Is IT losing its place?

IT's contribution to business is being forgotten as the industry struggles to survive what Gartner calls a "trough of disillusionment".

This stark reality was driven home by Harvard Business Review editor Nicholas Carr who dropped a time bomb recently, claiming IT has had its day.

Advising IT leaders the game is over and it's time to go home, Carr said infrastructure in most enterprises is essentially built out and no longer in an era of innovation.

IT is mainstream, he said, and as accessible as electricity, which means it is no longer a source of competitive differentiation.

Put simply, Carr claims IT has lost its strategic edge in the face of falling prices for solutions that everyone can access, and products with much the same capability, placing enterprises on an even keel.

John Roberts, Gartner's chief of research for the Asia-Pacific, hit back: "The central issue is not technological innovation, as Carr believes, but whether companies can convert IT into business results.

"When you look inside businesses, there are enormous examples of innovation continuing to happen." But the problem he sees now, is a lot of disillusioned managers thinking, 'Well maybe we've done it all'.

Moreover, IT suffers the problem of invisibility once it is applied to a business scenario.

Australian Tourist Commission (ATC) IT and telecommunications director Allan Woods can identify with Carr to a degree, saying, "IT has lost some of its sheen due to its increasing commoditisation."

Using the global downturn in the IT job market as a yardstick, Woods said IT is not the exotic industry it may have been 10 or 15 years ago.

And as the cost of IT solutions and hardware has continued to come down over the years, IT has indeed become a mainstream part of business and thus commoditised, Woods believes.

But he is a firm believer that IT can be used as a strategic tool in business.

The Internet in particular is critical to the ATC's competitive differentiation in overseas markets, in that it depends on its Web site to help attract international travellers to Australia as a preferred tourist spot. Supply chain management and CRM systems will also play a big part in managing ATC's events each year as well as managing its customers and suppliers, Woods said.

"IT in its simplest form can be compared to a resource like electricity or your own finance department. It's how you use it that creates competitive advantage. Or like a courier service - if it's not there any more it makes doing business very hard," he said.

For Monash University, IT has always been a strategic resource, according to the university's executive director of IT services, Alan McMeekin. Without information technology, Monash would not be able to offer quality teaching or an international standard of learning to students in terms of giving them access to and use of the latest software and computer systems.

World-standard education and learning lends the institution competitive advantage, particularly in the overseas student market, McMeekin said.

"What's important is the way you apply IT to the organisation; the strategic application of IT to the business. Even in the university environment, IT is becoming commoditised. We go and buy our computers at the computer shop and plug them in and it's also got the software you need loaded already, so it's very much commoditised in that sense," he said.

Another key [issue] is that Australia earns about $5 billion in export revenues through its international students of which there are about 150,000 here. That $5 billion exceeds Australia's wool and wheat industries, and it's on the increase."

Commenting on whether IT matters to MLC, Michelle Tredinick said "Of course IT matters to us." But the importance of IT to business can get lost around people's definition about what IT is.

"If you think of IT as just a set of units that does a reliable job, then it's like we commoditise ourselves out of the industry.

"But that's not what IT is, and that's not what I do either. What I do is change businesses by using tools around IT and by [maximising] information. Our CEO is the first one to say we run the information servicing the industry. We think financial services is about information technology.

"It's not about the raw unit," she said adding that it's about the question of what we need to do to fundamentally reshape the business.

"IT can accelerate change," Tredinick said.

This is a mindset echoed by Cutter Consortium analyst Tom DeMarco. Speaking with US Computerworld earlier this month, De MArco said: "When we talk about IT, it really is about change. It you want to change your company, you build an IT system to make it possible to make that change. That's why IT is hard. The idea of IT becoming commodotised is as silly as the idea that change is becoming commoditised."

Furthermore, Tredinick argues IT is very much a part of the business cycle. Its value to the business lies in how well IT manages, responds to and delivers to changing business needs. "For one year it might be "How do we harvest and how do we spot the difference in our [IT] cost?

Another year it might be how do we carve out a competitive position in our industry by leapfrogging in terms of a service or product or an offer. But it depends on the business cycle you're in. IT is absolutely a driving force behind change in the business."

Gartner's Roberts believes industry will come out of its current trough of disillusionment and reach a new level of maturity.

Some IT managers continue to question how big the IT budget should be, Roberts said, suggesting it should be big enough to provide value to the business.

"Yet most times in business, or in IT, most enterprises have big and sometimes frighteningly large budgets, but now they're struggling to show value," he said.

He said there is a gap in understanding the value question, stressing: "The value is in business.

"And I think some executives have [got sidetracked] from this, thinking only of the elusive business value of IT. Why it seems elusive is that every time we invest in a new solution, the value actually becomes embedded in [the process], in the way that we do things."

Roberts was vehement that IT has transformed businesses in significant ways in the last few years. Financial institutions over the last decade have been able to cut some 30 per cent of staff from the business, had grown their businesses or expanded into other product areas, and ultimately had made enormous productivity changes, all due to IT.

"But nobody has ever stood up and said, 'I want to actually acknowledge the contribution that IT has made to improving business'. All people are noticing is 'Well, it's costing a lot'. Sometimes they don't seem to understand that it's not all that easy to extract this."

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