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For Executives, Entrepreneurs, and other Digerati who need to know about SaaS and Web 2.0.

The IT Productivity Curve Must Constantly Be Replenished

Posted by Bob Warfield on October 20, 2007

Nick Carr writes that IT doesn’t matter, and cites WallMart’s recent switching from proprietary to packaged software as the proof point.  Carr has written along these lines for some time.  What’s missing from the analysis is a realization that productivity stems from creating an advantage that is a moving target.  Create one advantage, perhaps a sophisticated supply chain system, and your competitors will relentlessly try to adopt the advantage for themselves.  Once they’ve succeeded, your advantage moves to simply being a cost of doing business.  IT groups that rest on their laurels will wake up one day to realize they’ve become overhead and not the competitive weapon they once were.

I remember an email conversation years ago with Ethernet inventor Robert Metcalfe.  He was writing a column on IT productivity, and the apparent lack of measurable productivity gains from all the IT spending.  My position with Metcalfe at the time was that all the spending was just “keeping up with the neighbors” and would not translate to productivity until someone innovated.

It’s not always easy to find new ways to innovate with IT.  In recent years IT has given away a lot of its ability to innovate internally through outsourcing and reliance on packaged software.  Nevertheless, those organizations that do innovate will have a decided advantage over those who do not.  To succeed, CIO’s have to reserve a certain amount of their budget for looking for the unique problems that aren’t yet solved and then attacking them in a way others are not following. 

This is yet another corollary of my punctuated equilibrium concept applied to competitive IT.  If you’re simply doing what the rest of the crowd does, at best you will keep up, and at worst you’ll be beaten by an innovator.  Fortunately, it is early days yet in at least two big areas IT could choose to use for innovation:  SaaS and Web 2.0.  How much of your computing infrastructure can you move into the cloud and achieve results radically more cheaply and reliably than your competitors?  Should you be in the datacenter business at all, or should you be outsourcing all of that?  How can Web 2.0 (which I’ll define as using collaboration and conversation with your employees and customers) be harnessed as a competitive weapon?

What big bets are you making today that will bump your productivity curve above that of your competitors?  Or, as Apple says, “Are you thinking different?”

One Response to “The IT Productivity Curve Must Constantly Be Replenished”

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