Service has changed the way IT matters

IT is probably more central to the operation of business and government than it has ever been. The impact of fundamental innovations such as the internet and mobile computing are only beginning to be understood, let alone effectively exploited. The transition to the information age economy is underway, with IT as its primary motive force, but there is still a very long way to go. Organisations continue to benefit from the effective application of IT. So IT has to matter - doesn't it?

Nicholas Carr, in his Harvard Business Review article 'IT Doesn't Matter', questioned the strategic importance of IT and emphasised the need to manage IT investment and avoid the competitive disadvantage of overspending on IT. This touched a nerve in IT and for many his article was an attack on the very foundations of the industry, and generated a controversy that continues to rumble on.

At the heart of this controversy is the issue of the net value that IT can deliver and the strategic role of IT in organisations. Given that IT is now a fundamental part of organisational infrastructure, the issue is not about trying to explore if IT matters, but how it matters. The truth is that, for many organisations, IT is starting to matter a lot less than did, and the emergence and rapid development of IT outsourcing is a clear demonstration of the way in which may organisations really, really, want IT to matter less.

In a few decades, IT has gone from being based around organisational DIY to the IT-based service industry of outsourcing. Whilst most organisations and individuals don't really want IT for itself, they do want the services that IT can provide. The growing switch from buying IT systems to buying the services that are derived from IT is a fundamental shift that is having huge repercussions in the IT industry.

Moving from system to service changes everything for vendors and buyers alike. Once organisations begin to buy services rather than systems the technology becomes a secondary issue, with the quality of the service relationship taking centre stage. The business orientation of the deal means that mainstream procurement takes a more dominant role and the IT function has to redefine itself. Faced with this change traditional IT vendors must reshape their interactions with the customer and provide the long-term, high-quality relationships essential to provide world-class services. Many vendors are struggling with the organisational changes that this implies.

As buyers seek to maximise the value from their IT-related investments the role and impact of specialist advisors has grown. Recent research, undertaken by the Complex Product Systems (CoPS) Innovation Centre at the University of Brighton and Intellect, reveals that advisors are having a significant impact on vendor-buyer relationships. In short, advisors are enabling organisations to become smarter buyers, placing still more pressure on vendors.

Buyers now understand that today's strategic IT system is tomorrow's generic solution and that the source of any competitive advantage is often from effective management and innovation, not just technology. Organisations want to move from IT experimentation to IT optimisation. Combine this with the shift to services and you have the basis for the 'IT doesn't matter' view of the world. The problems with the air traffic control computer at West Drayton earlier in the summer show just how much IT does matter. However, although IT clearly matters, the way in which it matters is probably changing forever.

As the IT service market develops, the location, ownership and staffing of IT systems will matter less, although the quality of the services provided will matter more. The requirement to possess many in-house technical skills will matter less, although the need to be a smart customer for the services that such skills can provide will matter more. Buying the components to build an IT system will matter less, but buying the services such components can provide will matter more and more. Being an effective customer for the specialist advice required to be a smart buyer will matter more as well. All this adds up to a series of big changes for the IT industry and those who work in it.

So IT matters - just not in the same way, and the IT industry is going to have to get used to this new reality.

Stephen Flowers is a Principal Research Fellow at the Complex Product Systems (CoPS) Innovation Centre at the University of Brighton.

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