Other Voices: The Real Impact Of IT Is Just BeginningOther Voices: The Real Impact Of IT Is Just Beginning

IT matters to companies supplying products and services in the IT sector. The fortunes of technology leaders have fluctuated more than any other sector during the last few years. And the future leader board is by no means guaranteed. Microsoft, Intel, IBM, and Cisco Systems are constantly adjusting their products, revenue models, and business logic. If the last decade is any indication, the next decade will be anything but a linear extrapolation of the past. Pundits observed that IBM was dead and recommended that the only way to save it was to break up the company. Lou Gerstner's vision focused on integration of the different parts and to provide value-added services. Microsoft's platform is by no means secure, and Oracle is striving hard to consolidate its precarious market position.

Beyond the supply side, IT matters to companies using it. Management of IT in large companies is anything but easy and straightforward. It's not as simple as specifying the requirements and expecting vendors to deliver IT in precise ways, dovetailed to the different business requirements. It's because the boundaries of IT and business operations are blurred and only some requirements can be sourced efficiently.

IT is integral to many products. More products are becoming digital. Microprocessors are becoming smaller and cheaper, and we are able to put the power of computing into everyday products and packages. The automobile is a computer on wheels. In a typical car today, the cost of computing is more than the cost of rubber or steel. The cellular phone morphs into a digital camera and a music player and a PDA. Sony's success in the next decade will depend on its ability to master the intricacies of digital technology across its wide array of products.

IT shapes the next-generation business processes. For Wal-Mart, the current driver of competitive advantage is IT-enabled logistics and superior visibility of inventory. Its future driver of advantage is based on enhancing the efficiency and effectiveness of the supply chain using powerful radio-frequency identification tags with precise information throughout the logistics chain. Also, reliable and powerful communication technologies have allowed the possibility of moving many business processes offshore.

IT drives the next level of service delivery. Not just E-commerce companies, but every company has to think through how IT shapes the customer value equation. It's because superior personal service is based on better information and insights supported by powerful IT infrastructure. Suddenly, Apple is in the center of music delivery and service.

The future is not an extrapolation of the past. Managers need to position their stakes for the future. They may be better served by Wayne Gretsky's view on hockey: "I don't skate to where the puck is. I skate to where the puck is going to be." The question is, can we discern where the puck is going to be?

It's dangerous to assume or even imply that senior management should not pay much attention to managing IT because it's a commodity that can be contracted out. Only a part of the IT operations is a commodity. Many IT services can be obtained, but the marketplace is not mature enough. The contracts are complex and ill-specified, relationship management is still an art, and deriving benefits from IT relationships is still fraught with major difficulties.

More importantly, the IT agenda is intricately interwoven with the business agenda. When the IT agenda is separated from business capabilities, we are focused on the utility part of IT that should be managed for low cost. If the debate is about IT for the utility part of the infrastructure, I agree that it's not worth senior management's attention. But if IT is part of the business agenda, then it cannot be seen as irrelevant or marginal. Astute managers constantly shift the commodity part of the IT infrastructure to external vendors while focusing on ways to make IT create advantages in products, processes, and services.

The technology landscape may have changed a lot in the last two decades, but it's premature to conclude that we have reached a state where IT is simply a commodity much like electricity and railroad. If commoditization implies lack of opportunities for innovation in the use of IT, we are mistaken. If commoditization means that we have reached a steady state for IT prices, we are also mistaken. If commoditization means that managing IT can be on autopilot (or, more specifically, a boring task), we are also mistaken.

We're in the very early stages of business impacts of IT. We're at a stage of critical convergence of computing power, connectivity, and bandwidth availability. This convergence creates new possibilities. Just as factories emerged as the basic building blocks for the industrial age, we are in the initial stages of the business infrastructure of the digital age. We have fragments of a digital business infrastructure, but it's not yet coherently knitted together.

I wish I had a crystal ball like some analysts and observers seem to have. All I can say based on my research over the last two decades on how IT shapes business is two things: The role of IT on business operations is likely to be more pervasive and widespread in ways that have little resemblance to the past. And management of IT is intricately connected to business operations and decision-making; thus artificially separating IT management is futile and dysfunctional.

IT matters now, indeed, more than ever before. What we do not know is the precise form of how it plays out in different companies and industries. The management challenge is to embrace the technology revolution, analyze the possibilities, invest in the capabilities, and create new business models that are forward-looking. It's not about prediction but about staking out the building blocks of the future business landscape. After all, as Niels Bohr, the famous physicist (and not Yogi Bera) said: "Prediction is very difficult, especially of the future."

At Boston University School of Management, we have embarked on a new bold vision: to educate a select set of students to be proficient at the intersection of business and IT. Our belief is that the business world needs more managers who are comfortable straddling the domains of business and technology in ways to build the necessary bridges. What we have found lacking today are managers who are truly cross-domain experts, who don't shy away from understanding the technological issues in sufficient ways to examine possible future scenarios of value creation. The problem stems from a historical reliance on separating IT as a technical, specialist field, not as part of the mainstream business agenda. Such a separation is no longer true and, indeed, is counterproductive. We are training these future managers with a fundamental belief that IT matters but in ways different from the past.

The debate about the role of IT should continue because it is healthy. Carl Sagan said it best: "It is the tension between creativity and skepticism that has produced the stunning and unexpected findings of science."

N. Venkat Venkatraman is chairman of the IS Department of the Boston University School of Management. Write to him at [email protected].