Information technology doesn’t matter anymore to senior management. This controversial message is advocated in a May 2003 Harvard Business Review article by Nicholas Carr. Carr notes that IT has become an infrastructural technology, like electricity. Therefore, companies can no longer gain strategic advantage by investing in new IT projects. Instead, they should spend less on IT, become a technology follower, and focus on reducing vulnerabilities in the infrastructure.

While the core of Carr’s argument is correct his timing is significantly off. IT is becoming an infrastructural technology. One day we will be able to plug a new computer into the wall and managers will be able to obtain all the information and tools they need to do their jobs—process transactions, collaborate with colleagues and make decisions. Plugging a computer into the corporate network will be as easy as plugging in a new microwave in your kitchen.

This day, however, is a long time in the future. Companies are still building out their IT infrastructure. Some are still defining and building key transaction processing systems to integrate with customers and suppliers. Many are just getting started with automating important technology tasks like document management, business intelligence, and collaboration. In addition, the technology vendors are still adding new capabilities at lower costs.

Here is our view of the key IT trends in the medium to large organizations that we work with: 

• Technology applications are less expensive and more powerful. We have focused much of our recent organizational learning around knowledge management and business intelligence technologies. With respect to knowledge management, Microsoft’s SharePoint Portal Server and its integration with Microsoft Office provides powerful and relatively inexpensive document management and collaboration solution for many organizations.

• We have visited with many organizations that can benefit from implementing knowledge management and business intelligence systems. These organizations have a real need to get better information to their managers and analysts. With this information, they can better manage their finances and better meet the needs of their customers.

• The costs of customizing and integrating software into organizations has been significantly reduced. Microsoft’s .NET framework has made it faster and easier to add capabilities to integrate SQL Server’s business intelligence capability into a corporate intranet to provide key performance indicators to senior management. In addition, Active Directory can be leveraged to insure that managers only see the information they are entitled to see.

Based on these trends, it is imperative that organizations invest in these new technologies. While these technologies individually might not provide them with a competitive advantage, collectively they can significantly improve the functioning of their organizations, make them more responsive to customers, and allow them to manage costs and revenues more effectively. Further, companies that do not invest in these technologies will find themselves at a significant competitive disadvantage.