The spectre of flawed IT ought to scare us all

It is only when a system suffers a failure that the techies come into their own

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I am worried that most of my companies are not tech-savvy enough. Despite our bias towards sectors such as hospitality, technology needs to be front and centre in our thinking. From mobile meal ordering to digital menus to social media wizardry, the eating experience is being reinvented by technology. In the years ahead, any business that fails in its IT strategy will surely go broke.

A few years ago I backed an ailing retail chain with the hope of turning it round. After I invested, I discovered the core reason it was in decline: its technology strategy was deeply flawed and it suffered from a huge under-investment in systems. It had not built its own ecommerce platform. It totally lacked any form of digital marketing presence. Its electronic point of sale systems were useless; its stock-keeping and logistics software and hardware were redundant; its management accounting was in disarray. Unsurprisingly my investment was a write-off.

In my experience many founders and chief executives come from a marketing background. Their ability to sell and motivate provides them with the tools and confidence to lead a business. The other principal source of corporate leaders is finance. Their familiarity with the numbers gives them a commanding position on a board which frequently translates into the top job. Usually the finance directors look after IT by default. Commonly chief technology officers aren’t even directors.

Still today too few senior managers possess technology qualifications or experience. And in 2013, this is a profound weakness in many boardrooms. It means most non-tech companies do not take technology seriously enough.

I saw this phenomenon close up when I was in the broadcasting industry. Entertainment executives dominated: but almost none of them displayed any interest or understanding of the power and potential of technology. And so online, satellite and computer companies have progressively eaten their markets: the TV sector has been left in the dust, struggling to keep up with younger generations of consumers who are digital natives.

Why is it that chief information officers almost never become the big boss? There is an in-joke among techies – CIO stands for Career Is Over. Often technologists are clever but poor at office politics; perhaps they are better at making machines function well than inspiring people.

Moreover, many senior managers fear the tech specialist. As Machiavelli, whose book The Prince is currently enjoying its 500th anniversary, said: “The reformer has enemies in all who profit by the old order, and only lukewarm defenders in all those who would profit by the new order.” In many companies techies are seen as geeks with a narrow focus, rather than key players in charge of perhaps the most vital engine of all. Just try operating any business when it suffers an IT crash.

Outsourcing IT is another factor which has harmed recruitment. Sending tech jobs overseas means the industry is not training and promoting homegrown talent. The underwhelming tech culture in UK business means too few study computer sciences, so the skill base is insufficient for the commercial world’s needs. Business, universities and schools here must convince young people that working with computers leads to exciting, lucrative and highly regarded career options.

One of the few CIOs to end up running a large corporate is Phil Clarke, the boss of Tesco. He is the man who astutely moved into the restaurant sector earlier this year by buying Giraffe from us. I hope it will prove a successful initiative. Tesco is a company that harnessed technology – in particular customer loyalty cards – to become market leader among British supermarket chains. And after a dozen years or so running IT, logistics and then the international business, Mr Clarke took over the whole shooting match.

Whether it is production, the supply chain, digital marketing, research and development, customer insight, personnel hiring or product and profit analysis, the future is about smart machines – and executives who know how to harness their power. Automation, big data and real in-house expertise are massive themes for every entrepreneur in the years ahead. I vow that in 2014 I will become a true tech convert – after all, better late than never.

Twitter: @LukeJohnsonRCP

The writer is chairman of Risk Capital Partners, a private equity firm, and The Centre for Entrepreneurs

Letter in response to this column:

I’ve banished the IT spectre / From Mr John H Stephen

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