The History of Digital Intelligence - Part One

Since the emergence of computer-based information technology for use in companies in the 1950s, its impact on firms and their management process has been significant. Some challenges and best practices in adapting it to firms appeared at the very beginning, while others evolved over time. Indeed, many of the most important management practices of today find their root in the 1960s. However, other management practices, embryonic at the beginning, became steadily more important with the passage of time. Best management practices associated with technology today are an interesting amalgam of these new and old lessons. This blog tells the story of IT and management through the lens of what we, at Celeix Digital, are calling this series, the history of Digital Intelligence. 

Emergent Information Technology 

We, at Celeix Digital, wrote an earlier blog called Emerging Trends talking about the trends that are visible today. This section talks about the earlier stages of that process; essentially connecting the dots backwards. When one thinks of the history of applications of information technology, there are many potential beginning points. IBM in the mid 1950s is perhaps the best candidate, as it launched its 700 series and IBM 650 computers that were focused on large financial institutions for back-office transaction processing, making the first significant impact on transforming business operations through the use of computers. These early cases appeared in a 1966 book, ‘Management Information Systems - Text and Cases’ authored by professors John Dearden and Sunil Mithas. They made three broad observations that have come true and stood the test of time… 

— IT didn't matter a lot. Now it really matters to almost every organisation today.  This is a key legacy of sixty years of technology change and application.In the early days, IT was often important and challenging to deal with, but its applications and the way they were managed were not a matter of corporate life or death for most organisations. Under almost any realistic scenario, IT is destined to become even more important and transformational for organisations in the future. 

In the early years, there was a clear separation between those who had technical skills and those who were concerned with user requirements. Now, almost everyone has rudimentary technical skills and are using social media, sending emails, manipulating spreadsheets, preparing word documents, etc. However, these users still rely on technologists for more specialised tasks or templates prepared by them. Additionally, senior management is spending significantly more time today on new application design issues because of their potential impact on the competitiveness of the firm. The tasks of implementation by staff have also radically transformed. 

— Chief Information Officers in the 1960s were fundamental to the building of important IT application portfolios, which at their base contained originally written raw code by the firm’s staff. Today, their Chief Information Officer successors - the Chief Digital Officers are much more supervisors of assemblers of software and deliverers of services (admittedly very challenging roles). 

— Their IT Organisations do much less coding. Internally, the IT organisation used to do all the systems development and programming for the company as well as run its data centre operations. Instead, much of this work is now done by firms that create software, and develop and manage outsourced services. The way one gains access to the tools and staff that enable one to harness technology has changed dramatically. 

As a continuity, in this series (three to five blogs) we are going to explore how IT practice has emerged over the last sixty years and what the new practices and challenges are. This blog is structured around a series of cases. Each case, in its time, was an exemplar of either what IT could or could not do, and how it was managed. These stories, in their totality, embody a series of important messages about the challenges of conceiving and building IT-enabled systems, in terms of what has changed and what has not. The last part (the last blog under the same heading) speculates on the management challenges for the coming decade. 

Harmony Life of Hartford 

The case of Harmony Life of Hartford, written in 1961 by Glenn Overman of the University of Arizona sets the stage for being the earliest record of Digital Intelligence (note - digital intelligence is an intersectional union of business intelligence and digital transformation - the Definitions of Digital Intelligence). The case setting is a large insurance company that had just begun automating many of its transaction processing systems, and was creating a Data Processing (DP) organisation that was large (with hundreds of staff) for its time. 

Overwhelmed with demand for its coding and systems development resources, the Central Data Processing organisations (called by that title in those days) was confronted with a proposal from the sales department, who wanted them to build a software model to enable customers to more clearly understand how to match their future cash flows with appropriate insurance amounts. In doing so, hopefully these customers would buy significantly more insurance. Sales management was very excited about the proposal but was unable to project the potential benefits with any certainty. 

Since it was hard to quantify the potential benefits of this project and Central Data Processing was overloaded, Central Data Processing management did not want to do it. The case highlights a battle between a central IT Organisation and users over priority setting and allocation of limited resources, where the only referee to break the tie is the CEO and the senior user steering committee. 

When you read the case in 2023, you think you have entered a time warp. The technology has changed, but the battle between central standards and cost control, enforced by Central Management Information Systems (MIS), and the need for user-driven, feature-based innovation and learning, as advocated by users, screams out in its familiarity. Using similar nouns and adjectives, the two sides talk right past each other. Senior management still winds up a tiebreaker in those situations (the issue went to the CEO for resolution at Harmony Life, even though it was not an earth-shattering matter). 

This battle has been fought heatedly around different technologies in different organisations over a sixty-year period with varying results (sometimes the user wins, sometimes the CIO wins, and sometimes the CIO gets fired). The tension, however, between the need for standards and controls enforced by a central IT Organisation, with its controlled, central architecture, and the requirement of a fast response to a responsible user organisation, which needs something right away, the benefit of which is hard to pin down, is a timeless classic. General Management is caught in the middle. The technologies may change, but the challenge of balancing these issues lives on. 

In this blog we have looked at the examples of the 50s; the next one will have the examples from the 60s.