Technology is ubiquitous and particularly information technology is affecting our personal life, work life and society. The ongoing discussion about why and how technology matters or does not matter started with well known ‘IT Doesn’t Matter’ article published by Carr in 2003. The main gist of the article is that the tactical significance of IT for an organization is diminishing. To support this theory, Carr states that after 1980, PC invention companies spent an enormous amount of money on IT, and he claims that some of those companies spent up to 50% of their revenue on IT due to the fear of being left behind the competition. According to Carr, the main functions of IT are data storage, data processing, and data transport; much like railroads and power grids which are transport mechanisms. While IT functions were expensive back then, they are now very affordable and will soon get downright cheap. Thus, organizations no longer need to expend as much of their finances on IT as those companies did in the past. Although I agree with some of the points in the article, I also have differing opinions. IT solutions, like email service and storage, can be generalized, yet those requirements can vary depending on the industry. While it is true that competitors can emulate technology advancement or buy from the cloud providers, most often they also add their own innovations to the technology. This cycle repeats, which continuously produces better products at a lower cost to consumers and increases the respective company's market share. Information technology has power to disturb our modern society and democracies across the word in a positive or native way. For the purposes of the post I am going to concentrate on views to explore relationship between IT and Organizations.
Hunter & Westerman in their book “Real Business of IT” put in nicely how Information technology can be used to improve business performance in different ways including optimizing, reshaping automation, internal informing and external informing.
- Optimizing: Organization's internal process can be automated to optimize performance. A single internal process or a set of related processes can be rearranged using an application to improve performance.
- Reshaping automation: Reshaping an existing system can be used to optimize how vendors, suppliers, and other external entities interact with an organization. It can be a smaller effort such as automating exchange with a business partner or with a wider change that affects a lot of partners.
- Internal informing: Actionable information can be made available to internal business users to improve their decision-making capability which in turn can result in better customer service.
- External informing: Information can be made available to external customers to increase loyalty or overall user experience to increase profits.
As we think about humans, organization and technology one of the things that come to my mind is the famous psychology theory - Maslow's hierarchy of needs. An organization’s IT needs are in a way similar to human needs and can be looked at using Maslow's Hierarchy of Needs (Maslow, 1943) (See Figure 3.). The basic needs are at the bottom of the pyramid, such as email, word processor, and storage which have become commodities and are essential for the organization. These services must be delivered economically and at a very high quality. Once these services are delivered competently and reliably, something more valuable can be built on the top. If these services cannot be provided in an efficient way, business will always be doubtful about IT's value proposition. IT services are much more than pure utility commodity like electricity which is an undifferentiated commodity. By saying IT is just the cost of running a business, its role in adding value is entirely dismissed.
Most organizations use a set of comparable systems such as database management systems, email, customer relationship management system, enterprise resource planning and other business applications. It is not the technology that differentiates a company but how technology is being used to address business challenges and opportunities. For example, Amazon uses its the massive data collection to give users recommendations about books they might like or what other users with similar preferences like. It took years for Amazon to collect data at times when profit was minuscule. Netflix uses similar technology to recommend what films/shows their viewers may enjoy. On the other hand, CapitalOne uses data mining to offer customized credit products depending on a customer’s default risk. Without knowing the business problems, processes, and the environment, and how to use technology to solve the business challenges just buying technology may not help much.