Lesson of ICI's plunging shares

Last week, £400m was wiped off the share value of chemicals giant ICI. Failures in the implementation of a SAP-based supply chain...

Last week, £400m was wiped off the share value of chemicals giant ICI. Failures in the implementation of a SAP-based supply chain management system have emerged as contributory factors - evidence, if any were needed, both of the centrality of IT to business, and of the importance of mapping technology implementations onto new or existing business processes and goals.

ICI's project team played and lost a dangerous game: by neglecting to address their new software's impact upon business processes, it failed to secure employee buy-in. As a result, the supply chain faltered and then haemorrhaged customers.

There are lessons for the NHS in ICI's tale of woe. Richard Granger, director-general of IT in the NHS, has £2.3bn burning a hole in his pocket, but he is basing his plans for spending it on purely technological considerations.

For Granger and the national IT programme, business processes are of concern but, their remit does not extend to marrying up technology choices with the environments in which they must operate. The NHS Modernisation Agency is on hand to deal with the details of business processes and implementation, leaving Granger and his team to concentrate on their very limited role of sourcing software and hardware solutions that they deem useful.

When IT works in isolation from the end-users it supports, project failure is all but inevitable. It is common sense. We wouldn't expect a decorator to choose the colour he paints a house without first clearing it with the owners. Similarly, we should not expect technology roll-outs to flourish without meaningful user consultation, executive-level backing, and robust implementation methodologies. (One such methodology is presented in a new book, Changing Gears, reviewed this week on page 44).

Luckily, for every cautionary tale like ICI's, there is a shining example to follow. ICI should have adopted the enlightened approach taken by Barclays Bank, which has built IT into a multidisciplinary project team in order to ensure compliance with Basel 2, the new banking code for risk management, due to be implemented in 2006. Compliance has massive implications for banks' IT systems, but Barclays appreciated that Basel 2 raises problems that transcend the IT department, and planned accordingly.

If the NHS does not move to a more integrated approach to technological change, a fresh public sector IT disaster will surely follow. With this week's Budget increasing our tax burden, it is in all our interests that this does not happen.
This was last published in April 2003

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