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Sunday, January 14, 2007

IT Does Matter

As Nick Carr recaps his 2003 work –“IT doesn’t matter”, it makes interesting reading but in my view fails to cut much ice. His key theme was that as information technology becomes more powerful and ubiquitous, it is increasingly a shared resource that everyone has access to. He repeats this and claims as a result, it's getting harder and harder to use IT to gain any kind of edge over competitors. The standardization & commodization of IT while increasing its usage across different business makes it difficult to be used in unique ways by business to maintain competitive advantage.

As I see it,standardization and commoditization of a technology don't always mean that innovation stops. Once products become commodities, they can serve as components for further innovation. The automobile, light engineering, home offering industries all were overwhelmed with innovative offerings when standardization become the norm. While desktop PC's, Web servers, databases and scripting languages have become components in larger, more complex systems, these help immensely in creating complex and groundbreaking applications. It can’t be ignored that as these components got more standardized, the opportunities to create innovations have multiplied. Even if Carr's thesis is partly right, new technologies keep floating that are yet to be commoditized and business needs to be pursuing those and the others on the anvil that will help them keep strategically relevant by enabling them to be continually successful. Social media is now invading Inc.500 invading Inc.500 companies ( the traditional laggards in IT investments) with a vengeance. In this competitive world, companies cannot afford to ignore information technology, or relegate it to the back burner.
Lets examine the issue that IT has become commoditized. Generally speaking today, fewer than 50% IT projects manage to meet their budgets and more often than not miss their schedules as well. Ask any service provider - despite the claims of simplification of certain aspects of IT, it's still miles away from the point where setting up a content management or HRMS system is as simple as setting up a household appliance, despite big vendor’s public claims to the contrary. The fact is that each and every IT environment is different( and the range of difference can be very high). The availability of cheap commodity servers, system software and other hardware doesn't mean that IT strategy is any easier to implement and there is nothing to suggest that all users would benefit the same way on IT investments.
The real world understands this better. Almost four years after the publication of Nick Carr’s article, we find that IT investments continue to grow around the world. IDC finds that Worldwide Spending on Information Technology Will Reach $1.48 Trillion by 2010 from the current spending levels of $1.16 trillion on information technology in 2006 and this represents a compound annual growth rate (CAGR) of 6.3% to reach such projected levels in 2010. Dig deeper – we find that the investments are planned across the various segments. Vinnie makes the case for better vendor management. While agreeing with him, I find that more emphasis is definitely needed across enterprises in assessing returns on investments made in IT. As a major block of capital expenses, IT procurement indeed needs the application of modern management models. Have no doubt, the world is hungry for technology and more and more investments and far better returns are sure to happen.

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
"All views expressed are my personal views are not related in any way to my employer"