In May 2003, Harvard Business Review published an article entitled IT Doesn’t Matter by one of its former editors Nicholas Carr. It provoked a swift and powerful response, triggering a heated debate over the role of IT in business. A book on the topic was published a year later, and Carr continues to make numerous appearances and is seen often debating the topic. He recently spoke with Martin Slofstra, editorial director of the IT Business Group.
ITBusiness.ca: Did you ever think the Does IT Matter debate would rage on for this long?
Nicholas Carr: This month is actually the third anniversary of the Harvard Business Review article and the discussion and debate still seems to be going strong. I knew that what I was writing was controversial, and I thought it would stir up a little conversation for a couple of weeks, but there is no way I would have predicted three years later that we would still be talking about it.
ITB: Some of the debate seems to have come out of a fundamental misunderstanding of your premise. Some people seem to think you were saying IT is irrelevant.
NC: There is still some of that but that was particularly true of the first wave of responses when people were responding to the title without having necessarily read the piece. I’m saying IT is essential but has lost most of its power to give a company strategic advantage over its rivals.
ITB: But there is still a lot of talk about competitive advantage and IT. Is it the wrong question to ask just now or did it lose its relevance over time?
NC: I would say both. The IT industry, or the vendor side, has really always used as part of its marketing pitch a suggestion that IT was central to strategy and a way to get an advantage. And you can understand why. By getting across that message, you are telling people to buy your latest products or they are going to fall behind and get creamed competitively. It is a compelling marketing message but essentially that is all it is, a marketing message.
ITB: For CIOs though, who are asked to think in terms of competitive advantage and business strategy, where does this leave them. Do CIOs matter?
NC: Obviously, it depends on how you define the CIO role. The CIO role varies from company to company and it is has been changing over time. But I would argue that the classic, traditional CIO as the person who oversees a company’s information technology and its deployment, that role is becoming less important, and over the long term, it will disappear. Now having said that, we are seeing some CIOs move out of the technology world into more of a consulting role in helping businesses figure out what information they need, when they need it and how to best get that information. That role will remain and grow more important.
ITB: But if I’m a CEO, and I am staffing my senior executive team, do I need that? Do I need a business strategist, or should I not already be getting that from my finance person, my sales/ marketing person and my manufacturing person?
NC: If we are talking about the future when the technological role has faded away, I think in a lot of companies, they won’t need the information specialist. That role will just merge into traditional business functions such as the CFO, or marketing or business unit managers. But when you look at large companies with many different businesses, they often they don’t have anyone who can see, or look at the information requirements of all the businesses. And if you don’t have somebody doing that, the danger is that every individual business will manage information from its own narrow perspective. You will lose a lot of the potential for commonality of needs across the company.
ITB: Beyond Does IT Matter, what is the next big question that an organization should be asking?
NC: The next big question is what IT assets do we have to own and what can we just replace by renting the capabilities over the Internet. The fundamental shift of building it yourself, to maintaining it yourself, to the shared utility model, in the years ahead, a lot of companies will have a lot of opportunities. We don’t need to own this server, this data center or these applications, we can free up a lot of capital by renting these services over the Internet. I think that is the next big transformation that CIOs and CEOs will struggle with.
ITB: Some people would call that outsourcing but is it more than that?
NC: You can define it as outsourcing in the same way you can now buy electricity as outsourcing but I would argue really it is different from what we now know as outsourcing. Outsourcing is taking the existing IT model, which is, we take a lot of equipment and applications we own, and let us just move that to an outside supplier. That is still an inefficient way of managing IT because everything is dedicated and everything is fragmented. With a utility or on-demand model, you suddenly have shared access, shared resource and the only thing you own is the data and the personal configuration of the shared software.
ITB: You obviously pay close attention to the way technology is marketed and now we are hearing it is all about business transformation. Is there a valuable message in that?
NC: I think there is a valuable message in all that, but let’s face it, there are also a lot of vendors or re-engineering consultants who were saying the same thing about ten years ago. It’s good advice to focus on the processes, and go to the technology from there. But you still have to recognize that is a marketing pitch. There are a lot of IT companies that have realized that the technology has become commoditized and there really is no money to be made from things like servers, so they are moving up to a service or consulting role.
ITB: It also seems that this industry has lost its excitement and the buzz is gone. Look at the demise of Comdex. Now it’s all about business cases and return on investment.
NC: For the longest time, there was a belief in Silicon Valley, and elsewhere in the information technology business, that this is an industry that would be forever young, and that the rules that governed the evolution of all the other industries of the Industrial Age somehow did not apply to IT. But what we have found over the last five or six years is that IT looks a lot like any other industry and that it is maturing. A lot of the basic products are commodities, and a lot of the basic production functions are moving offshore, and so, it begins to look more normal and more average. On the other hand, it looks less exciting.
ITB: You still have those who argue that the greatest advances in IT are yet to come. Look at the way Microsoft and Yahoo and Google are slugging it out for control of content on the Internet. What is your take on that?
NC: We are finally getting to the point where the Internet will be a true, universal distribution platform for hardware and software and it will be incredibly disruptive for the industry. Whether it will Google versus Microsoft. SAP versus a service-company, or open source versus closed source, we will see a lot of competitive battles being played out for who is going to make the most money in this industry. For the user, though, it becomes much more cut-and-dry, which is to say: ‘Yes, so these capabilities are going to be available to all of us, because by nature, utility services are available to everyone.’ But that is a very different question from: ‘How do we innovate to do things differently from our competitors?’