the new meaning of quality in the information age

8/8/2019 The New Meaning of Quality in the Information Age

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V. 1

A compan y's software is becoming a critical

source of com petitive advantage and competitive

risk. Yet few manag ers can agree on the key

variables for judging its quality Here's a new

framework for doing just that.

The New Meaningof Quahty in theInformation Age

by C.K. Prahalad an d M.S. Krishnan

I r^ -T ' s SURPRISING HOW BLASE MANY MANAGERS

i Still are about Y2K. The legal problems alone1 associated with the date-change prohlem are so

large and complex tha t some corporations eould facedamages running into the hillions of dollars. TheSecurities and Exehange Commission, reeognizingthe po tential for long-term litigation associated w ith

Y2K, now requires that companies disclose any lia-bility in their lOK statements and may hold directorspersonally responsible for Y2K failures. Beeause oflegal and other costs, some observers predict the Y2Kprohlem will eause the GDP of the United States toshrink by as much as 0.;̂ % in 2000. And the globaldimension of husiness only aggravates the situa tion:as U.S. companies become more dependent on inter-national suppliers, they are subjeet to a bigger mil-lennium risk in the short term.

Yet the most important thing about Y2K isn't itsdirect cost-sever e as it is-b ut the warning it sends

about how a company's software applications arerapidly emerging as its central nervous system. It isa warning that managers ean ignore only at theirown peril. Software is inereasingly determining tbenature of the experiences eustomers, employees,partners, and investors have witb a eompany, itsproducts and services, and its operations. Tbere-fore, positive software-mediated experiences arecritical for retaining customers, motivating em-ployees, collaborating effectively with partners,and communicating with investors. Intranets andelectronie eommerce have upped the ante; these

Internet-based applications are having considerable



QUALITY IN THE INFORMATION AGE

who tells the consumer what to expect; instead, con-sumers also may participate insetting specifications.

And that poses further challenges. Varying expecta-tions make it difficult to pin down specifications. Asthose specifications change, managers must be able to

adjust to new qu ality expectations. That's why compa-nies like Disney and Marriott Hotels focus so stronglyon training employees. They mu st be able to adjust, inreal time, to the ever-shifting specifications of the Dis-ney or Marriott experience. At Marriott, even a break-down in service ean become an op portun ity for endors-ing an image and satisfying customers,- for exam ple, bysending a gift and a note of apology to customers whohave had problems in the hotel, Marriott can create a

favorable view of its overall qua lity.

Quality in the Software IndustryIn software and information products, the concept ofquality usually incorporates both the conformance andservice views of quality. On the one hand, there is a

minimal set of features that must always work. For in-stance, customers won't tolerate errors in tbe analytieoperations in a spreadsheet; they understand this do-main and can be very specific in their expectations. Onthe other hand, when customers have problems usinga software package, they define quality according to

their experience with the technical support center.The critical nature of this aspect of software quality

can't be overemp hasized. As software enters into newfunctional areas that are less clearly understood bycustomers, the demand for support services will onlyincrease.

But the view of quality in software pro ducts has stillanotber dimension. Software users expect a continu-ous stream of novel features: the promise of upgrades;high performance and reliability; ease of installation,use, and maintenance. Consider the "cookies" con-cept in Internet software, which enables a company toidentify its customers and offer them personalizedgreetings and information when those customers enterthe company's Web site. Companies like Amazon.com

mu st have sof tware funct ions tha t suppo rt fuzzyqueries, that enable tbe company to analyze cus tomers'buying patterns, and that suggest new products andpromotions. In setting software quahty standards, it 'simportant to realize that customers develop new usesfor products as novel features are added. Hence contin-uous exper imenta t ion-and the development of newand innovat ive fea tures-play an important role in

shaping consumer perceptions of quahty in software.Indeed, eustomers will tolerate more glitches in soft-ware during the experimental phase.

applications and databases in their informationtechnology infrastructures were built for each indi-vidual business line and are often incompatible.Similarly, a large Japanese consumer electronicscompany found that the consumer data it eollectsare never used because the company doesn't havethe software installed to engage in an ongoing dia-logue with its customers. As one manager in thecompany remarked, "We collect all this data andthen stuff it in a shoe box, never to see it again."

Of course, competitive advantage depends on thenature and sophistication not only of applicationsoftware but also of the rest of a company's infor-mation infrastructure-its data sources, databases,operating systems, and hardware. Wal-Mart pro-vides an ideal example of how an integrated infor-mation infrastructure can successfully affect busi-ness decisions. For example, the integration of theretailer's supply-chain software with its data min-ing and data warehousing applications ensures on-time and efficient delivery of products to stores. Theapplications are driven by information stored in

Wal-Mart's huge commercial databases on the backen d- 50 terabytes at last count. And Wal-Mart isn't

alone in reaping the benefits of a highly evolved in-formation technology infrastructure. DcU, East-man Chemicals, Amazon.com, and the Gap are allusing information technologies to change the rulesof the game. In our work, we see adirect link be-tween companies' IT infrastructures - in particularthe quality of their application software-and thequality and speed of managerial decisions.

One of the main reasons managers pay too littleattention tosoftware isbecause they often don'thave a framework tohelp them make decisionsabout it. For a start, senior line managers have noshared view ofwhat determines quality in soft-ware. General concepts of quality have evolved andhave gradually become more sophisticated. In the1970s, a product-centric, conformance view ofquality emerged; it suggests that products and ser-vices meet clear specifications such as size, weight,color, finish, battery life, ormean time betweenfailures. The idea is that consumers can expect theproduct to perform reliably. But as the service sec-tor grew, many companies had to develop a differ-ent model of quality- one inwhich quality wasjudged according to a company's ability to change




to meet the expectations of a diverse customer base.Most recently, a few high-tech com panies have beenpromoting a tbird approach in which a product'squality is judged according to its ability to supportinnovation through experimentation. (Tbe sidebar"The Evolving Concept of Quality" more fully de-

scribes the different approaches to quality). Today anew view of qua lity - one that synthesizes the con-formance, service, and innovation approaches-isneeded to assess an organization's IT infrastructure

! and software.

The quality of tbe software in an information in-frastructure can be judged by focusing on the user,the technologies the software isdrawn from, and

' what the software

T J . • J T r * U -<- W3S designed to do -

lt IS dlttlCUlt to a lso known as its

pin down qualityspecificationsfor applications

ir r and expectations tor

that cater to ^^̂ p r o d u c t , it t a k e s.. „ into account the pro-

needS ot a file of a user and tbefunc t iona l i ty of aproduct. Every prod-

uc t has a domain;software applicationsare special because

the functions of and expectations for a piece of soft-ware can vary a great deal. Given the importance ofdomains in software, we will begin by identifyingsome basic domain cbaracteristics. Then we willlook at how software users and technology shapethese characteristics. Finally, we will review thequality risks specific to the use and design of soft-ware. Our goal is to help managers determine whatapplication software toinclude intheir portfolio

and the performance standards they can expectfrom it.

Understanding Domains

It's quite easy to grasp the domains of most manufac-tured products. Consider your everyday bicycle. Inthe developed world, bikes are primarily used forleisure activities or for exercising. In emerging coun-tries such as China and India, however, bikes areprimarily used as a means of transportation and asa lightweight freight carrier. While there is somevariance in how the product is used in different parts

of the world, the bicycle's physical and structuralcharacteristics place limits on what can be done

with it. It therefore mak es sense to apply the confor-mance view in setting quality standards for manu-facturing a bicycle.

By contrast, software dom ains can be complicatedbecause users' needs and expectations vary greatlyFor example, it's quite hard to k now precisely how

people will use a software package sucb as Micro-soft Excel or PowerPoint, partly because use of theproduct depends on the sk ill level of the consumer.Because this information is less precise, the soft-ware's dom ain is difficult to define. It may be in-creasingly shaped by factors such as the interactionbetween the customer and the producer, as well asother technology used.

When it comes tosoftware, domains evolvequick ly. Take W inZip, a product originally designedto provide efficient data compression and transmis-sion. Since data transmission requites security, a

host of other features had to be added to the softwareincluding encryption and password functions, andthe ability to handle large files on multiple floppydisks. As a result, tbe end product that eventuallydominated the mark et had m oved a long way fromthe original specifications and functions.

A software application's domain has tbree basiccbaracteristics: specificity, stab ility, and evolvabilityThe more specific the domain, the easier it is formanagers to develop performance measures. Herea view of quality that empbasizes conformance to

specifications is appropriate.The most specific software domains come in thearea of accounting applications, w here the relation-ships hetween accounting transactions can beclearly specified. In principle, there isno reasonwhy a basic general ledger program should mak e amistake. That isnot to say that accounting soft-ware domains are simple. W hen you add to the general ledger program tax rules across countries, ex-change rates, rules for goodwill amortization, andso on, the application can get very com plicated. B uno matter how complex those calculations become

our knowledge about the application can still bereasonably well developed, and so the domain canbe relatively specific.

The second aspect of a software domain-its stability-lets managers clarify aproduct's domainSuppose a company that isused to selling stand-alone products and components tries to develop anorder-management application tosell customizedbundles. B ecause it has little experience with bun-dling multiple com ponents, pricing such a productand developing support services, the company mayfind it hard to design the new application. That be-

comes more complicated when, say, componentsare outsourced from vendors worldwide. But ove




time, experience w itb selling the product will givethe company a more precise view of custom ers' ex-pectations. Domain stability lets managers in-crease the specificity of the domain based on accu-mulated knowledge.

But the changing competitive landscape some-times works against that. Consider a company'sprimary supplier relationships and the applicationsoftware that mediates these interfaces. Supplierrelationships used to be fairly stable. But increas-ingly, the basis for value creation in these relation-ships is changing dramatically. More and moreinformation isbeing exchanged, and each partyis becoming more dependent on the other's infor-mation systems. The volume and frequency of in-teractions with a supplier can affect the nature ofcompany-supplier relationships and the character-istics of software required for managing those inter-faces. That's why the software needed to managesupplier relationships for mass-produced itemssuch as color TVs isdifferent from the softwareneeded to manage relationships between the sup-plier and the m ain contractor in a large power plant.In unstable domains, it doesn't make sense to adopta quality expectation of ioo% conformance forsoftware, because it can never beme t. Rather, man-agers should focus on the speed with wh ich the sys-tem can fix problems and adapt to cbanges.

Which leads to the third feature of software'sdomain-its evolvability, or the flexibility with

which products can change to reflect the accum ula-tion of new knowledge about user needs and expec-tations. For many products and services, domainsare evolving all the time. That is certainly true ofe-commerce and database-oriented applications,where new domains are constantly being devel-oped. In markets where each customer is his ownsegment, there is a significant amount of experi-mentation that is required before managers caneven partially specify bow business should be done.In those situations, discovery of a domain and itsperformance parameters is an ongoing process.

What, for example, is an ideal application interfacefor an electronic storefront on the Internet? Wbatare the right queries to set up in a database that col-lects information from electronic transactions overthe Web?

The bottom line is that a company's informationsystems may have to change frequently as man-agers learn about and adjust to the evolving applica-tion domains. That is obviously true for Internetstart-ups. But it's also true for established compa-nies; as both GM and Ford have discovered, sellingcars on the Web can uncover many opportunities

and problems that weren't fully identified when

they started tbe process. The automakers bave hadto recognize the impact that the Internet has ontheir relations with end users.

Determining Domain Characteristics

The nature of a domain is crucial for determiningan approach to quality. Consequently, the questionarises: What forces influence the domain? In general,two drivers shape a domain's characteristics. First,there is the dialogue that takes place between theapplication software and its end users, whichchanges as customers become more heterogeneousand as companies and customers learn from eacbother. Second, there are changes in the basic tech-nologies that determine the nature of the informa-tion infrastructure and the application software anddatabases that a company needs.

Customer Dialogue. In all companies, managersare involved in an im plicit dialogue with their cus-tomers. Customers provide feedback on quality,prices, service, design, channels, and so on. By ac-cepting or rejecting a company 's products and ser-vices, customers are giving valuable informationto managers. But in the traditional business sys-tem, managers don't have direct access to this infor-ma tion because dealers and distributors act as inter-mediaries. So it is Wal-Mart, not P rocter &. Gamble,that manages the interface w ith custom ers and col-lects the information. Yet these historical patterns

are changing. The Internet, for example, now letscompanies such as P&.G establish direct access tocustom ers. And as those companies do so, they willhave to confront a new real ity-th e fact that in moreand more industries, customers are highly diverse.It was not always this way. In 1980, companies likeAT&.T, in a regulated environm ent, could provide astandard set of services at a predetermined price toall consumers nationwide. Today AT&T has to dealwith significant variance incustomer sophistica-tion, as well as consumers' voracious appetite fornew services. Consequently, the number of AT&T

services changes weekly. The pricing of new ser-vices varies according to the sophistication and thebargaining power of the consumer.

The diversity of customers brings a whole newdimension to tbe discussion of quality in softwareapplications. Most thinking about quality implicitlyassumes that all customers are alike. If that weretrue, the domain could be specific, and therefore aconformance perspective of quality would he ap-propriate for software applications that provide aninterface to customers. But in the real world, cus-tomers differ. It is difficult to pin down specifica-

tions for applications that cater to the needs of a




heterogeneous customer base. Consider Internetsearch engines. They conform to design specifica-tions that are necessary for the search process, butcustomers are often left w ith inadequate or inappro-

pria te information.. f^ Similarly, some Inter-

A SOttWSrt? net storefront appli-cations may be reli-able, but the reality is

, tor

; it must

in ncP

more .̂. tential customers

abort the buying pro-cess on the Internetbecause it is too hard

J ^ • for them to under-Speecl, tor stand and use the fea-

tures in the interface.Inappropriate stan-

dards of quality haveresulted in lost sales.The point here is thata qu ality softwareapplication must do

more than meet tecbnical specifications for speed,for example: it must also be easy and exciting to use.Product developers must account for varying levelsof customer sophistication.

Direct access to customers, and consumer hetero-geneity, suggest that there needs to be a two-waylearning process. To make domains more specific,managers mu st learn about their custom ers' expecta-tions and capahilitics. Equally, customers must leamabout the products and functions that a companyoffers. Accommodating this two-way process hasclear im plications for what managers will requirefrom their companies' information infrastructures.Databases, for example, must be able to handle thenew information about consumers and their prefer-ences that is generated by every transaction.

For their part, customers learn through a wide va-riety of mechanisms. Generally, end users tend to

experiment on the Internet. They may need to betrained to use applications such as automated sales-analysis tools. People often acquire this training byimitating and learning from their peers, which iswhy it is important for an application to have a largeinstalled base. These interactions all shape the char-acteristics of a domain. Two elements are worthy ofnote: First, as managers and customers learn abouteach other, a product's domain becomes more stableand specific. Second, the application must evolvewith the two-way learning process.

Changes in Technology. Technology has perhaps

played tbe greatest role in forcing managers to re-evaluate quality. That's largely because advances in

technology profoundly affect tbe way applicationsoftware is developed and used. It's impossible todiscuss all theways in which technological changehas affected quality, hut four critical dimensionsstand out:

• Longevity of a technology platform. A platform

is the core technology upon which multiple appli-cations are built. Microsoft's Windows operatingsystem, for example, is a platform on which a widevariety of applications can be built. Sun Microsystems' Java is emerging as a competing platformThe longevity of platforms is critical to the qualityof software in an IT infrastructure because tbelonger a platform exists, the more familiar cus-tomers will be witb it and the more applicationswill be built around it. Microsoft's power base, forexample, is tbe public's widespread acceptance ofWindows and the number of applications written

on top of it. There are some disadvantages: a plat-form's longevity and its installed base may reducean industry's capacity for innovation. The impor-tant thing about platforms is that the quality stan-dards for applications developed for an establishedplatform are different from those developed forevolving or new platforms. Newplatforms have toemphasize customer education to increase thespeed of learning. But as customers become morefamiliar with tbose platforms, commonly acceptedstandards will emerge. In the long run, tbat meansusing the conformance view of quality to judge

software.• Time to rollout. Alarge company has to introducapplications and platforms to its employees all thtime. That can take a large amount of time. It cantake as long as two to three years to install an enter-prise resource planning system, for instance, andthe process may require education and training aall levels. What's more, no installation of a complexsystem happens witbout some technical glitchesThat means the quality of software must be judgedat least partly by the ease with which users can btaught and helped when the system fails.• Legacy systems migration. For most establishecompanies, the real challenge is the migration froman old system to a new one. Even as tbey attem pt toreduce the number of legacy systems in missioncritical applications, many large companies wilstill have to live with m ultiple system s. One majoglobal company estimated it would take three yearto reduce its 1,400 legacy systems to just 70 corporate-approved system s. Maintaining user interfacewhile both the legacy and the new systems are operating in various parts of the organization is a majo

challenge. Th e problem is exacerbated w hen a company is trying to combine a traditional busines



QUALITY IN THE INBORMATION AGE

model with a new one. That's one reason why Mer-

rill Lynch, with its extensive broker-based distribu-

tion system, has been so late in introducing on-line

trading. But companies like E*Trade, which have

almost no legacy systems, can move much more

quickly in meeting on-line customers' needs and

expectations.• Evolving technologies. By definition, technologies

evolve. Demand for multimedia capabilities is in-creasing for such applications as teleconferencing,

distance collaboration tools, and user-friendly Web

pages. Audio, image, and video assets are becoming

a major component of databases and the informa-

tion infrastructure of a company. But the technolo-

gies that are required to create, store, and retrieve

audio and video are just evolving. They include data

compression technologies, video streaming, video

logging, and image database technologies. The

rapid evolution of technologies suggests that earlyexperimentation is a critical part of the develop-

ment of new applications. It is difficult, if not fool-

hardy, to make a premature commitment to any

one technology platform. That uncertainty, and the

pace of technology evolution, results in an inev-

itable churn in the way applications are developed

and deployed. Technological change, together with

the disruptive forces of deregulation and globaliza-

tion, is facilitating the emergence of new forms of

competition. That, in turn, affects how we judge

quality. Internet-hased competition, for example,

changes the meaning of prices. Auctions are becom-ing the basis for setting prices for merchandise on-

line, whether hooks, airline tickets, or hotel rooms

are for sale. The information infrastructure and ap-

plication software requirements of a hotel or an air-

line to cope with an auction-oriented pricing strat-

egy arc very different from the requirements of afixed-price regime.

Software Risks

As business continues to expand the role of infor-

mation technology, a review of the collective risk

potential of the information infrastructure be-

comes critical. Traditionally, software risks have

been equated to uncertainties in cost and release

dates for systems being developed. Consequently,

project management approaches-and the software

development process, training, and human resources

practices associated with them-were seen as thebest way to control those uncertainties. Those ap-

proaches are still important, but managers must

recognize the risks inherent in an application's do-

main. In particular, products and systems designed

to foster innovation and the development of new

business models carry a high risk. Software is be-

coming mission critical for most companies. There

can be serious business consequences if a retailer's

supply-chain management system breaks down

during the holiday sales season, or if an electronic-

trading house experience glitches witb its appli-

cation software during peak trading hours. The es-calating risks associated with mission-crit ical

applications warrant a new level of concern about

access to various systems; processes for incorporat-

ing changes and backing up systems,- and protection

against hackers, viruses, and other outside hazards.

The level of security built around databases andapplication software must be carefully monitored.

But the process of re-

ducing risk in the infor- All IT department s

mation infrastructure . .

can create tensions with- natural tenCienCyin the ITorganization. jj ; fo end UD WithThere is a strong desire .. . -̂in the software commu- ^COlieCtlOn Otnity to write software experimentaltbat has as many "bells .. . „and whistles" as possible app l i ca t i ons , liut ato counteract the need to soUware portfoliobe domain specific. Ex- , i • i •

perimenting with bleed- skewed m tlllS Way

ing-edge software has Q^ > e a

been an integral part of ' • lthe progress we have COllipany S riSK.

made in the informationinfrastructure, and software users have a higher tol-

erance for defects than ordinary consumers have for

most manufactured products. But that's no longer

acceptable for applications tbat have become mis-

sion critical. As IT departments push for software

applications that have low levels of domain speci-

ficity, they also push those applications towards

lower levels of quality as measured by conformance

to specifications. The natural tendency is to end up

with a collection of experimental applications. But

an application portfolio skewed in this way can in-

crease a company's risk.

Yet another risk is that most IT organizations

were originally set up to manage an information in-

frastructure designed around a central mainframe.

But now these IT organizations have witnessed atransition to decentralized information infrastruc-

tures, such as client-server architectures, that have

interfaces with intranets and the Internet. These

infrastructures also use more feature-rich programs

that are independent of the underlying systems soft-

ware and hardware platforms. Managing such sys-

tems demands a very different set of organizational

capabilities than most IT departments have.




The sociology of functional managers brings risksas well. Marketing and operations managers con-stantly seek ways to improve their com petitiveness.As a result, they make demands on the IT depart-ment to develop and deploy new applications faster.IT organizations are under constant pressure to get

systems out faster and to work on new and emergingdomains. Indeed, schedule pressure in softwareprojects is one of the main causes of poor quality.A recent study by Carnegie Mellon's Software Engi-neering Institute on the adoption of software-engineering practices cited this quote from a soft-ware manager: "I'd rather have it wrong than have itlate. We can always fix t later."

Setting Quality Expectations

Once managers have identified the cbaracteristics

of tbe application domains in their networks, andthe factors infiuencing them , they can set appropri-ate quality expectations. They must start by shap-ing and reducing the basic sources of variation in thedomain characteristics. The first step is to increasethe sophistication of users in the company throughtraining. As employees become familiar with theway software applications crunch information,there will be a significant reduction in quality prob-lems. Second, managers must insist that their keysuppliers use compatible software systems to mini-mize problems with interfaces. Tbird, managers

must evaluate standardized software packages andsystems such as ERP systems, which attempt tobreak down business systems into predefined mod-ules in such areas as operations, finance, sales, andhuman resources. These systems allow for the con-solidation of multiple data formats and proceduresused in a company. But while the systems may in-crease domain specificity, they can also reduce acompany's ability to differentiate itself. (See thesidebar "Packaged Applications May Not Be the An-swer") Finally, managers can reduce variation insoftware usage in their design of the user interface -

for example, relying on predetermined menus andicons as a way to provide easy, common access toapplications.

Of course, despite managers' best efforts to con-trol it, variance in domain characteristics acrosssoftware applications will persist. But managerscan limit the risks that variance brings by makingexplicit statements to clarify expectations in thefollowing two areas:

Level of user and developer knowledge. For infor-mation infrastructures to be robust, knowledge

about applications and tbeir domains must beclearly articulated throughout the company. Soft-

ware developers and users must share their knowl-edge as much as possible.

Clarity in performance parameters. A furthermeasure of the robustness of an application is theway it handles deviations from the norm. Clearlyarticulated metrics for how the software should

perform under varying conditions is a prerequisitefor achieving a high level of quality. Clarity in per-formance parameters removes doubt about expec-tations for quality.

The Infrastructure Portfolio

It is important for managers to recognize that thequality choices they make are not part of an either-or decision. Because of the wide variation in do-

iged ApplicationsNot Be the Answeray

In many companies plagued by m ultiple incompatiblesoftware systems, chief information officers and se-nior managers have turned in trustration lo standard,packaged systems from vendors such as SAP, Baan.or PeopIeSoft. In troducin g these systems has almostinvariably resulted in short-term efficiency gains,A standard system with a customized front end canbe a big advantage because it can improve the consis-tency of data and business processes. But standard

packages don't always fit the business m odel. Con-sider the case of California-based Holman Cem ent,one of the largest cement m anufacturers in the UnitedStates. The company evaluated SAP R/3, a standard-ized enterprise resource planning system, three timesand decided not to use it. Holman found that R/3,which was developed to manage discrete manufactur-ing processes, wasn t suitable for continuous ones.Similarly, the CEO of Allied Waste recently remarkedin a Wall StreetJournal article, "We're unpluggingSAP's software. We will take a charge for it. They ex-pect you to change your business to go with the waythe software works,"

More generally, packaged software limits a com-pany's ability to innovate and compete. For companieslike Dell, which uses its supply chain to differentiateitself from rivals, it makes more sense to build customsystems to manage the sale and delivery of its products.

Software is a primary source of competitiveadvantage. In industries such as the m edia, tele-communications, and financial services, companiesmust innovate to survive. In those industries, soft-ware applications are transforming en tire businessmodels and stimu lating the discovery of new prod -ucts and market.s. Standardizing on a single vendor'ssystem could be inappropriate.




main characteristics, as well as in the factors influ-encing them, there can be opportunit ies within a

company to develop a portfolio of applications tha treflect the three traditional c ategories of quality wehave described. First, there arc those systems and

applicat ions that should be primari ly conformanceoriented because their domains are stahle and spe-cif ic. Next come those systems and applicat ionswhose domains are dynamic and whose customershave different skills and ex pectations. H ere, a service-oriented view of quality mu st apply, and the emp ha-sis will he on support and learning. Finally comethose systems and applicat ions whose dom ains areevolving; in this last case, qual i ty must be aboutfaci l i ta t ing innovat ion and exper imenta t i on . By

analyzing their application portfolios in this way.

senior managers can gain signif icant knowledgenot only about their technical assets and the qual-ity standards needed to judge them but also abouthow wel l the organ iza t i on can suppor t va r iousappl icat ions . This por t fol io approach to qual i tydoesn't have to be confined to a company's infor-

mation infrastructure. Indeed,it

can often be ex-tended to the organization's full range of productsand services (See the s idebar " Converg ing Ap-

proaches to Quali ty") .

But there is tension at the heart of this portfolio,which can be described best in the exhibit "Appli-cat ion Portfol io Dynamics." Competi t ive real i t iesand the t ransformat ion of businesses are forcingcompanies to experiment more and to create new

business m odels. That leads to higher required levels

Con verg ing Approaches t o C^itality

W e have argued in this article thata new view of quality is needed toassess an organization's IT infra-structure. But the p erspective ofquality developed in this pa pe r-a synthesis of conformance, adapt-ability, and in novation -can Vie ap-plied beyond the information infra-structure; then otit)n can also be

applied to the goods and services acompany produces. That's because,as products and services incorporateembedded software, they take onthe characteristics of th e software.Therefore, a new definition of qual-ity must b e applied to those prod-ucts. Consider the dashboard of acar. Nowadays it has features sucha s navigation controls, which havea significant software c omp onent.Today's dashboards aren't a s self-

explanatory a s they used to b e when

they were composed of nothingmore than simple mechanicalgauges that indicated speed, o i l . andgas levels. A il the bells and w histlesin today's cars are forcing automak-ers to assume a higher variance insophistication among users. Tomeet traditional conformance stan-dards of quality, automakers mustincorporate ada ptability and evenexperimentation standards in theirjudgm ents of quality.

But while producers of consum ergoods and services are catering toa greater variance in the sophistica-tion of their customers (tradition-ally treated as homo geneous users),software developers are moving inthe opposite direction. They m ustincreasingly deal with relatively un-sophisticated customers a s they

reach out to wider audiences. Thatis why the software they are design-ing is simpler and more constrained(for example, standa rdizing pull-

Automobile Dashboard

Simple user controls

• Mechanical gaugei

• S imple mot ion,environmental, andentertainment controls

Complex software-mediated

controls

• Electronic gauges

• More sophisticatedenvironmental andentertainment controls

• Electronic navigationalcontrols

• External communicationinterface

V i e w o f Q u a l it y

High

variance

in user

behavior

down m enus across a group of a p -

plications). A s this happens, soft-ware developers must introduceconformance quality standardsrather than assume that adaptabil-ity and experimen tation are theonly important measures of perfor-mance. Both automakers and soft-ware designers are beginning to

converge at some m idpoint relativeto their assum ptions about quality.This convergence is shown in thefigure below.

Decision-Support Software

Constrained user interface

• Access restrictedthrough icons

• Access operating systemsand applications only

through menus

Open-ended interface

• Operating systemcommand prompts

' Com mand-line interfaceto database and applications

• Customized menus



QUALITY IN THE INFO RM ATIO N &)

Application Portfolio Dynamics

Management'sneed to innovate

applications that supportinnovation and experimentation

(high variance)

applications that conform

to q uality specifications(low variance)

Management'sneed for systemreliability

of evolvability and experimentation in product do-mains. Adaptation and innovation are thus becom-ing key elements for judging quality. At the same

time, the mission-critical nature of many of theapplications is driving managers to seek domainspecificity and thus avoid system glitches. Man-agers are increasingly preoccupied with reducingrisk by making sure products conform to specifica-tions. Because of both considerations, the portfolioof applications in the IT infrastructure of compa-nies during turbu lent times is in a state of constantchurn. M anagers must learn to control and respondto this rhythm of change. As an application's do-main characteristics shift from high variance (ex-perimental) to low variance (conformance), man-

agers must take care to reevaluate the qualityapproach applied to that software application. Inparticular, they must be sensitive to controlling thenumber of experimental applications in their port-folio at any time.

Additionally, before the full-scale adoption of anapplication, carefully devised trial launches shouldbe conducted to gather information about its likelyeffects on the business. One major multinationalcompany globally imposed a new application on itssales force before employees were ready. The salesforce was a heterogeneous bunch and did not share

the same information needs. Nor did they wantall the steps in the sales process to be automated

and standardized. A triawould have alerted seniomanagement to the different needs of the individual members of thesales force, thereby avert

ing the problems thaarose.

It is critical that decisions about changes tthe application portfoliarc not left to the CIO anthe information technology department a loneThe IT staff may lackthe knowledge that frontline managers have abouthe actual and potentia

domains of a company'software applications. Sit is crucial that seniofrontline managers combine their domain expertise with the technicaknowledge that the ITdepartment brings to th

table. Only in this way can the who le company develop a clear understanding of the sources and thquality of knowledge within a business, as well aobtain an understanding of the available technolo

gies. Of course, there is nothing new about the neeto involve senior management in quality discussions,- senior line managers have been an integrapart of most successful manufacturing quality initiatives. But the idea is often forgotten in softwardevelopment.

In all businesses-from a relatively slow-movinbusiness such as cement manufacturing to rapidlchanging businesses such as financial servic es- thinformation infrastructure has become critical. In

deed, some businesses, such as on-line share trading, simply cannot exist w ithout a high-quality information infrastructure. As we move into the newmillennium, we may take a lead from CharleDickens and describe the competitive environm enas representing the best of times and the worst otimes. Turbulence creates major opportunities, buit also represents major risks for those who donchange. In such an environment, organizationmu st learn to react fast and make decisions in a dcentralized mode. A high-quality information infrastructure lies at the heart of this capability.

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the new meaning of quality in the information age

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