Should M organisations be listening to Nick Carr?

Nicholas Carr wants companies to spend less on IT. Jyoti Banerjee ponders that advice on behalf of medium enterprises.

At last week's London debate with Bob McDowell of Microsoft, Nicholas Carr restated his well-known perspective: IT does not add strategic value to an organisation, so companies should spend less on it, and business leaders should intentionally choose to be IT followers, not leaders.

What was different about this debate from many similar ones was the focus applied to medium organisations. Carr's usual analysis is based on large enterprises But does this approach work for medium enterprises as well?

My instinct is that Carr's ideas work better for medium enterprises than they do for larger organisations.

Typical medium enterprises don't have the budget, bandwidth or business practice to justify expensive investments in what Carr calls distinctive technologies. Instead, they prefer their tech to be low, and their infrastructure commoditised.

Of course, there are at least three caveats that are worth pointing out.

One, not every medium enterprise is a typical M - some thrive on strategies built around distinctive IT. I know a paper distributor that has no warehouse - the goods are sold electronically while en route to the UK. Distinctive IT in this instance, allows a ten man company to produce annual sales of over £30m. So Carr's rule for spending less is not a rule - maybe just a rule-of-thumb.

Two, getting the most out of IT is really a function of the people running the organisation. If they are the sort that can exploit IT, they may well want to invest in it to get the extra zing they seek in their business. Those that find IT too hot to handle should steer well clear. Again, no clear rule can be created, when the variable is so clearly people.

Three, there is currently no pervasive IT infrastructure available to medium enterprises that is in any way analogous to the infrastructure that provides our utilities. Sure, the utilities offer a model for ubiquitous infrastructure but that is still some way off in IT. Right now, the closest thing we have for IT infrastructure in electricity terminology is that everybody is still using their own generators. Most of the generators used by medium enterprises come from one company, Microsoft, but it is not shared infrastructure in the sense of a single power station supplying many companies. Already, shared infrastructure is getting closer, via grid computing, software-as-a-service, Web 2.0, etc, but the bigger challenge in making shared infrastructure the model of choice will be the ability businesses have to adapt their processes to match such capabilities. Given that perspective, I don't see shared infrastructure becoming ubiquitous any time soon.

Engaging Carr in debate was Microsoft's Bob McDowell, who holds the position of Vice President Information Worker Business Value. I am tempted to point out that McDowell's job title represents a crime against English grammar, but hold back from doing so on the grounds that most Indians (including yours truly) have murdered the language often enough that we should live and let live.

The trouble with McDowell the debator is that he largely agreed with Carr's position, taking much of the spice out of the debate. There was no adhering to the cancer-sweeping-across-tech-industry position one of McDowell's own bosses has adopted against Carr. So it was a debate without sting - really, a discussion - but one worth having as McDowell is an unusual tech exec in talking good sense. His main case study on getting value from IT was budget airline JetBlue, which spends on average about a third of the rest of its competition on IT - a real boost to Carr's position.

McDowell's main point is that technology acts as a change agent - it can be used to blow up business processes and change them. My own research in M organisations points to the importance that solid business processes have in the growth strategies of medium organisations. There are very few out there right now that don't have some friction in their processes that they are trying to eradicate. And it is technology that helps lower process friction, enables scaling, and therefore, enables growth.

So M execs should listen to Carr. But they need to heed the McDowell message as well. And they are welcome to listen to me: the best organisations make the best use of the business assets they have, including tech assets and investments, through the use of their single most important asset: people. Smart people.

Smart people deliver value. The rest don't - no matter how good, distinctive, or cheap their IT.

Comments

[woodgate53]

JetBlue may spend less on IT, but they still use it. Could they run their business without IT? No. IT is essential to the modern business and businesses that make good cost effective use of IT will clearly benefit.