I thought of this Andrew McAfee post as a continuation of the "Does IT Matter?" debate sparked by Nick Carr.

[T]he strong relationship between IT investment and productivity growth has broken down recently.  If this is accurate, it's quite bad news.  Productivity growth is a primary engine of economic growth and, ultimately, of increases in standard of living.  If the wonderful, unprecedented, and unanticipated productivity increases we've been enjoying since 1995 are in fact coming to and end despite our continued investment in computing, and despite the fact that computers continue to get much more powerful over time, then we have a problem.

Is IT really such a great leap forward in companies' abilities to better themselves that it's more than another process improvement program?  Does modern IT really deserve a place alongside electricity and the internal combustion engine?

The optimist would say that IT-enabled collaboration and knowledge sharing will usher in huge, but hard to quantify, productivity boosts. The pessimist might note that optimists have been saying bascially the same thing since computers were first networked.

Perhaps there's room for a third perspective, the realist, who says that businesses shouldn't invest in the basic building blocks of IT any more than they should invest in the basic building blocks of electricity. They should, however, spend on IT-enabled services to be delivered on demand. Put another way, spending money on infrastructure is spending money on infrastructure is spending money on automation; maybe we've done all the heavy lifting we can there. Innovation, on the other hand, where we improve processes or uncover new advantages, is where the discretionary IT dollar should be spent. By allowing companies to specialize in infrastructure in order to deliver higher-order services, IT organizations can shift their spending to higher impact efforts that subsume technology.

Tags: enterprise IT, productivity, Nick Carr, Andrew McAfee