It Took Less Than 10 Years for IT Not to Matter

Photograph by Rich Hendry/Gallery Stock

Way back in May 2003, Nick Carr published the article “IT Doesn’t Matter” in the Harvard Business Review.

For those of you who don’t remember it, Carr’s piece was a doozy and then some. He argued that companies paying top dollar for the latest and greatest technological equipment were spending a lot to buy a very limited competitive edge, if any. The chief executive officers of the largest technology companies reacted to this proposition as you might expect. Ignoring all the nuances in Carr’s argument, they viewed it as a wholesale attack on technology. Carly Fiorina, then CEO of Hewlett-Packard, called Carr “dead wrong.” Other technology kingpins chimed in with similar vitriol.

In truth, it has taken just about 10 years for Carr’s view of the world to reach mass adoption. Without question, some startups are producing cutting-edge technology and some customers are taking advantage of their wares to one-up rivals. On the whole, however, corporations now seem to prefer, whenever practical, to rent the same computing services their rivals do, rather than try to build custom systems.

Most of the people I talk to these days are like Siobhan McFeeney, who heads up information systems management for the AAA in Northern California, Nevada, and Utah. She has running for customer relations, Workday for human resources and financials, and Box for document-sharing and collaboration. “Sometimes it is a harsh reality when companies realize they are not IT companies,” McFeeney says. “We are in road service and a huge insurance agency. We are not an IT company.”

Salesforce—the granddaddy of the software-as-a-service companies—went public in 2004. NetSuite followed in 2007. ServiceNow, Workday, and Box are all expected to go public in fairly short order. Using these names seems to constitute a badge of honor for forward-thinking chief information officers and chief technology officers.

The very companies that bashed Carr back in the day did very little to prepare for the cloud-computing era. Technology giants such as Oracle, SAP, and IBM failed to create attractive Web-service versions of their major software franchises, while HP, Dell, and others opted not to rent out computing power to their customers. Only recently has this started to change in a meaningful way.

The bad news for the big guys is that the cloud companies have shown a major reluctance to being acquired. The only companies willing to sell have been niche players, rather than true platforms like a Salesforce or a Workday. It’ll be interesting to see which cloud high-flyer gives in first—and just how high that acquisition price will be.