News from the fourth annual chief information officers' summit
IT directors should prepare for a major board-level backlash against IT, leading to another round of outsourcing, the chief information officer of a leading investment bank has warned.
Speaking at the Economist CIO Summit in London earlier this month, JP Rangaswami, global CIO at Dresdner Kleinwort Wasserstein, said recent media coverage - in particular, a piece in Harvard Business Review byNicholas Carr (see box) - questioning the value of IT investment will fuel board members' appetite for outsourcing.
"We have not yet seen the impact of this on chief executives but it will be severe because there are a lot of people wanting to believe that IT doesn't matter. There will be a backlash," he said. "It is not what Carr said in his article, but the headlines he has generated. The likely result is that we will see more large-scale outsourcing.
"People will come screaming at the IT department claiming we spend money building unproductive toys. This is very dangerous, as IT is going through a difficult time, and the baby will go out with the bathwater."
Rangaswami urged IT directors to prepare their counter-arguments now. He maintained that IT will only reach maturity as a utility when it has common standards, including XML-type customer-focused standards.
"In IT we have gone from PCs to networking to customer information without having fundamentally agreed standards. IT can never reach maturity without standards," he said.
One problem for IT managers is that IT still cloaks itself in a level of mystique that separates it from business partners, he added. "We must take away the smoke and mirrors and be more open about how technology works.
"Too many organisations cannot put a handle on how much they spend on IT. This is because there are too many nested costs, and many hidden subsidies that result from point decisions that don't come up through the organisation."
Does IT matter? The changing corporate IT strategy
In an article in May's Harvard Business Review entitled "Does IT matter?", editor-at-large Nicholas Carr said that IT is evolving like other "infrastructural technologies" such as railways, electricity and water.
He said these technologies have a growth period, followed by many years of consolidation, before becoming a commoditised utility. "From a strategic standpoint, they become invisible," said Carr. This demands a rethink of the corporate management of IT.
"In brief, executives need to shift their attention from IT opportunities to IT risks - from offence to defence." The July issue of Harvard Business Review will publish a rebuttal of Carr's opinions by John Hagel and John Seeley Brown, so this HBR-stimulated, but influential debate looks set to grow over the summer.