IT Going Away

CIO Insight: Some business and technology analysts are asking whether the CIO role and IT organizations will survive. What are your thoughts?
Dale Kutnick: In the last 20 years, many people have said IT will disappear, will get embedded in the business. We go through this anarchy phase all the time: "We don't need CIOs, any moron can run that." The problem is, from a regulatory standpoint, it ain't going to fly. Companies need a senior officer in charge of IT to know what's going on. More important is the amount of money spent on IT, and the fact that shared services are growing. Take financials: I can do my financials on my spreadsheet. So why is my financial organization getting larger? Because finance is a shared service. Most companies have centralized or federated human resources, too. IT's the same; there's leverage to be gained. That's why the idea of IT being absorbed into the business is nutty. Why would business executives worry about license fees and managing servers? That's dumb.

Your colleague Mark McDonald says the argument that IT for competitive advantage is going away is nonsense. What do you think about the link between IT and strategy?
It's only being questioned by knuckleheads. There are always naysayers who pop up and say IT isn't strategic, it's becoming less strategic, it's becoming a commodity; the Nicholas Carr B.S. And we've responded to it; we're quite vocal. There's not a doubt in my mind that IT is more strategic than it was before, for two reasons. One, most organizations in the past 10 years have doubled the amount of money they spend on IT. It's now getting attention at the board of directors. Which means you'd better not screw it up or you'll find out how strategic it was.

Moreover, there are absolutely, unequivocally companies in every industry that have used IT as a competitive differentiator. Not absolute IT, but IT as part of business process. I recently talked to a transportation company; they use IT to differentiate their scheduling and distribution strategies. IT is an undeniable component of all that, and is becoming more important all the time. In that business the motto is, before we move something, let's think through the consequence of it from an information standpoint. To me, IT is becoming more strategic than ever.

Think about where IT is going in terms of solving real-world problems. Think about the aging population: Who's going to take care of us old folks? We will need surveillance cameras, robotics, sensors and things that react. If we fall, they call the doctor. We'll have chips under our skin that will track our vital signs. We have to get over our hang-up about devices being embedded or attached to us.

Being green, especially in Europe, is very important. Here, people talk about saving money cooling their data centers. In Europe, everyone talks about carbon footprint. In Europe, half the CIOs talk about how IT will be extremely important in managing energy. We will see a redesign of all systems that utilize energy to better use or exploit IT to make decisions about energy use.

How much fuel do I use? How much energy do I need to heat the building? How do I recycle? You will see a lot of breakthroughs in the next five years.
These are social responsibilities: becoming green, helping our aging populations. Governments have a duty as well. That said, there are significant economic opportunities in this. We have not applied as much knowledge to what I call the next computer industry.

What new IT and business strategies are on the horizon?
IT enabling new businesses and business processes. Since companies are doing a better job documenting their business processes because of Sarbanes-Oxley and other legal issues, they're starting to examine business process patents. Document management plus business process management equals business process patents. NTP [the patent law holding company] sued Research in Motion [manufacturer of the BlackBerry personal digital assistant] and won $612 million for a business process. Amazon patented its online shopping cart. Visa and MasterCard own patents for credit card authorization.

As companies apply technology to existing processes, they think about new things they can do with it. A process is nothing but some business components with an information flow. Apple did it with excellence in the iPod. Apple didn't invent anything; it's really combinatorial innovation. We're combining business components and processes in different ways. We're able to source business components and product components from halfway around the world to do concurrent engineering. Think of the concurrent engineering when Boeing built its new jetliner. They have to ship components around the world, with millimeters of tolerance.

We are a couple of years away from nanotechnology and biotechnology being im portant stuff. We will program molecules. I'm a huge believer in materials science. We are right on the verge of all sorts of real cool things happening. The possibilities are very exciting.