New York, NY (1888PressRelease)
April 09, 2009 - It is generally accepted that the unprecedented economic problems facing the United States and the World can be traced to a domino effect that began with the decline of the real estate market, the decisions of mortgage bankers to sell mortgages to applicants who were not qualified to purchase overvalued properties using adjustable mortgages that were destined for default, the resale of these high risk mortgages to financial and investment banking institutions who ignored the risk, and were insured by insurance companies that ignored their high risk and potential for default.
When synthesized into a single cause for the problem, “mismanagement” would get a lion’s share of the votes. As each domino fell, the cause could be traced to the failure of human senior executive decision makers to make the prudent decisions to justify the decision based on value and protect against risk. Prudent decisions are made based on a disciplined methodology that justifies the business decision on the return on investment (ROI) potential measured against risk.
Information technology has advanced from being an array of specialized proprietary applications targeted at providing isolated solutions to specific business functions in the 1970s to being capable of providing key business solutions across the total business enterprise to support the inter-functional operation, decision making and management of the entire company.
The surprise is that neither the real estate industry, the mortgage bankers, the investment banking nor insurance industries capitalized on the power of technology to prevent the problems that are presently plaguing the country and brining so much financial pain to major companies, stock holders and the American people.
Because of the importance of top level decisions, it has long been accepted that key decisions should be based on a disciplined decision making methodology that ultimately justifies the decision based on return on investment (ROI) and/or management by objectives (MBO) criteria. The importance of these decisions dictates that the decision making process follow a set of steps designed to ensure that all relevant knowledge has been included in the process to identify risk and make sure the decision will produce the anticipated outcomes.
Had the key causative decisions made by mortgage bankers, investment firms and the insurance industry followed this type of disciplined decision making methodology and been guided by the findings, it is likely that the problems underlying the present economic crisis would have been identified earlier allowing for corrective action that would have most likely prevented the crisis.
It is clear that poor decision making contributed to the present economic crisis, and the evidence is growing that human factors, such as greed, the desire for quick sales regardless of risk, a lack of knowledge about risk and flawed assumptions were basic to the economic problems.
History has demonstrated that information technology can be used to collect, analyze and report information of importance to strategic business decision making, and by doing so eliminate the human elements that might otherwise prejudice the quality of the decision making process. For example, the stock market monitors stock sales by using an information technology program based on predetermined performance thresholds that have been defined based on research and a disciplined decision making model, that when reached automatically provide management with an alarm and other protective actions to avoid problems.
In retrospect, had the IT industry offered their enterprise management capabilities to the decision makers in the real estate, mortgage banking, financial investment and insurance industries as a tool to provide quality data in support of a disciplined decision making methodology the risks would have been made clear in advance of the implementation of a poor decision and alarms would have gone off early to create awareness of the pending problems. It is arguable that had these IT enterprise management and decision making tools been in place the present economic crisis could have been avoided.
Historically the IT industry has marketed their products to IT decision makers such as CIO, CTO and MIS executives as solutions to specific business problems. For the most part they have not been able to escalate their sales and marketing approach from a “technical” sale to a “business” sale and as a consequence have not been able to gain recognition for the value they could add in validating decisions and protecting against the kinds of risk that brought major problems to the world’s economy.
Ironically, companies like Computer Associates have long understood the importance of integrating IT solutions into an enterprise management framework. CA has remained a leader in enterprise management due to highly successful products such as Unicenter, but they have never been able to transform their enterprise management product capabilities into a marketing and sales initiative targeted at CEOs and P&L level decision makers. As a consequence they have missed out on the opportunity to sell these top decision makers that their products had the ability to optimize strategic decision making and minimize decision making risk.
With the nation in economic crisis and the American people highly skeptical of the capabilities of the political and business leaders to find a quality solution, there is an extraordinary opportunity for the IT industry. Not only can the IT industry present evidence regarding how IT enterprise management and decision making support tools could have prevented the present problems, but they can now offer a practical solution that eliminates the highly upsetting element of human failure and offers an easy to understand solution to identifying and protecting against the risks that ultimately brought the economy to its knees.
The challenge facing the IT industry is finding the way to change the way they have historically marketed their products. In the past they have found it very difficult to present their products in the form of a business proposition that CEOs and P&L level decision makers can understand and integrate into their company’s strategic planning and business management process.
If the IT industry can escalate its marketing and sales strategy from the CIO, CTO and MIS level to the CEO and P&L level there are billions of dollars in sales that can be made. Indeed, the timing could not be any more advantageous for those IT companies that can deliver enterprise management decision making support solutions. Politicians have committed trillions of dollars to finding a solution that has yet to be defined. Businesses face failure unless they can improve the quality of their strategic decision making. The American citizens are suspicious of the capacity of the politicians and business decision makers to find a solution and would be highly receptive to a solution that took human failure out of the equation and substituted automated safeguards to protect against risk.
Does the IT industry recognize the significance of this opportunity? To date none of the major IT companies has indicated any awareness of the value they could have provided in preventing the type of poor decision making that caused the present economic problems and the opportunity associated with marketing their products as a way to prevent a repeat of the problem. Hopefully those with the capacity to provide valuable solutions to enhance the quality of strategic business decisions and protect against risk will recognize the importance of their contribution to correcting the present economic problems and add value to the stabilization of the national and world economy going forward.
Dr. John T. Whiting
john.whiting ( @ ) e-businessmanagement dot com
http://www.e-businessmanagement.com
973-764-0375
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