Why Harvard Business Review's view of tech is dangerous
By David Kirkpatrick
(FORTUNE.COM) -- There's nothing like a punchy headline (see above, for instance) to get an article some attention. A recent long piece in the Harvard Business Review shockingly labeled "IT Doesn't Matter" has garnered the magazine more buzz than at any time since the Jack Welch affair. The article has been approvingly cited in the New York Times, analyzed in Wall Street reports, and e-mailed around the world. But without such a dramatic and reckless title I doubt the article would have been much noticed. It's a sloppy mix of ersatz history, conventional wisdom, moderate insight, and unsupportable assertion. And it is dangerously wrong.
Author Nicholas Carr's main point is that information technology is nothing more than the infrastructure of modern business, similar to railroads, electricity, or the internal combustion engine--advances that have become too commonplace for any company to wangle a strategic advantage from them. Once-innovative technology becomes merely a necessary cost. "IT management," writes Carr, "should, frankly, become boring." He thinks today's main risk is not underusing IT but overspending on it.
Carr misunderstands what information technology is. He thinks it's merely a bunch of networks and computers. He notes, properly, that the price of those has plummeted and that companies bought way too much in recent years. He's also right that the hardware infrastructure of business is rapidly becoming commoditized and, even more important, standardized. Computers and networks per se are just infrastructure. However, they are only the boring part of the IT equation.
One of the article's most glaring flaws is its complete disregard for the centrality of software. Any human knowledge or information can be mediated and managed by software. Charles Fitzgerald, Microsoft's general manager for platform strategy, says that Carr doesn't put enough emphasis on this, the "I" in IT. "We have definitely hit an inflection point where suddenly the least expensive technologies are the most powerful ones--like Intel's microprocessors," Fitzgerald says. "But the source of competitive advantage in business is what you do with the information that technology gives you access to. How do you apply that to some particular business problem?" To say IT doesn't matter is tantamount to saying that companies have enough information about their operations, customers, and employees. I have never heard a company make such a claim.
Who cares about the hardware? Not, in general, the experts I contacted about Carr's article. "We never actually needed IT--we only need its functions. Good technology should be as invisible and as cheap as possible," says Joel Kurtzman, a top business strategist at PricewaterhouseCoopers. Paul Strassman, who has spent 42 years as a CIO--at General Foods, Xerox, the Pentagon, and most recently NASA--was more emphatic. "The hardware--the stuff everybody's fascinated with--isn't worth a damn," he says. "It's just disposable. Information technology today is a knowledge-capital issue. It's basically a huge amount of labor and software." Strassman was so distressed by Carr's article that he sent HBR a six-page critique. Says he: "Look at the business powers--most of all Wal-Mart, but also companies like Pfizer or FedEx. They're all waging information warfare." Rob Carter, CIO of FedEx, declared himself "stunned" that anyone could think tech didn't matter. "Everything strategic in the company has IT inputs into it," he says. "I always annoy my team by telling them, 'It's the software, stupid.' "
Carr also assumes wrongly that most companies aggressively use IT everywhere they can. That is just not true. Ralph Szygenda, CIO of GM, wrote a response to HBR in which he says that companies are deploying information systems throughout their operations at only "the fifth-grade level." Take, for example, something as basic as sales-force automation. Many companies have not yet put their entire sales staff on one system, blocking management from gaining an integrated view of the sales cycle. Fewer still are the companies that can effectively interpolate sales data with such critical after-sale information as product or service reliability, customer satisfaction, or repurchase intent. A holistic view of the customer--which ought to be a holy grail for any business--is still shockingly rare. Said one CIO recently: "My company is drowning in data but starved for information."
What worries me most about Carr's article is that it may reinforce managerial complacency. Far too few CEOs routinely think about tech as integrated into everything their companies do. Many executives are still intimidated by technology, which they worry is too complicated for them to understand. With budgets constrained and business lousy, the IT-doesn't-matter argument is likely to fall on eager ears. Yet while IT spending can certainly slow, thinking about how to use it must continue to quicken at any company that wants to survive. IT still matters.