Steven Lohr, writing in the New York Times (republished in the International Herald Tribune), discusses the wider impact on the technology industry:
The industry, according to IBMs Irving Wladawsky-Berger, a strategy executive at International Business Machines Corp., has entered “the post-technology era.” It is not that technology itself no longer matters, he said; but steady advances in chips, disk storage and software mean that the focus is no longer on the technology itself – with its arcane language of processing speeds and gigabytes – but on what people and companies can do with it.
As a result, industry executives and analysts say, the balance of power is shifting away from technology suppliers and toward their corporate customers. At the same time, the use of lower-cost building blocks of computer hardware and software is spreading, making it easier for companies and individuals to share data and work together using industry standards rather than remain dependent on one or two key suppliers.
These trends, they say, point to increased pressure on prices and profits for most technology companies, a good deal for corporate customers and a very tricky time for investors.
Most corporate executives say there is a lot they can do now with technology to give themselves an edge. Glen Salow, chief information officer of American Express Co., sees the recent trends in the industry as working to his advantage.
First, he said, the hard times in the technology business have increasingly meant that big corporate customers hold the upper hand in their dealings with suppliers. That shift, Salow said, has given him not only more bargaining power on price but also more influence in the development of products and services.
With their new power, customers are also pressing for greater flexibility in how they buy computing resources, including paying only for as much product as they use, as if they were buying electricity.
The widespread use of software standards, Salow said, enables the thousands of internal programmers at American Express to build applications almost as if snapping together Lego blocks, reducing the amount of code that has to be written by hand. A result, he said, is that the software for, say, a new credit card offering or a fraud-detection feature can be built and put in use in about two weeks; five years ago, this might have taken six months.
“It all frees you up to take more gambles because each risk is not so costly and you can move a lot faster,” Salow said.
The push toward utility computing, according to Wladawsky-Berger of IBM, fits neatly into his concept of a post-technology era.
“In the last few years,” he said, “the underlying components have become so powerful, reliable and inexpensive that you don’t have to worry so much about the underlying engine, and you can move up to higher-level concerns.”
IT and Business Results
The central issue is not technological innovation, as Carr believes, but whether firms can convert IT investments into business results. Innovation alone has never made firms successful. Carr concedes the point when he observes that enterprises investing the most in IT don’t turn in the best performances (we’ve known this for years). Companies that use IT to create business value have integrated business and technology leadership, management discipline, sound processes, and a focus on making the enterprise more effective.
But Carr is also wrong when he contends that IT innovation is winding down. Innovation through electronically enabled services, processes and products has only just begun, and CIOs still need to lead the enterprise forward with risk-managed innovation. Carr goes wrong by equating IT with hardware and networks; rather, the essence of IT is information. Successful firms will use information and IT intelligently and in new ways to solve business problems and create customer value. IT will increase the speed, scale and cost-effectiveness of doing business. So if you want to gain a competitive advantage from IT, focus on two things: first, what the computer conveys and processes the information on customers, suppliers and processes that remains underused and poorly managed and second, better governance between the business and IT sides. With this focus, you can assess IT risks well, and you can execute on good IT investments, whether innovative or otherwise.
Manage costs and risks carefully.
Integrate business and technology planning and execution.
Design IT governance so that business and technology executives share critical decisions and accountabilities.
Ensure transparency about who has the power to make decisions and who has accountability.
Reinforce the importance of collaborative behavior.
Continue building on IT-enabled productivity improvements.
Direct new IT investments toward pre-sale, selling and other business processes largely untouched by IT so far.
Tomorrow: Leslie Walker and Dan Faber
TECH TALK IT’s Future+T