Does IT matter?

IT's evolution had closely mirrored that of earlier infrastructural technologies. Its buildout had been every bit as breathtaking as that of the railroads. During the last quarter of the twentieth century,the computational power of a microprocessor increased by a factor of 66.000. In the dozen years from 1989 to 2001,the number of host computers connected to the Internet grew from 80.000 to more tha 125 million. Over the last ten years,the number of sites of the World Wide Web has grown from zero to nearly 40 million. And since the 1980s,more than 280 million miles of fiber optic cable have been instaled-enough,as Business Week recenty noted,to "circle the earth 11,320 times".

 As with earlier infrastructural technologies, IT provided forward-looking companies many opportunities for competitive advantage earlu in in its buildout,when it could still be "owned " like a proprietary technology. A classic example is American Hospitality Supply. A leading distributor of medical supplies,AHS introduced in 1976 an innovative system used proprietary software running on a maniframe computer,and hospital purchasing agemts accessed it through terminals at their sites.Because more efficient ordering enabled hospitals to reduce their inventories-and thus their costs-customers were quick to embrace the system.

  AHS gained a true competitive advantage by capitalizing on characteristics of infrastructural technologies that are common in the early stages of their buildouts,in particular their hight costs and lack and standardization.

IT management should bdcome borring. The key to success,for the vast majority of companies,is no longer to seek advantage aggressively but to manage costs and risks meticulously. If, like many executives,you're begun to take a more defensive posture toward IT in the last two years,spending more frugally and thinking more pragmatically,you're already on the right course. The challenge will be to mantain that discipline when the business cycle strenghtnes and chorus of hype about IT's strategic value rises anew.