Executive Excellence: Technology ROI...

Getting a handle on Return on Investment and Return on Assets can be difficult. Much of the problem lies in a matter of perspective. Most organizations remain rooted in a functionally-based business model which obscures the returns achieved on operating assets. Although services represent the bulk of today’s businesses, executives continue to run their organizations with a tool set and metrics developed in a manufacturing world.

The greatest untapped performance opportunity today lies in moving to an asset-based business model focused on three operating asset categories: (1) people and intellectual property, (2) equipment and (3) facilities, wherever they are located across the total enterprise.

Why is an asset-based approach now possible? Organizations have loaded up on technology investment, but it has generally been used to automate existing functions. Enterprise-wide solutions have made the existing business model more efficient, but the greater business leverage for services businesses lies elsewhere:

Intranet networks and the Internet now allow connection of multiple users in an expanded asset-based business model. Stakeholders can thus all be directly connected to the organization and with each other.
Action can then be cost-effectively applied to enhance the performance of assets. Self-management tools for equipment and people assets and the device itself as a self-management tool for people drive remote diagnostics and prevention in new ways.
Information and learning technologies (as well as entertainment services) are now coming into offices and homes through Broadband technologies.

Asset-based supply chains promise to revolutionize service delivery, connecting the global community in overlapping spheres of influence. Even the employee’s home is a node in the chain of resources and technology investment.

Despite advances in management, information and learning technologies, organizations continue to be oriented toward accounting conventions, not economic valuation; using tools appropriate for consumable materials, not non-consumable assets; focusing on the supply chain as a buying issue, not as a series of service-driven relationships requiring system-wide management.

In today’s knowledge-driven world, the intersection of operating assets creates an organization’s intellectual property and ultimate valuation. Today’s service businesses require a new business model and a new tool set to optimize performance.

Asset-based Business Model:

Through asset-based process mapping, all contributors to the service delivery process can be interconnected. A global and life-cycle perspective can be developed for facilities, equipment and people. Process and data management can be developed in powerful new ways to benefit cost structure, productivity and quality. The organization is run directly through operations, not indirectly through a host of functions, departments and projects.

Much has changed over the past 20 years through value-added out-sourcing and flexible staffing strategies. Static structures need to give way through an expanded business model that provides the framework for flexible, distributed systems. A total systems approach, using a new business model, is needed to optimize asset-utilization across varying life-cycles. Besides measuring human and organizational efficiency and effectiveness in systemic ways, the benefits of existing and future technology investments become directly measurable.

First publication, copyrighted 1998 by System Change, Inc.:

Carlson, John G. “Technology ROI: Assess the return on assets.” Executive Excellence 15.9 (September 1998): 19.

John G. Carlson is Founder and CEO of System Change, Inc., a methods-based consulting firm featuring assessment services. He can be reached at jcarlson@systemchange.com or through his firm's website: www.systemchange.com.

		Technology ROI: Assess the return on assets by John G. Carlson, System Change, Inc. Getting a handle on Return on Investment and Return on Assets can be difficult. Much of the problem lies in a matter of perspective. Most organizations remain rooted in a functionally-based business model which obscures the returns achieved on operating assets. Although services represent the bulk of today’s businesses, executives continue to run their organizations with a tool set and metrics developed in a manufacturing world. The greatest untapped performance opportunity today lies in moving to an asset-based business model focused on three operating asset categories: (1) people and intellectual property, (2) equipment and (3) facilities, wherever they are located across the total enterprise. Why is an asset-based approach now possible? Organizations have loaded up on technology investment, but it has generally been used to automate existing functions. Enterprise-wide solutions have made the existing business model more efficient, but the greater business leverage for services businesses lies elsewhere: Intranet networks and the Internet now allow connection of multiple users in an expanded asset-based business model. Stakeholders can thus all be directly connected to the organization and with each other. Action can then be cost-effectively applied to enhance the performance of assets. Self-management tools for equipment and people assets and the device itself as a self-management tool for people drive remote diagnostics and prevention in new ways. Information and learning technologies (as well as entertainment services) are now coming into offices and homes through Broadband technologies. Asset-based supply chains promise to revolutionize service delivery, connecting the global community in overlapping spheres of influence. Even the employee’s home is a node in the chain of resources and technology investment. Despite advances in management, information and learning technologies, organizations continue to be oriented toward accounting conventions, not economic valuation; using tools appropriate for consumable materials, not non-consumable assets; focusing on the supply chain as a buying issue, not as a series of service-driven relationships requiring system-wide management. In today’s knowledge-driven world, the intersection of operating assets creates an organization’s intellectual property and ultimate valuation. Today’s service businesses require a new business model and a new tool set to optimize performance. Asset-based Business Model: Through asset-based process mapping, all contributors to the service delivery process can be interconnected. A global and life-cycle perspective can be developed for facilities, equipment and people. Process and data management can be developed in powerful new ways to benefit cost structure, productivity and quality. The organization is run directly through operations, not indirectly through a host of functions, departments and projects. Much has changed over the past 20 years through value-added out-sourcing and flexible staffing strategies. Static structures need to give way through an expanded business model that provides the framework for flexible, distributed systems. A total systems approach, using a new business model, is needed to optimize asset-utilization across varying life-cycles. Besides measuring human and organizational efficiency and effectiveness in systemic ways, the benefits of existing and future technology investments become directly measurable. First publication, copyrighted 1998 by System Change, Inc.: Carlson, John G. “Technology ROI: Assess the return on assets.” Executive Excellence 15.9 (September 1998): 19. John G. Carlson is Founder and CEO of System Change, Inc., a methods-based consulting firm featuring assessment services. He can be reached at jcarlson@systemchange.com or through his firm's website: www.systemchange.com.
		Copyright 1998 by John G. Carlson, System Change, Inc. All rights reserved.