E-heads make way for intelligence

Technology for its own sake is dead. Now business is demanding real, intelligent content.

Technology for its own sake is dead. Now business is demanding real, intelligent content.

The "e-thing" is dead, thank goodness. We have all grown tired of everything remotely connected with IT having an "e-" put in front of it. For an industry that needs to constantly repackage its products to ride the latest fashion waves, the e-thing was very useful. At one point, Business Week was quoted as saying that "e" sold more copies than sex and scandal. So much for hype and insubstantial claims for a new world order; now we can get down to real business.

The basic economics of business are well understood and, from an economic perspective, the Internet has some very useful properties. Firstly, and perhaps most importantly, it reduces the cost of transactions - so much so that the very notion of the firm as a single entity is being challenged. We shall almost certainly see businesses unbundling their operations to focus on core capabilities, as Cisco already has.

If functions such as manufacturing, logistics, procurement and human resources are not core capabilities, then why not outsource to someone who makes a living doing these things? The Internet makes it harder to justify having all these functions under one umbrella we call "the enterprise".

Another significant effect of the Internet is the potential for very high levels of information transparency. Suppliers to large procurement portals such as Covisint are not at all happy with the fact that their prices, stock levels and availability can all be directly compared.

The Internet has many
We are used to technology providers who are dumb about business - your business, that is.
Martin Butler
other economic implications, but from the perspective of the IT industry a change is taking place that has gone almost unnoticed. It is typified by the emergence of companies such as Perfect.com.

We are used to the idea that technology providers are perfectly within their rights to be dumb about business - your business, that is. It is your job to take a technology and sculpt something useful out of it for your organisation. Pretty soon this will just not be good enough.

Perfect.com was founded by Paul Milgrom, professor of economics at Stanford and Harvard. Embedded in its procurement products is a high level of economic intelligence. I believe this is the way forward. We have always paid lip service to the notion that technology serves business, but, in reality, technology has often driven business in directions that are not always productive - the e-thing for example.

Products such as Perfect emphasise the change from technology that is developed by technicians, to technology that is developed by people who know about business. Other vendors such as Ariba are also driven by the need to embed business intelligence in applications, but Perfect.com represents a major shift in this direction.

While we once measured software in terms of its performance and functionality, we are now entering an era where it will be measured by its intelligence.

This is the real, long-term effect of the Internet upon the technologies we use: a move from technology for its own sake to technology as a vehicle for embedded intelligence. Economists, business experts and strategists will be the drivers of information technology, not the technology enthusiasts.

Martin Butler is a thought leader on technology and strategy. He is the chairman and founder of the Butler Group, one of Europe's foremost analyst groups.

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