Radically Simple IT

In the March 2008 issue of the Harvard Business Review, David Upton and Bradley Staats from the Harvard Business School wrote an article about a radically new approach to developing IT systems called the path-based approach. As the authors state in the opening sentence, “enterprise IT projects continue to be a headache for business leaders.”

The article is a case study of Japan’s Shinsei Bank IT department and how they revolutionized retail banking in Japan.  Masamoto Yashiro, the former chairman of Citibank Japan, was brought in as the new CEO in 2000 and he hired Jay Dvivedi, who used to run IT operations for Citibank Japan as his Chief Information Officer.  Together, they led the development of a new enterprise IT system using the path-based method of application development. They call it the path-based approach because it focuses on providing a path for the system to be developed instead of attempting to define all of the specifications or requirements for a system before the project is launched. Shinsei succeeded in developing and deploying an entirely new enterprise system in one year at a cost of $55 million.

Traditionally, there are two choices for building a major enterprise system – the “big bang” approach of replacing the current system and processes all at once or the incremental method of improving the existing system one piece at a time.  Shinsei did not want the risk of the “big bang” method and did not have the time to implement the incremental method, so they chose a third method called the path-based method.  Some of the principles of the path-based method are variations on old themes while others are totally unconventional.

Here are some things they learned:

Don’t just align business and IT strategies – forge them together — Besides having the CIO report to the CEO, Shinsei business managers spend significant amounts of time in learning about IT.  In addition, they focus on understanding “foreseeable business objectives” and the interaction between business and IT groups is iterative and continuous.

Strive for extreme simplicity — Shinsei succeeded by employing the simplest possible technologies.  There were three keys to their simpler approach, limit the number of standards, create simple re-usable solutions and apply modularity to clearly specify user interfaces.

Give (some) power to the people — Many project failures stem from organized resistance to new systems.  When Shinsei rolls out a new system, they start by offering an interface that is similar to the old system – and only after users are comfortable with a new system do they turn off the old screens.  Shinsei also created a system for including feedback and requests from employees, customers, business users and technical users.  Comments have averaged about 100 requests per day which helps Shinsei continually improve systems and processes.

The conclusion is that “businesses must focus on building IT systems that cannot fail to improve…and adopting the path-based approach will provide flexible systems that can change as the business demands and can shift IT from being a simple platform for existing operations to a launchpad for new functions and brand new businesses.”

Imagine what would happen if you marry path-based method of application development with the visualization capabilities of iRise?

The complete article is a worthwhile read and is currently available for free from the Harvard Business Review website.

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