Customer Reviews

IT Doesn't Matter-Business Processes Do: A Critical Analysis of Nicholas Carr's I.T. Article in the Harvard Business Review

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Smith and Fingar present an interesting monograph on the current state, and future possibilities, of IT.

Their premise is that IT, as we know it is over, Business Process Management (BPM) represents the next wave of corporate computing. They do a good job of defining IT but never do they adequately define BPM. We are told what it isn't; it's not data, it's not hardware or software, and it's not Web services. But what is it? It is loosely defined, first, as a value-chain that encompasses suppliers and then as the white space between the boxes on an organization chart (referencing Rummler's terrific book on managing process).

Regardless, I believe they make a valid argument. It's not how many servers you have, it's about how you're using the data and applications to make money and trounce the competition.

But Carr also makes valid arguments, after all, who screws things up like IT? Who would think that in this day and age we still have runaway IT projects and projects that lack business value? There is a dearth of business sense among IT managers and there are too many business managers who find computers a mystery and abdicate business decisions to IT managers.

At times the book becomes strident and takes on the spirit of a manifesto. The section on IT investments, and how they're going to soar again, references a science fiction writer and talk show host as sources. Later on, Smith and Fingar lament that Carr's article will destroy economic growth by giving CEOs justification for withholding IT investment. Perhaps the silver lining here is that vendors will offer products and services that add business value and IT and business managers will have to make solid business arguments to justify purchases.

What is implicit but not explicitly stated in this book or Carr's article is the importance of governance: businesses must articulate strategy and align IT with that strategy. Organizations must select and manage IT projects as business projects managed by capable and IT savvy business leaders and business savvy IT managers. This will distinguish those firms that can effectively utilize IT resources from those that cannot.

As anyone who is responsible for strategic IT planning can tell you, it's a new dawn in IT these days - especially as IT spending relates to improved business efficiencies and the bottom line. While Carr's HBR article is a simplistic and flawed interpretation of where IT is heading, Smith and Fingar present a well thought and presented, point by point analysis of, not only what is wrong with Carr's misguided vision, but also solutions offered by new directions in IT of paramount importance to strategic corporate management. A significant element of my company's competitive edge came from developing advanced business processes, so we are already up to speed on the directions towards business process management espoused by Smith and Fingar. I do, however, know of many examples of companies and organizations that might be looking for excuses to minimize their IT expenditures due to problems with previous flawed IT strategies and execution. For those companies, Carr's article might provide the perfect justification to retrench. This book, on the other hand, is for forward thinking strategists who are looking to optimize and innovate to maintain and improve their efficiency and competitive edge.

Contrary to what some might suspect, this is not simply a thinly veiled attempt to plug their recently published book, even though it does essentially repurpose much of the content to make their case. However, the vision Smith and Fingar paint of a Business Process Management (BPM) future as counterpoint to Nicholas Carr's HBR article should perhaps be more appropriately called Business Process Magic, and even if the future they deify is less than five years away (difficult to believe) their vision does little or nothing to solve the real pain today. The fact that standards have been developed, frankly doesn't mean they'll ever be widely used, except, perhaps, for marketing purposes by those involved in developing, selling and profiting from them (Microsoft, IBM anyone?). And, just because something is "enterprise," doesn't mean it has to be complex, confusing and expensive, does it? Some things to consider when evaluating the IT/BPM near-future (or more accurately, your business pain today):

1. IT departments are not the customer.
Smith and Fingar go to great lengths to explain what Carr did and did not mean by "IT," ultimately deciding he meant the industry, not IT specialists (IT departments, including the CIO). The truth is, IT departments may provide the backbone, the infrastructure, to the enterprise, but they are not the brains. That is, they are not the subject matter experts (SMEs) who perform the day-to-day transactions that define the enterprise's business value (even Smith and Fingar estimate 80% of enterprise processes should be managed by business users, not IT). This is not to condemn IT specialists (just as programmers generally shouldn't design UIs, UI designers generally shouldn't write code). Despite years of aligning IT with business, the sensibilities are just too different. Smith and Fingar seem to be committed to helping internal IT redefine itself into being something greater than it needs to or should be, ultimately causing overlap and redundancy with other senior management. The COO/CFO and ultimately HR will own the future of process management because, like it or not, humans are the critical components - IT is simply the enabler. IT will support things automated, but should never define requirements (or even build the systems if the software is designed well enough) unless it is their own internal processes (where they are the SMEs).

2. Cost matters.
There is little mention of the cost of implementing existing or future BPM systems, but in Smith and Fingar's universe it ain't gonna be cheap. Kodak spent 1 billion dollars implementing an ERP system, and that's just a piece of the BPM puzzle. Why so much? Because 20-50% of IT costs (estimates vary) are integration costs, tying systems together at the code level. Consider this - if 80% of processes should be managed by business users, is all that integration really needed? Perhaps there's an easier way.

3. Don't carboload on consulting.
Implicit in both their books, consulting appears to be an eternal given. It doesn't have to be - not if the tools are truly usable. Consultants don't know your business - they know the toolset, and they excel at holding hands. You know your business. If the software is really designed to be used by business users, then USE it. Get your hands dirty, document your processes, then let your employees interact with them. Analyze the usage. Then think about bringing in consultants if and when problems start to emerge (or read a book on process, you might just fix it yourself!).

4. It's all about usability.
The bottom line - if Carr is right and IT has truly been commoditized, then the sole critical differentiator is ease of use. And if Smith and Fingar truly believe business users must use BPM software hands-on to maximize impact, it not only has to be easy to use, but logical, and aligned visually and semantically with relevant and meaningful metaphors. The outlook today? Usability is painfully adequate in most desktop and web apps (score points for Carr) but still highly questionable for IT department-centric server apps (regardless what Smith and Fingar claim, I'm from Missouri on this one).

Finally, full disclosure - my company, ... has developed a business operating system does solve real pain and is available today. ...enables business users to use their own business processes to organize people, applications and information. And yes, it's easy to use, reasonably priced and out of the box.

Smith and Fingar take Carr's assertions to task, and tear them to shreds. With clever observation after clever observation, they show how and why Carr is extremely misguided -- and how and why the corporate landscape is and should be changing from IT-heavy to business process management-focused. Smith and Fingar are truly onto something: a means being adopted by many companies to help them become agile, customer-centric, real-time enterprises, with business users, not IT staffers, leading the way. Read this and catch the BPM wave (make that Third Wave, as Smith and Fingar discuss in another work).

When Carr published his ill founded thesis in HBR a few months back it shook the corporate world. It was like telling the CEOs that they were stupid to spend millions on IT to achieve competetive advantage. Relating IT to commodity was not only erroneous but showed a lack of pragmatic involvement by the author in issues dealing with IT. In my 35 years as senior executive I have never encountered such an irresponsible behavior (HBR+ Carr= ATTENTION).

The response by Peter F and Howard S is timely in that it attempts to explain rationally the present short comings of IT in delivering its true potential and organizational culture that has focussed on cost management via IT. The authors, I believe lay out the very foundation of the future and next generation of IT solutions that will be driven by businesses where the user will orchestrate services that will be delivered using the under pinnings of IT infrastructure. Yes we got rid of the Glass house only to have built a plexiglass replacement. IT geeks are notorious in delivering the perfect mouse trap and take inordinate time. Yes user's need to take charge.

I have read the book and fully recommend that any one who has any responsibility in IT should do so before the ill founded thesis in Carr's article hits the corporate board room and you will have to hurriedly prepare your response. There is a lot of ammunition here that help us in delivering the right message- that IT does matter not in its components form like the PCs, network, or routers-yes they are commodities; but the software (services) are the value that will create competetive advantage for our companies for a long time to come. The changing customer environment mandates a responsive process driven business where IT remains supreme and evolving.

Linking BPM to Carr's argument that "IT Doesn't Matter" is a clever move by Smith and Fingar, but it is a justified one. In their last book they claimed competitive advantage through BPM and new BPM technologies. In this book they push against the arguments made by Carr in this HBR article from May "IT Doesn't Matter", and they attempt to set out holes in his arguments and his oversight of the emergence of the BPM movement. I love it, like I love their previous book BPM3W. Clearly this book had to get to market fast, so it's quite short, but it take a completely different look at BPM from another dimension created by Carr, and the two books make good companions. btw guys, I'm still waiting for the New Directions book mentioned in the cover of BPM3W.

The integation of industry comment, with new ideas, works well, and weaving in comments from people that wrote to them during the writing helps give alternative views not previously published.

Nicholas Carr's article in the Harvard Business Review has taken the backlash wave from the IT overspend in the 1990s to spin a sensational story, a story that some rebuttals have called "dangerous," for it distorts the role of IT in creating competitive advantage. Companies are indeed struggling with the issue of IT's role, and it is difficult to break out of existing misconceptions of IT. This is evident in David Forbes' review of this book. He seems so locked into his perceptions that he distorts what the book actually says. For example, he says the Smith & Fingar's vision is that of expensive ERP sysems of the past. He must be so busy railing against ERP systems that he failed to actually read the book's related discussions that are in fact in agreement with him. And, about Forbes' comments about usability... did he actually read the section on amenity? Again, agreement.

The point is that when it comes to IT, many people bring much baggage to the subject, for IT means many things to many people and is an emotiaonally charged subject for those with a particular stake in IT. Many read a book like this and filter it through their individual bias to the point where they distort what the book actually says.

As a business manager using the book to foster discussion in our company, I suggest readers go through it twice: once quickly with their defensive mechanizms in place, and then again with a keen eye on what the IT issues portend for their company going forward. We are doing precisely that in our company and find the book to be the focal point of our deliberations, for it covers all the key issues of the past and those setting the stage for the future. Correct thining about IT, not preconcieved notions or turf bias, is essential for companies to move forward, for as the book says, IT is not about the past fity years of business automation and its inherent limitations, IT is about a "change in kind" in business automation where the focus is not on data and record keeping, but on the way business is conducted. And yes, the authors totally agree that usibility is key to that, for it's business people who must manage their own business processes.

This book offers lots of anecdotes and comments from various academics, journalists, consultants and IT leaders saying why they disagree with Carr's proposition. Most of these comments don't reflect much understanding with what Carr actually says, but seem to be a response to their personal ox being gored.

Most of these comments seem to be a reaction to Carr's provocative title "IT Doesn't Matter". But Carr's central argument is not that IT, literally, doesn't matter. IT matters very much to modern business, in the same way that using electricity, distribution networks, capital and debt markets matter.

Carr's argument is that IT is less and less useful for differentiating one's company from the competition, or for establishing competitive advantage. IT is becoming a mature industry and the same or similar technology quickly becomes available to everyone. Carr supports his argument with historical reviews of other industries and notes that the most profitable companies actually spend less than average, as a percent of revenue, on IT. Carr's arguments are so simple, intuitive and well-founded they can scarcely be argued.

Another way this book falls short is that Smith and Fingar don't spend much time living up to their title, to explain why Business Processes matter. I agree that business processes and the ability to intelligently apply IT to support them is what really matters in establishing competitive advantage, but they spend little time discussing this.

I have to admit it, but I'm becoming quite a fan of these guys since the publication of BPM3W. If anyone has missed the global coverage of Carr's "IT Doesn't Matter" article over the last few months, and they work at the intersection of business and IT (as I do) then they haven't been listening! What's great about this new little book is that Carr's negative messages about the IT industry are seriously examined. There are 5 and a half pages of references alone, pointing to virtually everything that's ever been written about Carr's argument. What comes out is a clear, compelling, case against Carr. Not only do Smith and Fingar show that IT matters, they show where the emphasis should lie, on the business processes supported, managed, and optimized by IT.

This book signals a change in the fundametal use of IT in business. While the Harvard Business Review article agrues that IT doesn't matter, this book dissects those arguments and offers a completely different view and conclusion. Although many companies still think of business automation as record keeping and transaction processing, the authors describe a "business process" revolution that has already been embraced by leading companies in almost every industry.

Expect to see negative reactions to this book from those clinging to older forms of business automation ("Old IT"), which have indeed been commoditized and no longer matter. The section on commoditization in IT has been especially useful in helping my company think about how "New IT" can enable new ways to gain efficiencies instead of the same-ole, same-ole annual IT budget cycle. This book is a quick read and should be in the hands of every member of the executive team as they make vital decisions about managing their IT investment, for it explains what aspects of IT really matter and why.