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Does IT matter? CEOs and CIOs sound off

Executives respond to criticism of Harvard Business Review

By David Kirkpatrick
FORTUNE.COM


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(FORTUNE.COM) -- The great thing about being an online journalist is the instant feedback. And when I took a strong stand last week online and in FORTUNE magazine criticizing the Harvard Business Review's recent article entitled "IT Doesn't Matter," many of you took to the glorious modern medium of e-mail.

Gratifyingly, the majority seemed to agree that it's crazy to say, as the article does, that IT is no longer a source of strategic advantage for companies. I got notes from CIOs, from software executives, and from ordinary everyday businesspeople. "Couldn't agree with you more," wrote the head of one big technology research firm.

Before I go further, I should note that after I'd finished writing my original column I got back a response to questions I'd e-mailed Michael Dell. He calls the thesis of the HBR piece "generally consistent with our story." He likes the article's focus on the standardization and commoditization of IT, the way it notes that IT infrastructure ought not be proprietary or cost a lot, and its point that the technology companies that win will be those with scale who excel at selling commoditized products. OK Michael, I kind of agree with those parts of the article, too. My beef with it had more to do with how it extrapolates from the situation of the technology industry itself to say that customers shouldn't care about IT. Thankfully, Dell's note continues: "Things I did not totally agree with: people will slow down IT investment...and have little need to upgrade PCs." Later he also says, "The author needs to understand what's going on with scale out vs. scale up." By that Dell means spreading computing tasks over more, cheaper devices, and thereby gaining the ability do even more.

In the responses to last week's column, there were quite a few who thought I was the stupid one. "IT is an overhyped part of business," wrote one CEO. "I can tell you that technology has added very little to the bottom line over the last seven years." He went on to say how he and his CEO friends are spending significantly less every year on IT, which "doesn't improve rapidly enough to justify the purchases!!!!!" Ah, that glorious modern tendency to overpunctuate e-mail. But he was not alone in his views. "The HBR article hits the point. Not you." That, in full, was the note from one reader from Bombay.

I'm pleased to say that those who limited themselves to one element of punctuation at a time generally seemed to come out on my side. A satisfying response came from Alinean, a technology consultancy whose data had been among the very little supporting material cited in the HBR article. Turns out that author Nicholas Carr misinterpreted the data, which he wrote showed that companies with the best financial performance were among those spending least on IT. In a release Alinean sent out after the article appeared, entitled "Alinean Research Shows That IT Does Matter," the firm notes that its research in fact shows no correlation between IT spending per se--at any level--and corporate performance. Turns out that the worst performing companies also spent very little on IT. Said Alinean CEO Tom Pisello in the release: "Our results show time and again that it's not how much you spend, it's what you spend it on and how well the investments are managed."

Many readers of Fast Forward had a similar response. Marc West, the CIO of Electronic Arts, wrote that "perhaps the key is to change the focus on IT to focusing instead on IP. The most valuable contribution we in IT can make is to get the company's intellectual property to the forefront of whatever we do. As CIOs we often sell the technology aspects and not the business value of our contributions." He goes on to discuss the significant behavioral challenge faced by both IT managers and general ones as IT gets more integrated into business operations.

Another angle came from Howard Smith, the CTO for Europe of giant Computer Sciences Corporation. "It's the P in IT that matters," he jokes, "as the old IT shop is being replaced by the Process office." Like many, Smith says he's writing a formal rebuttal to HBR. I suspect a coming issue will be a bonanza of debate.

Alan Warms, CEO of Participate Systems, which builds sophisticated software for collaboration, wrote: "We just closed several deals with leading Fortune 100 companies using our software to differentiate their ability to get vast international sales and marketing ecosystems working together to respond faster and more correctly to customers. This is not a 'me too!'"

And another CEO: "My small marketing services company has the same technology as much larger firms, but we consistently beat out much larger companies in delivering our services. If IT didn't matter, then everyone would be on the same level playing field, but that is clearly not the case!!" (He got carried away with those exclamations.)

My favorite note was the one that asked if the HBR editors who published the piece were even reading their own (generally excellent) magazine. This respondent noted that in the same issue of HBR is a great article by the CEO of Harrah's Entertainment. Here's the article's sub-headline: "Harrah's Entertainment has outplayed the competition and won impressive gains, despite being dealt a weak hand by the economy. The secret? Mining the company's rich database to develop compelling customer initiatives." The article unequivocally shows how IT gave Harrah's strategic differentiation. I'll read HBR for articles like that one.

At least Carr and HBR have done us all the service of getting these issues out for debate. It will be nice to keep hearing all the voices now raised about how IT really does matter.

To discuss this column with other readers, go to http://www.fortune.com/technology.


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