While most business leaders equate the Information Technology (IT) department with simply “keeping the lights on,” IT does much more than administer and operate business systems. In fact, with how quickly technology is changing the game in retail, hospitality, healthcare, manufacturing and more, companies that underinvest in IT are in real danger of becoming yesterday’s news.
In May 2003, Harvard Business Review’s Nicholas Carr came out with a stunning article titled, “IT Doesn’t Matter.” In the article, Carr argued that as information technology becomes more prevalent and widely used, the strategic advantage from adopting new technologies has waned.
The theme “IT Doesn’t Matter,” of course, clashed heavily with pundits, consultants and vendors of the day who would hear nothing of this offensive concept. Instead, these constituencies argued that while information technology may quickly commoditize, the real value is not in a specific technology, but how various technologies are stitched together and deployed for business improvement.
Today, most business and technology leaders have accepted that information technologies quickly commoditize and that any advantage implementing the latest and greatest may create only temporary competitive advantage. But to underestimate the value of a highly available, optimized and business supporting IT infrastructure is to do so at your peril!
Take for instance a recent Financial Times column by entrepreneur Luke Johnson. Mr. Johnson is a private equity venture capitalist that regularly invests in ailing companies. After investing in one particular retail outlet, Johnson discovered “the core reason (the company) was in decline: its technology strategy was deeply flawed and it suffered from a huge underinvestment in systems.” In other words, on the surface this company may have looked like a quick and easy fix, but Johnson found out that years of underinvestment in point of sale, networking, data center upkeep, servers and retail applications had left this company in the dust bin.
For this particular retail company, IT didn’t matter, and it showed. The refusal to invest in people, processes and technologies to keep this retailer well stocked and serving customers efficiently was a key contributor to its demise.
Granted, this is just one case study, but Luke Johnson—an investor in multiple companies—sees a disturbing trend when he says, “most non-tech companies do not take technology seriously enough.”
So does IT matter? The answer is self-evident: IT should be treated as an important and critical function in your company. IT does more than just “sweat the details” of making sure systems are available and performing. Whatever your business strategy—improving productivity, cutting costs, discovering new markets, changing your product mix, or expanding sales, IT is the enabler. IT allows business to do things—only better. And companies that fail to understand the significance of a healthy investment in IT will likely be next on Mr. Johnson’s list of companies that need VC help to rise from the dead.
The speed of change—in terms of politics, globalization, technology, and markets is un-relenting. And emerging new concepts such as “the internet of things,” wearables, industrial drones and more are coming online quickly. It’s not enough to simply serve your customer of today well enough; you also need to understand your customer’s needs tomorrow and predict what they’ll be in the next few years.
And that’s not going to happen if you firmly believe that IT doesn’t matter.
