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Raining On The I.T.-Bashers’ Parade

Carr is not the first person to question the value of information technology. Paul Strassman, for example, despite being a high-profile, big-budget chief information officer for such organizations as NASA, the U.S. Department of Defense, and Xerox, has made a second career of studies not finding the benefits of IT. Morgan Stanley economist Stephen Roach is another famous critic of IT. During the 1990s, he claimed that increasing investments in information technology were showing no benefits. Roach, echoing MIT economist Robert Solow, wrote that IT investments were not appearing in U.S. productivity numbers. I called Solow, a Nobel Prize winner, and he admitted that this so-called productivity paradox might easily be explained by how poorly productivity is measured. Productivity numbers are hard to come by, and Roach relied on outmoded methods. But Roach stuck by his IT-doesn’t-matter numbers, like the proverbial drunk looking for his wallet under a street lamp.

Today, information technology accounts for about half of capital expenditures by U.S. companies. Productivity is high and increasing rapidly. What is Roach saying now? He says that the productivity numbers are highly questionable. In other words, if the data conflict with your theory, throw out the data. It makes me wonder whether Roach, like Carr, just has a bad attitude about IT.

In Carr’s reply to early critics, published on the Web by the Harvard Business Review in June 2003, he wrote that his article “has at least succeeded in setting off an important and long-overdue debate about the role of information technology in business.” I don’t think so. If anything, Carr has succeeded only in misleading his readers.

Howard Smith and Peter Fingar, in their 2003 book IT Doesn’t Matter-Business Processes Do, argue that Carr is not only wrong but dangerous. They remind us of what happened when Harvard Business Review published Michael Hammer’s 1990 article “Reengineering Work.” Too many Harvard MBAs decided to take the easy part of Hammer’s advice and downsized their companies to death. Unless Carr’s argument is debunked, the current crop of reigning MBAs will be tempted to run WordPerfect on mid-1980s PCs connected to IBM 360 mainframes.

Which brings us to Carr’s central conceit. He urges IT managers not to venture foolishly out onto technology’s cutting edge and to buy only that which has low risk and high value to their companies. Carr urges this as if it were breaking news.

In fact, IDG alone publishes 300 information technology magazines worldwide, and each has several competitors. All of these have been offering advice for decades on just how far onto the bleeding edge of technology it is wise to go to give your company an edge. Taking technology risks, when done well, can bring competitive advantage. When done poorly, it can bring disaster. But that’s a balancing act that the information technology managers of the world were well aware of long before Carr put in his two cents.

We often brag about the marvelous U.S. innovation machine. We brag about our world-leading research universities. We brag about our entrepreneurs and the venture capitalists, like me, who back them. But there is an unsung player in our marvelous innovation machine: the aggressive users of information technology. In Germany, by contrast, it’s hard to buy IT unless it’s from Siemens. In the United States, startups readily find managers out on the cutting edge, searching for new, smarter, and more efficient ways to do things-a quest that keeps our vaunted innovation machine humming.

If business executives follow Carr’s advice, who will provide innovation’s test beds? How will new technologies find their markets? This may be the most important reason to debunk Carr’s arguments once and for all: if they harden into conventional business wisdom, American ingenuity will be strangled in its bassinet.

I serve on the board of a small public company in Silicon Valley called Avistar. For 10 years, Avistar has been marketing networked desktop videoconferencing to large companies. Avistar’s hardware and software have worked increasingly well for a long time. What’s taking time is their adoption-the search for one situation after another in which the technologies provide a value that’s worth the risk.

Avistar CEO Jerry Burnett disagrees strongly with Carr and recommends a division of labor in IT management. On one hand are specialists in what Burnett calls “availability management.” These might be mistaken for the cost and risk minimizers that Carr extols. On the other hand are specialists in “adoption management.” These are the people Carr wants demotivated, demoted, or fired.

Carr argues that things that are widely available, like IT, cannot be used for sustained competitive advantage. Well, since Harvard Business Review is received by almost a quarter-million people and can be bought by anyone with $16.95, then according to Carr’s own argument, that publication itself doesn’t matter. Cancel your subscription and download any interesting articles from back issues-which any teenager will be able to find for you on the Internet for free.

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