Does IT Matter?

IT Doesn’t Matter. That is the title of an article in the May 2003 issue of the Harvard Business Review. Obviously, it catches the eye of all those involved with information technology (IT). The author, Nichlolas G Carr, argues that IT is no more a strategic resource because of its ubiquity. In his view, a strategic resource is one that is scarce and, therefore, gives a sustained advantage to its user. IT, on the other hand, has become cheap and accessible and, therefore, IT resources have become “costs of doing business that must be paid by all but provide distinction to none”.


“There is no danger of IT spend slowing down in India. The saturation point is quite far away”

At one point of time, railroads, telephones and even electricity provided real advantages to those who used them. As the availability increased, they became commodity inputs and their competitive advantage vanished. In the case of IT, from a sub 5% share of capital spend in 1965 in the US, the share rose to nearly 50% of the capital spend in the 90s, points out the author. This has led to a situation where IT is essential to business but is not a strategic input. 

Organizations in the future will spend less on IT, will not always want to be the leaders in technology implementation and will focus on the vulnerabilities of using IT and not the opportunities it affords. And the suppliers of IT will sell the products like commodities, leading to a lowering of margins. While this could be the reality for the developed world, it is not the same in developing countries where a Rs 30,000 crore domestic market and 5 million PCs is a long way off from IT omnipresence. IT has not reached near the capital spend to GDP ratio (it is near 2.5%) of the developed world and nor has it become available to all. 

IT products are sold and used like commodities in the western world. Can this happen in India? Yes. Will that be the best option? No. Simply because the backend systems and processes are not in place. Buying a PC and plugging it into the network is not enough till the hardware and software backbone on the network is tested and is robust. That is not the case in India.

Take the examples of many computerized services on offer today. I just called an online bill payment agency that has not processed my bills on time. This is my third call and I am told that my problem has been referred to Mumbai. My home loan installments are running into a problem. I have paid them through collection boxes, they have been debited from my account but the records are available again only in Mumbai. So my next installment cannot be released.

My daughter’s mobile is stolen and is reported to the operator within three hours. She cannot get the same number till some procedures are followed including getting the local police station to register a first information report. Some old bill copies also have to be submitted. Worse, all this information is available only after a few telephone calls and two personal visits. Three weeks later, a bill arrives with an extra two weeks’ rental as the billing department is unaware of the disconnection.

Meanwhile, my daughter has taken a new connection from a different operator. It is far simpler.

Mind you, people are by and large helpful, the technology front ends are in place and the intentions are good. The backend and the processes are just not there. And this is the situation in large organizations that spend huge amounts on IT infrastructure and have large IT departments. How would smaller organizations with rudimentary software provide customer services if IT was sold to them just as a box? There is a huge unfulfilled need for decent software that can manage complex customer interface relations. Similarly, there is no danger of IT growth slowing down in India. In fact, not more than 30% to 40% of organizations are computerized and even when they are, they have technology islands. 

The domestic market for IT is a huge opportunity waiting to be tapped as Dataquest has continuously been propounding. And to put some milestones on this road, we once again bring you the DQ Top 20 Annual Issues – now in their 20th year. It is a task that gives the entire team immense satisfaction. We hope that these will provide you with immense utility.

Shyam Malhotra
The author is Editor-in-Chief of Cyber Media, the publishers of Dataquest.

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