This blog discusses the impact of information technology (IT) on businesses and their leaders. As I’ll show in the next post, there has been an enormous increase in the amount of IT used by companies over the past twenty years. Investment in IT has been particularly heavy since the mid 1990s, when both the Web and commercial enterprise software appeared, then spread like wildfire.
The ‘computerization’ of our economy and our business world has caught virtually everyone by surprise; I don’t think anyone really anticipated the levels of innovation and investment we’ve seen over the past twelve years. Since 1994 I’ve had the amazing opportunity to study what happens as companies work to select, adopt, and exploit the technologies available to them.
The leaders of these companies have been operating on much tighter deadlines than academics. They’ve had to act — to make large investments, then organize and execute adoption efforts that can be astonishingly complex. And since the landscape of available technologies keeps changing, they’ve had to do this work again and again.
Most executives and managers don’t have technology-heavy educations or backgrounds, so getting involved with IT means entering unfamiliar terrain. It often feels like hostile terrain. Technologists can appear to speak entirely in jargon and acronyms, and much of the advice and writing about IT seems to be some variant of "This new technology is so powerful and popular that if you don’t obtain it quickly, you’ll be left behind by the competition."
In these circumstances, two approaches to IT are seductive to many business leaders. The first is to delegate responsibility for technology decisions and results to the CIO, the IT department, consultants, a task force, a project manager, and/or technology analysts. The second is to adopt the contrarian position that ‘IT Doesn’t Matter;’ that as Nick Carr neatly summarized in a 2003 Harvard Business Review article, IT is "a cost of doing business that must be paid by all, but provides distinction to none."
Carr’s argument struck a deep chord with many of the executives I’ve worked with and taught over the past couple years. They feel that they were sold a bill of IT goods by many of the advisors they relied on to help them make sense of confusing phenomena like the advent of the Web, and that a lot of the advice they got was just plain wrong (remember B2B exchanges?). And while examples of large-scale IT failures keep coming (From Foxmeyer Drug to Hershey to Nike to Overstock.com), it seems that we IT advocates keep relying on the same small set of (old) case studies — SABRE, Wal-Mart, Dell — to bolster our arguments. Given all this, it’s both tempting and plausible to conclude that IT does, in fact, not matter and so should not be on the radar screens or to-do lists of business leaders. As Bob Metcalfe put it, "Carr’s argument just won’t stay debunked."
In a later post, I’ll share some data, findings, and conclusions from work I’ve been doing with MIT’s Erik Brynjolfsson that will hopefully drive a stake through this argument. But the goals of this blog go well beyond just taking on Nick Carr (who’s very insightful and perceptive, and who I agree with on many points).
This blog has two overlapping aims: to explain to non-technologist business leaders how, where, and why IT is having an large impact, and to articulate their roles in maximizing this impact. In other words, I’ll describe both what IT does for managers, and what managers do for IT.
After more than a decade’s research, one of my two strongest conclusions is that the most important constituency for IT success is the population of managers and executives outside the IT function (I’ll usually refer to this population as a company’s business leaders). For business leaders, delegating responsibility for some IT decisions is, to put it simply, a very bad idea. This blog will concentrate on those decisions.
This viewpoint in no way implies that the IT department or the CIO are unimportant. Their competence, professionalism, and ability to work with business leaders are critical, but as one smart CIO put it when I was talking with her about her company’s ERP effort "I can make this project fail, but I can’t make it succeed." Concentrating on business leaders also doesn’t mean ignoring users. It does mean not placing users at the center of the picture, and assuming that their ‘satisfaction’ is the quantity to be maximized, or that no technology will succeed inside a company without completely satisfied users.
The ‘parameters’ of this blog are:
Technologies that are intended to change how work is done. Business leaders typically have no significant role to play in IT efforts are invisible to end users, such as network upgrades, rationalization of redundant data centers, etc. These efforts are the domain of technologists, and should be left to them.
Technology-consuming industries, not technology-producing ones. Google, Microsoft, Skype, and SAP are fascinating companies and the competitive dynamics of their industries contain many lessons, but they’re not the focus of my work. I’m interested in how IT gets from the marketplace into companies, not how IT gets out of companies and into the marketplace. Of course, all industries are technology consumers, and I’ve studied how high-tech firms like Cisco manage their own IT. And this blog will be valuable to technology producers to the extent that it helps them understand their customers better.
Commercially available applications, rather than ‘roll your own’ systems. Most companies have gotten out of the business of writing their own applications. Instead, they buy commercial applications, then configure, integrate, and deploy them.
Companies all over the world, rather than just in the US. America has the most IT-intensive economy, and the longest period of exposure to most technologies. This does not mean that we’ve seen it all, or had all the good ideas. Some of my most eye-opening field research has taken place at companies such as Japan’s MK Tokyo taxi company, Spain’s Inditex/Zara, and Argentina’s Los Grobo. All of them are brilliant users of IT, and each of them has helped me understand that there probably is a ‘US paradigm’ for how to use IT, and that this paradigm, like any, has its flaws and blindspots. Later posts will explore each of these case studies.
My research’s other overarching conclusion is that IT matters — that it’s having a profound impact not only on productivity but also on many other things that business leaders care deeply about, including capability development, how work is organized and accomplished both within and across companies, and competitive position and advantage. Furthermore, these impacts are not largely ‘played out;’ the period of disruption and turbulence brought on by the Web, Enterprise IT, and other technology developments is not coming to a close. It’s still going on, and will continue into the foreseeable future.
This blog is devoted to describing IT’s impact and business leaders’ roles in maximizing it. I’ll explore these topics using my own research and that of other academics, as well as data, conclusions, and opinions from many other sources. I’ll concentrate on areas where I believe my work sheds new light on existing practices (such as the method used by companies to select new technologies) and theories (such as the ‘electronic markets hypothesis’ — the idea that greater diffusion of IT will lead to greater use of markets, rather than hierarchies, for coordinating work). I’ll also discuss why some new technology developments are particularly important, and should be understood and considered by business leaders.
If you’re a sophisticated technologist and a believer in the power of IT, I hope you’ll find this blog useful. If you’re an IT neophyte or skeptic, I’m even more hopeful that you’ll visit this blog and participate in its community. I’m always eager to hear from people who have opinions, expertise, war stories, etc. I’d prefer that you share them widely by posting them as comments here, but please also feel free to email me.