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6/17/2003
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Other Voices: The Real Impact Of IT Is Just Beginning

The debate about IT's viability is healthy. In fact, it's going to help make IT a central value for years to come.

What's the role of information technology in business today and in the future? How should managers deal with IT in business operations? The dot-com crash and the telecom meltdown have made some analysts and observers prematurely conclude that the IT revolution is over. The glamour may be gone from the technology sector as far as day traders on the Nasdaq are concerned. But the real impact of technology on the shape of business is just beginning.

So the debate is: does IT matter? Has IT reached such a state of commoditization or utility that we can just focus on lowest-cost IT infrastructure? If so, can (and should) senior managers let go of their responsibility to manage it? Has managing IT become a routine, boring job that does not require astute managers who can devise new drivers of competitive advantage and value creation?

It's clear that we are in a major transition in global business operations, and IT is a big part of it. Computing has become faster and cheaper, and we're able to digitize many products in ways that couldn't have been dreamt about a decade ago. We've made significant strides to network not only individuals but also devices and appliances such as the refrigerator and air-conditioning units to the network. And we're able to do so at connection speeds that make the sound of a 300-baud modem trying to connect nostalgia.

It's also clear that the management approach to incorporating and embracing IT is not well understood. The perennial list of questions continues—is it a cost center? Is it a service center? How much should we invest in IT? When should we invest? What's a relevant benchmark? What guidelines do we have to master this technological evolution?

To understand the complexities, challenges, and opportunities posed by IT, it's tempting to look at past technologies such as railroads and electricity and telegraph. We generally accept that those who forget the lessons of history are doomed to repeat them, so we try to look for some lessons, some patterns that parallel the current state of confusion. We see a familiar pattern7mdash;the euphoria, greed, and disappointment. But we also see a build-out period involving massive changes to the infrastructure of telegraph, railways, roadways, and so on.

History is useful, but it's not a textbook of physical laws and rules; past events are never replicated in the present in exactly the same way that makes us feel confident to apply the lessons in exactly the same way. Historical events are infinitely more complex than simple patterns of similarity that we sometimes see. The evolution and impacts of technology are anything but predictable. We celebrated the 30-year anniversary of microchips in 2001 and ask anyone at Intel whether it has been a predictable journey. We are celebrating the 30-year anniversary of Bob Metcalf's famous memo and the history of 3Com does not resemble a smooth ride for the managers or the investors. The evolution of microprocessors and networking has been anything but smooth and predictable.

IT is different from other technologies. IT is more pervasive and more widespread in terms of the business operations than other technologies. Factories, industry townships, and big corporate headquarters no longer define the business infrastructure. The emerging business infrastructure is more like a global network of business processes in different parts of the world, yet controlled and coordinated through powerful software and communication technologies.

The other major difference is that IT enables managers to derive better information and insights to guide decision-making and actions. We are in an era where differential knowledge drives company success, and IT's role in creating and exploiting knowledge is relatively new. Viewed this way, IT is by no means a commodity. It's inextricably connected to the decision-making processes of companies. And intricately linked to how a company wins in the marketplace.

So, where does IT matter?

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