IT commoditization: a management view

There has recently been a public debate about the “commoditization” of IT. Is IT a commodity? And if so, what does that mean? What, in turn, would that mean for management of networks, systems and applications?

If IT is becoming a commodity, then the infrastructure is becoming a utility, and the role of management is to achieve that utility-like status. That would mean a generally lights-out, hands-off level of automation. In some respects, possibly in many respects, this utility-like goal is praiseworthy – even if it seems a long way out in reality.

However, I would argue that viewing IT as a commodity may be a fundamental misperception that nevertheless could become a self-fulfilling prophecy if the industry proceeds along less-than-imaginative lines.

The argument for IT as a commodity was articulated a couple months ago by Nicholas Carr in the Harvard Business Review. The article is compelling, thoughtful, provocative and well worth reading. However, some of the assumptions are worth reexamining.

Carr suggests that the “IT buildout is much closer to its end than its beginning” – an extraordinary opinion for someone like myself, who views current high-tech applications and delivery systems as basically “Old Stone Age” at best. (I confess, this is built upon a significant amount of personal frustration.) Carr says about 50% of corporate spending is directed at IT – actually a rather astonishing number – with data to suggest that the biggest spenders are not likely to be those with the greatest return on investment.

This last data point, however, is well in line with expectation. Anyone investing in high tech because of a love of technology in and of itself – or else because they view “Internet” real estate as finite as Rhode Island – is bound to re-experience the blunt weapon of “downturn economics.”

More telling and fundamental to Carr’s argument is the focus on high tech as infrastructure, in the same way railroads and electric utilities are infrastructure. Carr shows three incredibly aligned graphs reflecting upswing in investment among these areas. Food for thought, indeed.

However, he goes on to equate “high tech” with “data storage, data processing and transport” – of which, conveniently, he views “transport” as the leading definer. It is here where the argument for IT as a commodity begins to go awry. While “data storage” and “transport” are clearly infrastructure-like enablers, “data processing” is a rather questionable term for a universe of largely still unexplored possibilities. If “data processing” is analogous to number crunching, then the perspective on high tech is about 50 years out of date.

In all fairness, Carr goes on to posit the notion that most “best practices” for off-the-shelf software have already been defined by effective monopolies or standards, in areas ranging from word processing to supply chain management. In this case, “data processing” becomes a convenient, if not terribly satisfactory, vehicle for standardizing human and software behavior in a number of business activities, and by implication much of this standardization has already been done or is about to become complete.

For those of us who still view virtually all applications as primitive, this is an extraordinary notion. It suggests two tracts for high-tech evolution. One in which both application software, and by association – human behavior – become quickly standardized and commoditized; and another in which application software evolves towards a level of responsiveness and intuitiveness that truly fulfills its promise as an extension of human behavior –  in business and in personal realms.

This latter path reflects my view – and it opens the door to new perspectives on management software. The management of applications, networks and systems is clearly evolving, towards automating basic tasks to enable other, more “strategic” tasks that so far don’t get much IT attention. Such strategic tasks involve planning, optimization, and ultimately increasing the alignment of IT with business priorities and business dynamics. As IT becomes an integral part of “business behavior,” it becomes an instrumented and intelligent voice that can reflect back on business practices and contribute to business growth. This is far from a commodity, like the railroads – moving mass through space. It is an evolving mirror, reflecting back on who we are and how we think.