Upon further reflection on my earlier columnabout Nicholas Carr’s “IT Doesn’t Matter” piece in the Harvard Business Review, I realized that I had fallen into the same trap as many other writers who commented on it. I generalized about the value of IT when IT’s value is actually very specific.
Take, for instance, John McKinley. InfoWorld’s CTO of the Year and Merrill Lynch’s former CTO used Web services and Linux to save the company about US$1 billion a year. In that context, there is no doubt that specific types of IT matter more than others. Thinking in those terms, I realized that it’s not that IT itself doesn’t matter. Rather, it is vendors that stubbornly offer the same old IT to a changed market that don’t matter. To win in the market, vendors must continue to innovate, listen carefully to their customers, and offer IT solutions that work within the new reality of tighter IT budgets and demands for more IT accountability. Those that continue to push shelfware and products that don’t help IT reduce complexity in a fiscally responsible manner will slide into irrelevance.
The first rule for vendors that want their IT products and services to matter is simple: Don’t try to sell commodity products at noncommodity prices and then offer a nebulous “value add” to justify the margin. The best example of this tendency is Sun’s entry into the Intel-based Linux server market. If I look at the list pricing for the Sun LX50, for example, I am hard-pressed to find a more expensive box with the same configuration from a traditional Intel-based server vendor. The justification for the margin, I suppose, is the excellent warranty and support Sun offers. But in an era when hardware is so inexpensive, many IT managers are forgoing service agreements and taking their chances or just keeping spare parts on hand. I used to be tempted by the extended-warranty option for DVD players at Best Buy when the players were $500. Now that you can get a good-enough DVD player for $75, a warranty doesn’t matter so much — if the DVD player breaks, you can get another one without breaking the bank. The price of Intel-based servers has followed a similar trajectory. No doubt, Sun makes great products, but these days I only need “good enough” and at a price to match.
A vendor’s relevance also rests on easy installation and minimal maintenance; the best products become a simple platform rather than a complex solution. Salesforce.com has successfully achieved relevance in the SFA space against vendors of installed suites such as Siebel. It has done this by delivering everything needed within a Web browser as well as providing Web services interfaces into its system if users want to extend Salesforce.com’s app into other applications. In the collaboration space, Groove Networks transcends traditionally bloated and expensive server-side collaboration offerings with a desktop client that allows end-users to securely and incrementally self-organize in groups of any size without the whole process becoming a dreaded and slow IT project. (Full disclosure: I am both a Salesforce.com and Groove customer).
In the end, IT doesn’t matter — except when innovative vendors make IT matter. As a working CTO and technology writer, I’m on the receiving end of more sales calls for technology solutions than you would believe. From now on, I’m going to ask a simple question of vendors that call on me: Why does your product or service matter? If every vendor could answer this simple question, the value of IT might just be proven beyond doubt. But vendors need to make the case.
