About eight years have gone by since Nicholas Carr famously argued that “IT Doesn’t Matter”, in his often quoted article in Harvard Business Review. Countless rebuttals and affirmations have since been posted all over the cyberspace. Whether IT is a mere commodity or a strategic value to business, what cannot be escaped is a need to empirically measure it.
If IT is indeed a commodity like electricity and water, the CIO office has to generate and send a monthly utility bill to business. If IT is a strategic differentiator, then the CIO office has to give empirical business value measures and ensure that the value differentiation of IT is sustained for business growth. In either of these scenarios, it is imperative for the CIO to provide a structured way to measure the business value of IT on an ongoing basis.
A service oriented approach of IT offerings gives us a measurable framework. In this approach, CIO office commits to provide a set of IT Services. Each IT Service provides value to multiple business functions with SLAs. For example, an IT Service called ‘Email Management’, may provide all the required email management services to the business functions. Where IT is perceived as a commodity, the utilization of IT services under each business function is tracked and a user bill is generated each month like an electricity bill. If the CIO is up for a challenge, along with the IT bill a benchmark comparison can be provided so that business knows if they are paying more or less for that service.
In organizations where IT is considered strategic and not a mere commodity, the same service oriented approach works but the measurement framework is more involved. We need to define a set of parameters for each IT Service and come up with a standardized measurement approach. I will discuss them with some examples in my next article.
In conclusion, whether IT is a commodity or strategic differentiator, we have to come up with a consistent measurement framework and map its value to business. IT Services based organization structure gives us a means to arrive at such a framework and it is immaterial whether Nicholas Carr is right or wrong.