What really matters in IT today

Let's face the facts. IT isn't what it once was. The pall cast by the dot-com collapse at the beginning of the decade eroded corporate confidence in IT, took the shine off IT as a desirable career path and even made us question our self-worth.

It didn't help to have pundits such as Nicholas Carr publishing articles in academic journals proclaiming that IT no longer mattered. (Read a review of Carr's latest book.)

But where are we today? What matters? What turns the gears? What are the core developments powering change in our change-happy world?

Well, for one, despite Carr's prediction four years ago (see "IT doesn’t matter"), IT matters. In fact, IT spending in North America grew a healthy 5% in 2007 and is forecast to repeat that feat in 2008, according to Computer Economics' latest IT spending and staffing survey. And while companies are buying more, as a percentage of corporate revenue IT spending is down: 1.8% in 2007 compared with 2% in 2006.

That's a good sign, says George Westerman, research scientist at the Massachusetts Institute of Technology's Sloan School's Center for Information Systems Research (CISR). "If you have a scalable platform, you’d expect the cost of that platform to go up more slowly than the revenue you get from it," says Westerman, who is co-author of IT Risk: Turning Business Threats into Competitive Advantage.

The upshot: Leading organizations are getting real value out of their IT spending, and the advantages often revolve around business agility, Westerman says. "Agile firms have significantly higher growth and have better gross margins than competitors." Solid IT infrastructure is a key building block for agility, he adds.

Done right, IT increases efficiencies and reliability, but the increase in agility is the key benefit because business environments are becoming less predictable. Cycles are shorter, quicker refreshes are required and companies have to contend with the pressures of globalization, thinning margins, rampant merger and acquisition activity, and tighter regulations. 

Agile companies navigate these choppy waters better than less agile firms, growing revenue and profits faster. 

Paradoxically, the most agile companies are those that have standardized the bulk of their core business processes and platforms. Companies once believed the more rules and standards that IT put in place the less agile the business would be overall. "The thinking was, if we do the kinds of things that will get us to cleaner infrastructure and applications architecture, all the rules that helped us get there would restrict the flexibility we need to be agile," Westerman says. "But that's just not true."

Enterprises with well-managed IT "become more agile because now it's easier to handle major changes, whether it be business expansion or launching new services," he says. "By putting the rules in place to make sure we run our architecture and infrastructure effectively, our businesses actually become more agile — and successful."