By Will Sturgeon, 4 October 2006 15:20
NEWS
Nicholas Carr, a perennial thorn in the side of the IT industry and author of the 2003 Harvard Business Review article 'IT doesn't matter', looks set on stirring fresh controversy in the industry, telling companies to stop spending on technology.
Today Carr told an audience in London companies have been misled to believe buying technology can make them more productive.
He said: "Smaller firms are more productive than large firms and yet they have less technology." And though he conceded it would be naïve to assume that represents the grounds for a hard and fast rule, he added it should at least "lead anybody to question the importance of IT".
Carr said: "Companies should spend less on IT." "But when I say spend less I don't mean use less or get less," he added, saying companies need to reduce their vulnerabilities when buying IT - such as over-spending or buying into expensive projects that ultimately fail to deliver.
He said: "Successful IT management comes down to successful management and not just those who are more innovative or take more chances."
As such he said companies should resist the urge to buy new technologies and should discard any notion of the cutting edge, saying there are few companies likely to see competitive advantage by being an early adopter.
He added: "The vast majority of companies should be IT followers not IT leaders. The innovator is going to pay a lot more than those who follow in the innovator's wake."
Though one might expect Microsoft to wholly reject Carr's ideas, Bob McDowell, VP of information worker business value at Microsoft, admitted the industry and business customers haven't always done themselves any favours.
He said: "There was over-hype in the 90s and there was overspend." And he added that the IT industry is "still paying the price now".
James Governor, analyst at Red Monk, said Carr's comments are welcome in an industry that is short on "comedians". But he said there is also a greater relevance to some of Carr's words.
Governor said: "Frankly we should all be shifting uncomfortably in our seats," adding Carr's words should ring true with many people who may rather forget past over-spend or poor buying decisions.
While he said it's unlikely any CIO "will stand up at the end of the year and say 'please reduce my budget'", Governor said businesses should be savvier.
He said: "All businesses should be harder when it comes to negotiating with their vendors. Bring in the procurement people and the legal people and don't worry about losing control of your IT spend."
Comments
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1. Charles Smith
Nonsense. I've been in Information Technology since 1970. Every year without fail (except perhaps 1999) the cry from the Pundits has been "reduce the spend on IT". What people really mean is do more pro rata for IT spend. It is all about demand.
If IT spending over the past 20 years had risen the same rate as executive/director's salaries then there would be cause for concern. Particularly so if IT's efficiency had matched the performance of the business executives.
2. Chris Slater-Walker
Hmm...perhaps instead it should lead people to question the wisdom of throwing more staff at a problem, rather than more IT?
3. Paul Jacques
Smaller companies are more productive because they don't have the money to spend on IT. That “amazing” productivity comes from people working longer hours for no extra pay. The extra productivity is not an efficiency, it's a (begrudged) gratuity from the workers to company. And if the workers could get the boss to pay for something “IT” do the work for them, the would have it in an instant.
4. anonymous
What Carr has said nothing new, businesses must watch costs at all levels, not just IT.
5. Jeff Roberts
I am ambivalent about the points Carr makes in his book and as reported here (although it is a great read). On the one hand I can see that IT is increasingly a commodity that everyone can have and - presumably - needs to do business (in the same way you may need an office environment). In this way IT is not a differentiator (except of course it is between those that have it and those that don’t).
On the other hand, as many business strategists from Carr’s alma mater have pointed out in the past, competitive advantages are increasingly temporary in this day and age. This implies that if you want the competitive edge, you have to innovate earlier than your competitors. Whether this innovation includes technology or not is another matter. If it does include technology, then your company needs to have experienced people who understand the technology, know how to use it to change the way organisations work and are good at nailing down suppliers and costs. This is just business as usual.
6. Brian Catt
This is old stuff reinvented for a hard of learning audience.
IT can deliver - if the business changes with it. Overlaying sophisticated business wide IT based processses on legacy functional structures designed to preserve power in a few separately managed functional silos is barmy. If the people deciding don't want their empires balkanised by granular measurement and process then IT can't deliver.
Tom Peters said if BPR was fully deployed the gutters of corporate America would run with blood. That's why it doesn't happen.
On the same theme but this time on efficiency and size - according to Catt's second law overheads start from zero for a start-up and approach 100% asymtopically as the enterprise approaches the nation state scale.
3rd Law?: Small is beatiful, sure, but it isn't a stable state. Power and wealth of the mega corps corrupt and always win by acquiring innovation and then crushing the remaining competitors with anti competitive practices, however superior their products are.
Governments dislike variety and support the oligopolist under the table so small can't last or win. Long term you are assimilated or put out of business by the big corrupt innefficient monoliths the politicians retire to the boards of.
Resistance is futile.
Brian
7. Jeff Roberts
I am ambivalent about the points Carr makes in his book and as reported here (although it is a great read). On the one hand I can see that IT is increasingly a commodity that everyone can have and - presumably - needs to do business (in the same way you may need an office environment). In this way IT is not a differentiator (except of course it is between those that have it and those that don’t).
On the other hand, as many business strategists from Carr’s alma mater have pointed out in the past, competitive advantages are increasingly temporary in this day and age. This implies that if you want the competitive edge, you have to innovate earlier than your competitors. Whether this innovation includes technology or not is another matter. If it does include technology, then your company needs to have experienced people who understand the technology, know how to use it to change the way organisations work and are good at nailing down suppliers and costs. This is just business as usual.
8. simon
Hmm, misses the point I think. I agree that businesses shouldn't buy IT to "keep up with the Joneses" - but they should buy it where it benefits the business.
Where I disagree is on the role of the procurement dept. Sure, they should be involved in any large purchase, but they sure as hell shuld not be allowed to purchase IT without adult supervision.
I've seen numerous occasions where the IT and end users have determined determined what their requirements are, and who is best placed to provide what they need - only for the procurement dept who wouldn't know their USB port from a tin of beans go out to tender and buy a job lot from a different supplier and get something that isn't what suitable for the job. I once recall hearing from the procurement dept "I didn't know what this 'support' things was so left it off" !