to add value and support an institution's mission, strategies, and objectives with clarity and visibility to the business managers and end users. My recommendation was that bankers need to focus on making sound business and IT decisions and excel at execution.
In June 2009, Peter Weill and Jeanne Ross published a book ("IT Savvy: What Top Executives Must Know to Go from Pain to Gain," Harvard Business Press) that reflected the results of their research across many industries, including the financial services industry. The authors define "IT savvy" as "a characteristic of firms and their managers reflected in the ability to use IT to consistently elevate firm performance." Several financial institutions are profiled in the book as examples of "IT savvy" firms. The authors describe four operating models and related requirements for the digitized platforms that match each operating model. The authors' research findings conclude that "IT savvy" firms that pick the appropriate operating model and digitized platform achieve a 20% higher level of performance than their peer competitors.
I believe the crux of the Weill/Ross thesis is valid and translates into the expectation that bankers in every line of business should become IT savvy. Some readers may think becoming IT savvy is an oxymoron for bankers. But, if bankers do not want to become IT savvy, then their institution's future success is probably going to be below average, if the institution survives.
Last month, I published a case study analysis of one medium sized institution, HarborOne Credit Union ($1.8 billion, 14 branches headquartered in Brockton, MA) that is on the road to becoming IT savvy. HarborOne is aggressively pursuing its business objectives with a multi-year plan that incorporates and leverages IT investments to fulfill its mission, strategies and objectives. This case study provides an example of how an institution becomes "IT savvy." HarborOne's journey is not just about what is going on in IT. The commitment and participation of the entire management team and staff of about 350 employees are necessary to achieve an IT savvy status. HarborOne also knows it can not become "IT savvy" without successful IT supplier partnerships that have common objectives and a strong commitment between the institution and each IT supplier.
If you are a banker, making sound business and IT investment decisions will define your future potential. Achieving excellence in execution puts your bank on the road to realizing its potential.
Bill Bradway, founder and managing director of Bradway Research LLC, analyzes the business strategies and IT investments of US banks and credit unions.