Narendra Aggarwal: What are some of the best practices among companies that use IT strategically?

Assoc Prof Sia: In global companies that see IT as an asset and use it strategically, IT is typically being managed to achieve scale, responsiveness, and innovation. These leading companies often establish shared services. They establish centres of excellence and value managers to maximise the business value of IT. Shared services help to consolidate common IT services and offer them flexibly in a service catalogue with transparent pricing to the users. Centres of excellence pool the IT specialists within the organisation physically or virtually to leverage and share their expertise enterprise wide for process and service innovation. Value managers manage the relationships with the business and play the dual role of consolidating the voices of the field and also representing the corporate IT in deploying or enforcing policies. These units work together under the direction of an overall IT leadership.

Prof Weill: We have just published a book called IT Savvy. As we studied over 350 companies in many countries around the world, we were able to identify a set of companies that we call IT savvy. These companies made IT a strategic asset and followed some common practices around using technology. They outperformed their competitors. Companies that were above average on IT spending and on being IT savvy had a 21 per cent higher profit margin than their competitors in their industry.

This is very good evidence in our MIT studies that being IT savvy really pays off and it's even more advantageous when competitors are significantly less IT savvy than you are.

Prof Soh: I think the economic value probably comes from several areas. The traditional one people always think about is from economies of scale - the efficiencies that IT brings through streamlining of processes. And a growing trend we are seeing is that IT enables consolidation of a lot of the back office in shared service centres such as for accounting and HR and so on, globally. Judicious outsourcing coupled with expert management of vendors also offers the potential for lowering costs and increasing service levels.

Another key area is in helping to generate new revenue streams through new products and services that are IT enabled. In all this, responsiveness to the business is key, and the need to have good governance processes within the organisation, so that the right people are involved in making critical investment and prioritisation decisions for IT and business.

Prof Markus: Shared services means providing a standardised product or service to customers (business units or employees) in various locations throughout an enterprise. The advantages of shared services include greater efficiency, better control, and in many instances, better service quality. If managed poorly, however, shared services can reduce local service quality and responsiveness.

When shared services are provided internally they can deliver value without high levels of process and bureaucracy.

Narendra Aggarwal: Are these best practices applicable to Asian businesses?

Prof Weill: If I was talking to an Asian board of a company, I would say there are a few things they should go after to maximise their profitable growth from a technology point of view. The first is that they have to realize that delegating IT issues to IT organisations is not good enough. What that is going to do is give the IT group the opportunity to take too much risk on the part of the organisation. We need some kind of joint governance and joint accountability for decision making.

There are three critical decisions to be made. The first is how much money you want to spend on technology relative to other assets. The second is where to put that money, how you prioritise. The third is how you hold people accountable and access the value.

One of the things we learnt with IT is that the shorter the time between investing and feedback, the faster you learn and the more value you get. So having quick feedback, post-implementation reviews that are done while the project is still in operation, very fast assessments on whether the investments are paying off - these are the three things I would advise to a senior management team in Asia.

Assoc Prof Sia: Given Asia's diversity, IT management practices in Asian firms are relatively more accommodative. Most IT systems do not just handle one solution but a few possible solutions because of the unique circumstances they face. Typically, that also means that these systems are more loosely integrated as an IT platform in order to accommodate the disparity in infrastructural maturity.

Going back to the example of Olam International, it has a mix of centralised and distributed architecture due to the IT connectivity issue in less developed countries. It expands globally through an IT platform where online, offline and hybrid solutions can coexist. In that sense, you do not see that much of a rigid standardised solution. Their business users in Nigeria can work offline when network connections drop with the knowledge that data will be synchronised and updated when these connections are restored.

Prof Soh: We see many Western MNCs expanding a great deal of effort to streamline their IT systems and management structures which have proliferated over time, as they become more cost competitive and more responsive to global business. Asian firms have some advantages as they build their IT assets. They tend to have less investment in legacy systems and structures, and they have taken away some lessons from the experience of established multinationals. We notice that Asian MNCs tend to take a 'just enough' approach to building up their global IT systems, and that they keep management structures and processes from being burdensome to administer. This lean, pragmatic, adaptive approach appears to characterise much of IT management in the new Asian MNCs that we have examined.

We also note that with the diversity across Asia, the role of the value manager becomes particularly important because he stands at the intersection between the local business units and the enterprise wide IT functions and IT services. It is the job of the value manager to be the voice of the field and help businesses in the field to prioritise and send the correct signals back to centralise supply, applications development and infrastructure services.

It is also their job to mediate centralised policies and systems and help them to be appropriately implemented in the field. This brings us back to the issue of management talent in Asia. When we talked to some very successful MNCs it is clear that one of the key skills that the value manager needs to have is that he has to be a master negotiator.

He has to keep mediating between what central is saying you have to do and what local business needs are. It requires a certain maturity of IT management expertise, ability to understand business processes and figuring how the technology fits in with it. I think that is really where the focus of the next phase of developing human capital needs to be - going beyond technological skills.

Prof Markus: I would like to advise Asian businesses to standardise only as much as they need to. As you know, many Asian countries have low labour costs. For the Asian company trying to manage IT strategically, this means that standardising and centralising IT services somewhere in Asia, for instance India, may ironically mean IT costs elsewhere in Asia such as Indonesia.

Savvy Asian companies do not let this circumstance prevent standardisation and centralisation for high cost Asia countries, but they do permit exceptions, for example, by allowing Indonesia to supply its own IT needs locally.

Prof Weill: In closing, I would say that this is a fabulous time in the history of Asian corporate growth and world economy to take some bold steps to lead companies to be more digitally savvy. I think you are going to see when growth begins again in the world economy, Asian firms are very well placed to do that, and I think they are going to need to scale in terms of costs and profitability. Technology is one proven way to do that but you can't do that overnight. This is something that takes time, takes comfort, takes governance, maturity, it takes an infrastructure.

Start with some strategic experiments today by trying things, look for opportunities to learn with fast feedback is my practical advice to every small to medium company in particular and, for global companies to look for what's different in Asia that they can use to help lead their company's value from an Asian perspective back in the head office.

This article was first published in The Business Times.