Do you, as CEO or CIO, place more emphasis on IT efficiency or IT effectiveness for your organization? Or do you concentrate on both of these virtues? How do you measure each of them? Which of these two distinct measures makes a greater contribution to corporate success? Is there a method for measuring the impact of IT on corporate success amid the growing euphoria over paperless offices, fully automated manufacturing, and virtual enterprises based on gigabit Ethernets and component object models? What is the reality of IT usage in various companies? Can a framework of ground rules be evolved for superior IT performance?

The authors address these questions, with the help of a team of McKinsey consultants and staff from the Institute of Production Engineering and Machine Tools at Darmstadt University of Technology, focusing on the manufacturing industry. Based on a 15-month survey of a hundred manufacturing companies, including automotive, mechanical, component, electronic, and process industries, located in Europe (including Germany), the United States, and Asia, the authors have concluded that IT effectiveness makes a much greater contribution to corporate success than IT efficiency. Leveraging both virtues simultaneously is, of course, the best strategy of all. However, as the study reveals, only around one-fourth of the surveyed companies demonstrated both above-average IT efficiency and above-average IT effectiveness, and were thus deemed “IT stars.”

A significant contribution of the authors is the development of an empirical method for measuring IT effectiveness, used for analysis of the surveyed companies--rather than just relying on intuition for rating IT effectiveness. According to them, a metric based on functionality, availability, and utilization can be used to quantify the IT effectiveness of specific business processes, such as product development, marketing, sales, and order processing. The core of this survey is its crystallization of seven rules for successful IT management in manufacturing, as follows:

• make IT a priority in product development;

• integrate IT into marketing, sales and service;

• use IT selectively to integrate order processing across the company;

• shift the focus of IT in administration to business planning and management development;

• make IT a top management affair;

• create a customer-oriented IT service network; and

• introduce integrated standard software on a fast-follower basis--but redesign the business first.

In four parts, the book describes the above seven rules for superior IT performance. The first part, in the style of an executive brief, is followed by parts 2 and 3, where the seven rules derived from the study are discussed. Part 4 is the bonus for readers. In 20 pages, it projects the future of IT in terms of new IT developments, applications, and managerial challenges. It should prove to be stress-free reading for CEOs, at whom the book is best targeted, and CIOs, who are its next best audience. Though the authors have also addressed the contents to other “executives and users from departments and functions who wish to learn more,” to me it seems that CEOs and CIOs would gain directly from it for their organization’s IT performance, while for others it may provide information on the benefits of IT.

Apart from its main content, the book’s presentation is its key strength. The scope of the survey and the methodology for measuring IT performance appear separately as brief appendices. A glossary of key terms and an index follow. The book’s limitation, if any, arises solely from the scope and nature of the survey. The composition of the surveyed domain is heavily biased in favor of the developed world; thus, the results cannot be considered representative of companies in newly developing countries. Also, because the study is limited to the manufacturing sector, top managers from service industries will have to be satisfied with gleaning the general theme of IT effectiveness rather than being able to use the seven rules empirically. Also, perhaps because of the nature of the survey itself, the text is devoid of references. Thus, while the report is an easy read for managers, it will not please the academic community.

In a nutshell, this book is a must-read for top managers in manufacturing organizations. Perhaps an equally smart Do IT guide by the McKinsey team--geared for the service industry and based on a more representative geographical domain--would benefit a much larger audience.