2+2=5? - Editor's Note

Communications News,  August, 2003  by Ken Anderberg

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Ten years ago, I bought my first Mac. That 8-megabyte RAM, 80-megabyte hard drive machine was costly for the time but its speed and capabilities were astounding. Within a few months, however, I began to realize that 80 megs of storage was going to come up a little short for future needs. Three years later, after several upgrades to that original iMac, I purchased a much faster machine, with 64 megabytes of RAM and one gigabyte of storage.

You're probably laughing now about how antiquated even that newer Mac is in today's high-tech world. At the time, though, it provided me with a strategic advantage in my small business, or at least allowed me to keep pace with competitors. All small publishing businesses had computers, but some had better ones than others, or used more advanced applications because their computers could handle more complicated tasks.

For me, upgrading the IT component of my business was a necessary step to remain competitive.

Now, some guy at the Harvard Business Review (HBR) has decided that IT is no longer a strategic advantage for enterprises. It's a commodity that everyone has and, therefore, no longer a business advantage. According to Nicholas Carr, editor at large for HBR, IT managers no longer should strive to increase opportunities through better networks; their tasks now are relegated to ensuring network and data security, and managing IT costs.

Much of Carr's assumption is based on the steadily declining costs of enterprise network hardware and software, and on the fact that lower costs mean everyone can own the same products, thereby eliminating any competitive advantage. The decline in tech purchasing over the last two years also is evidence, he suggests, of this change in the importance of technology in the enterprise environment.

That assumption, however, does not add up, as it ignores two watershed occurrences in the last four years that have severely impacted today's tech market. First was the rush to Y2K compliance, which generated a tremendous boost to technology sales. The second was the dot-com explosion, which caused a second wave of buying right after Y2K.

The buying frenzy in those two periods may be a far greater influence on the tech market stall today than the dot-com implosion and the U.S. recession combined. Y2K caused most enterprises to upgrade their LANs; the dot-bomb flooded the market with additional used and unsold product. Quite simply, the buyers did not need to buy--at least not yet.

Does that mean IT has been commoditized? Of course not. Technology still provides a competitive and strategic advantage for those companies who are capable of using it best. That means better hardware and software, more bandwidth, optimization of existing networks and legacy applications, upgraded storage, more secure Web and WAN solutions, and utilization of new applications.

Will enterprises need to continue to upgrade their networks in order to improve or maintain their competitive advantage? Of course. Just like my old iMac needed to be replaced, the servers, switches, cabling and other aspects of enterprise networks will need to be upgraded. One day, I might even get a new Mac to replace that 1995 model. Right now, though, there is no strategic reason to do so.

Ken Anderberg

kena@comnews.com

COPYRIGHT 2003 Nelson Publishing
COPYRIGHT 2003 Gale Group