The importance of your IT department

Companies need to understand that their technology teams can add to the underlying goal of their business, argues David Rae

Three years ago, Nicholas Carr rocked the technology world when he wrote an article for the Harvard Business Review that claimed IT doesn’t matter. His argument was that technology was a commodity, so business leaders should look to minimise IT spending at all costs.

Why bother spending big on something that all your competitors had access to, he asked, if as a result it couldn’t provide any competitive advantage. While I don’t pretend to agree with Carr’s point of view – I believe that business leaders who don’t back substantial investments in IT will live to rue the day – I do think that IT will be provided very differently in the future than it is today.

Large companies should always invest in IT, but if we take on board Carr’s assertions that IT has become so much of a commodity that there is nothing to differentiate it from what your competitors can get their hands on, then there is only one way to go: companies must return to the dark days of bespoke software development and the adoption of so-called ‘bleeding edge’ technologies.

At first glance, this looks like several steps backwards. However, the development of common standards are – at least in theory – providing interoperable building blocks that can be used by developers to create their own systems without worrying too much about the underlying interoperability. And adopting bleeding-edge technologies doesn’t have to mean putting your neck, and your company, on the line.

However, most companies could benefit from spending substantially more on their R&D efforts. Admittedly, it is a rather large leap of faith to back plans to invest substantially in R&D. But without it, businesses could be missing out on a competitive advantage further down the line. The only way businesses will be able to use technology to their competitive advantage is by unshackling, then boosting the IT department. Also, by encouraging the chief information officer to think creatively about how the IT department could help the underlying goal of the business.

Business could do this in any one of several ways. It could be that employing a hugely talented software engineer is the right decision. Or it could be that adopting a few bleeding-edge technologies to test their appropriateness to the business and taking the cost on the chin is the way forward. Maybe outsourcing some aspects of IT, while substantially increasing in-house focus on specific areas, is the right way to go. Whatever the ultimate answer, all have one thing in common: they demand an autonomous, motivated and dynamic IT team to come up with the strategic vision and then make it happen.

Tesco, for example, was an early adopter of radio frequency identification tags. It helped it to keep greater control of stock and inventory and, as a result, handed it an advantage over the competition. Similarly, companies that handed executives a BlackBerry device early found that productivity improved, which again gave them a competitive advantage. Developing a bespoke software package, which is designed to tackle a particular industry-specific issue could well do the same, but to a much greater extent.

At a conference I recently attended, the argument was put forward that, because information was so central to the business, not only should your chief information officer have a seat on the board, but the finance director should have a direct reporting line to them. Now that would be a turn up for the books.