Management Really Needs
from Peter Drucker, Management Challenges for the 21st Century,
His perspective –
1. Too much IT is invested in looking at
operations issues and cost control.
Managers need to look past costs to the “creation of value and wealth.”
2. Past technology improvements have been as productive
or more so. Between 1455 and 1505 the
output of books went from 1200 pages/monk/year to 250,000 pages per
printer/year. Can we point to any
current industry that is 200 times more productive than it was 50 years ago?
Good IT should provide managers with:
- Activity-based costing (includes cost of machine
downtime, cost of waiting for a part, cost of inventory waiting to be
shipped, cost of scrapping a defective part…)
- Cost of entire economic chain (e.g. cost of
production, shipping, service, training…)
- Price-led costing vs cost-led pricing
- Foundation information (cash flow, receivables,
- Productivity information (benchmarking, economic
value-added analysis (profits must be greater than the cost of capital))
- Competence information (measured by unexpected
successes and failures, innovation levels compared to competitors (why do
the others guys have all the new products?))
- Resource allocation Information (review of ROI
and payback period and discounted present value), people performance
(against set and known standards)
- Business intelligence –knowledge about actual
and potential competitors worldwide.
at some point managers need to get out of the office
and talk with customers. There is no
substitute for personal contact.