MGT 505 Module 1 The IT Environment and the Manager's Role Example

Utility or Capability? A Non-Technical Manager Takes Charge of IT at a Tile and Flooring Distributor

Student Name

Master of Business Administration, Aspen University

MGT 505: Managing in an Age of Information Technology Change

Instructor Name

Month Day, Year

Utility or Capability? A Non-Technical Manager Takes Charge of IT at a Tile and Flooring Distributor

Bay Tile Supply, a composite family-owned distributor in Mobile, Alabama, sells ceramic and porcelain tile, natural stone and luxury vinyl flooring to contractors and builders from four branches along the Gulf Coast, with about $64 million in sales. Its six-person IT department runs the order and inventory system, warehouse scanners, email, accounting software, the network across branches and a web portal where contractors check stock and place orders. Last month, the IT manager of fifteen years resigned. The owner assigned the department to the vice president of operations, who has run warehouses for two decades but has never managed technology. She has asked how to think about her new role.

Is IT Still Strategic?

Carr (2003) argued that information technology had followed the path of earlier infrastructure such as railroads and electricity: once scarce and a source of advantage, it had become widely available and standardized, a commodity. When every competitor can buy the same systems, IT stops differentiating and becomes a cost and a risk. He advised companies to spend less, follow rather than lead in adopting new technology and focus on vulnerabilities such as outages and security. For many of Bay Tile's systems, his argument fits well: email and accounting software are the same as competitors use.

Where IT Pays Off

Brynjolfsson and Hitt (2000) reviewed evidence on IT and productivity and concluded that IT's largest benefits come when it is combined with complementary investments in new work practices, decentralized decisions, training and redesigned processes. Firms that bought computers without changing how they worked gained little; firms that reorganized around them gained much more, though the organizational costs were large and often invisible. Bharadwaj (2000) found that firms recognized for strong IT capability, combining infrastructure, skilled IT staff and IT-enabled intangibles such as customer knowledge, outperformed matched peers on profit and cost measures. Both studies suggest that some IT can still matter, but only when it is tied to how the business works.

Utility or Capability

What the Department Does Today

Interviews with the six IT staff showed how their time is spent. About 70% goes to keeping utilities running: resetting passwords, fixing printers, patching servers and repairing scanner connections. About 20% goes to small requests from branches. Less than 10% goes to the portal and inventory reporting, the systems most likely to matter to customers. The departing manager had wanted to change this balance but never had the authority to outsource routine work. The department's time is spent almost exactly opposite to where the research suggests value lies.

Risks the Manager Must Own

Carr's advice to focus on vulnerabilities applies directly. Bay Tile has no tested backup of its order system, and a ransomware attack on a competitor last year shut that company down for two weeks. The manager need not understand encryption, but she must insist on tested backups, multifactor sign-in and a recovery plan, and must review them as she would review safety in the warehouses.

What the Portal Could Become

Contractors increasingly plan jobs at night and on weekends. The portal shows stock but cannot reserve material for a job, suggest matching trim or show delivery times. Sales staff still take most orders by phone. Following Brynjolfsson and Hitt, improving the portal will pay off only if sales work changes too: salespeople would spend less time taking routine orders and more time on large projects, using portal data to anticipate needs.

Spending the Savings

Outsourcing utilities will cost roughly the same as the staff time now spent on them, but it will free three of the six IT staff to work on the portal and inventory reporting. No positions will be cut; the people who know the business best will move to the work where that knowledge matters most.

The Manager's Role

A non-technical manager cannot judge code, but she can make the decisions that matter most: which systems are utilities and which are capabilities, how much to spend on each, which risks are unacceptable and what business results each investment must produce. She should rely on a technical lead for how things are built and on service providers for utilities, while keeping ownership of priorities and results.

Questions a Non-Technical Manager Can Ask

The vice president can manage IT well by asking the right questions. For any proposed project: what business result will it change, who in the business owns that result and what must change in how people work for it to pay off? For any system: is this a utility or a capability, and are we spending accordingly? For any risk: what happens if this system is down for a week, and when did we last test the answer? These questions require judgment about the business, which she has, rather than technical knowledge, which she can hire.

Recommendations

Bay Tile should move email, accounting support and network management to established service providers under contracts with clear service levels, reducing the in-house team's routine work. It should hire an IT lead whose main job is improving the portal and inventory data with the sales and warehouse managers. And the vice president should hold a monthly review of IT priorities with the owner and branch managers, so technology decisions follow business needs.

Measures

The vice president will track system uptime and security test results for utilities, the share of contractor orders placed through the portal, order accuracy and the share of IT staff time spent on capability projects, aiming to move it from under 10% to 40% within a year.

Conclusion

Carr's argument fits much of Bay Tile's technology, which should be run cheaply and safely. Brynjolfsson and Hitt's and Bharadwaj's research shows that the portal and inventory data can still create advantage if the company changes how it sells. The manager's role is to make that distinction and to tie each investment to how the business works.

References

Bharadwaj, A. S. (2000). A resource-based perspective on information technology capability and firm performance: An empirical investigation. MIS Quarterly, 24(1), 169-196. https://doi.org/10.2307/3250983

Brynjolfsson, E., & Hitt, L. M. (2000). Beyond computation: Information technology, organizational transformation and business performance. Journal of Economic Perspectives, 14(4), 23-48. https://doi.org/10.1257/jep.14.4.23

Carr, N. G. (2003). IT doesn't matter. Harvard Business Review, 81(5), 41-49.