It’s hard to believe that CIOs were so anxious to get access to the new technology that they didn’t completely evaluate its value to the company. The statement that jumped out at me the most is when the CIO Victor was asked why he wanted the new system, he was unsure as to why his business needed the new 100 million dollar ERP system, but felt they had to have it. The attitude Victor had towards the investment was described as Irrational Exuberance. Even though it was 1990 when the IT spending was accelerating, I feel that Irrational Exuberance still exist in businesses today.
I feel that the most interesting fact is that when a company invests in technology and the technology has bugs or goes wrong, they buy even more technology to fix the broken technology. The addition of new technology only adds to the cost of technology increasing the complexity. I think that the complexity of new technology also increases because many companies such as airlines, insurance companies and banks still have mainframe computers. Many software programs are not made to be compatible with very old outdated technology, which causes the systems to fail when attempting to integrate old technology with new technology.
IT software grew from 28% to 45%, which dominated capital spending from 1990 to 2000. Sometimes its hard to track IT spending in relation to the industry purchasing the software because the amount of planning is not evident. In comparison to today, I feel that the IT spending has greatly changed, because as technology advances the price for technology is cheaper, especially for the hardware, while offering good performance. The fact that companies are able to view past mistakes made by previous companies in relation to spending, benefits, and planning, makes me wonder why companies are still making the same mistakes that were made in the during the software decade.
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I wonder where Victor is today, but he is probably not CIO anymore with that irresponsible attitude. I bet one reason for his “irrational exuberance” was his competitor had the 100 million dollar ERP system. As this chapter points out, Business Week and others printed success stories of companies that adopted new technologies without waiting for these successes to actually happen. Therefore, you would think Victor would evaluate value and analyze risks, but he had to have it anyways. To me, the new technology invested in by a competitor should be treated as a want and not a need as Victor had. However, as you said, exuberance definitely remains in businesses today.
Also, experience at my job makes me agree with what you said about companies buying additional technology to fix the current one. I work for a restaurant that opened a few months ago, and when they trained us on inputting orders to send to the kitchen, some orders were never actually sent. So, they hired an IT consultant from Kentucky to customize the current system and paid for his flight and hotel. His customizations failed to completely solve the problem and only added complexities. Management had to then trash the current system, start from scratch, and postpone the grand opening, which significantly added to overall costs. So, I agree with you that despite examples from the past, companies often make the same mistakes.
I think it's crazy that it seems these "researchers" don't do their homework to the full extent. If there have been companies that have failed in relation to technologial implementations, it seems like a no brainer that those companies should be apart of the first beginning of research. I dont see how companies can spend out so much on a system that hasn't been fully evaluated or tested. When it all boils down, companies just want to make sure they own the same technology as the competitor and based on the chapter, at any cost.
I also think that it is unbelievable for researchers not to do their homework to the full extent. If this kind of situation happened, how come the companies could implement the new system successfully? If researcher did their homework, the companies might not spend so much money implementing the systems which had not been evaluated or tested.
I personally think that the companies who failed to do their homework properly and successfully implemented a new ERP system accomplished it by the luck of the draw.
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