Thursday, July 19, 2012

10 years on: IT does matter, more than ever

Just under 10 years ago Nicholas Carr wrote a (in)famous piece in the Harvard Business Review entitled “IT doesn’t matter”. The argument was, post dot-com-boom, that IT was now a commodity, companies didn’t need to spend big bucks on it because they could buy just about anything they wanted off-the-shelf.



At the time my response was, “Is IT worth it?” I, unsurprisingly said “Yes it is” and then looked at Carr’s example of American Hospital Supply. My argument here was that rather than be defeated by commoditisation of IT American Hospital Supply could have chosen to make IT their business. It was a strategy decision.



Anyway, 10 years on. Commoditisation of IT has continued but it is hard to imagine anyone arguing like Carr that IT doesn’t matter any more. Indeed, IT is more important and in more and more cases is becoming the business.



Technology has destroyed the music business as we knew it and is in the process of remaking publishing; television is going to be changed soon.



IT forms the marketing channel now - Facebook, Twitter, LinkedIn.



Logistics is IT based - DHL, drop shipping, Amazon.



iPads, iPhones, Web - are the way you talk to your customers.



And thats the vital bit: information technology, computer technology, software technology is no longer a back room cost cutting tool. It is the customer interface. It is the customer service experience.



Take the travel industry for example. Go back 15 years, 1997. I remember booking my first flight to the US that year. I went into a travel agent, a young lady sat on the other side of the table and poked at a green screen. We talked, she booked me a flight. In 1997 how many of us ever saw the inside of a travel companies IT system?



OK, in 1997 a few were appearing on the web, go back to 1992 and I can safely say: if you didn’t work in the travel industry you didn’t touch travel IT.



IT was a back room activity. Yes the company needed it but the dependency was recent. Customers were unaware of all this.



Today that has changed. This year I’ve booked flights on BA, KLM, S7 and Virgin Atlantic. How I book them - the company web site, Opodo, Expedia, SkyScanner has a lot to do with the customer service experience. I normal start a flight search on SkyScanner, switch to Opodo or Expedia to book and complete things on the airlines own site. If a site is difficult to use I stop and switch elsewhere.



Thats flights. Booking the family holiday is even more IT dependent. Crummy interface, can’t get the answer and I drop the holiday plan and go to another supplier.



I’ve been making this argument for a few years now. So it was good to see McKinsey & Company catch up with me in April when they published “Are you making the most of your company’s ‘software layer’?” Its the same argument:



Software now forms an integral part of the customer service (i.e. buying) experience. Get it right (Amazon) and win big. Get it wrong and you will never be heard of again.



Underlying your delivery might be commodity products but choosing when and where to use off-the-shelf and when to write your own is more important than ever.



Now, imagine for a moment you were a newspaper editor in 2003. You read Carr’s article, you agreed with it, you commoditised your IT. Does that still look like a smart decision?



IT systems might be commodities under the hood but your thinking needs to be ahead of the pack and you need to be able to deliver on what you decide.