Living on the Grid: why information technology does matter

Nick Carr created huge waves a few years ago with his Harvard Business Review article and follow-up book titled Does IT Matter? In these works, he opined that information technology is becoming a standard utility, much like the water and electricity that flows into our homes and businesses. And as with water and electricity, it is no longer a competitive differentiator for companies to have these services.

In his latest work, The Big Switch: Rewiring the World, from Edison to Google, Carr looks deeper into the phenomenon, observing that cheap, utility-supplied computing "will ultimately change society as profoundly as cheap electricity did." Early effects include the shift of control over media from institutions to individuals, to the way wealth is distributed.

"In the years ahead, more and more of the information-processing tasks that we rely on, at home and at work, will be handled by big data centers located out on the Internet. The nature and economics of computing will change as dramatically as the nature and economics of mechanical power changed with the rise of electric utilities in the early years of the last century."

Carr says a new generation of "utilities" -- this time providing IT processing power -- promises to provide services on a large scale. "They're using the broadband Internet, with its millions of miles of fiber-optic cables, as the global grid for delivering their services to customers. Seeing the economic advantages of the utility model, corporations are rethinking the way they buy and use information technology. Rather than devoting a lot of cash to purchasing computers and software programs, they're beginning to plug into the new grid."

The rise of this processing grid -- or "cloud" if you want to call it that -- is paving the way to more intelligent solutions to a range of problems, both for businesses and society. However, there's a dark side as well. In an interview pertaining to the book, Carr voiced concern about the erosion of professional-level jobs due to the rise of computing.

Technology change "leads to the loss of certain types of jobs, but it ends up creating a whole lot of new kinds of jobs. We saw that with electricity, which brought a boom in both unskilled factory jobs and skilled white-collar jobs."  However, he warns, "computerization is taking a very different course. It’s allowing companies to replace all sorts of workers, skilled and unskilled, with software, but it isn’t creating big new classes of well-paying jobs in the place of the ones it destroys. That’s one of the main reasons that we’ve been seeing the steady erosion of middle-class prosperity over the last two decades. This effect will be magnified by the arrival of the World Wide Computer, which is both displacing additional categories of jobs and allowing other jobs to be transferred overseas where they can be performed more cheaply. If the electric utility helped create the vast middle class, t he computing utility may help destroy it."

I don't share Carr's pessimistic vision of job loss due to global automation. The rise of on-demand computing may threaten jobs -- especially corporate IT jobs -- but also give rise to new opportunities.  The shift will be from jobs in large companies to more entrepreneurial opportunities. Entrepreneurs (and smaller units of large companies for that matter), for example, now have low barriers to entry to enter new markets, without having to make heavy investments in IT. For example, Doug Kaye, co-founder and CTO of GigaVox, said in an interview that he started his company investing a grand total of $83 in computing infrastructure during the first two months of operation -- by tapping into Amazon Web Services cloud resources.

Carr’s arguments make sense when considering the commoditization of hardware, operating systems, networks and storage. We’ve all become jaded by the breathless (and eye-rolling) claims of ‘revolutionary’ technologies, paradigm shifts and inflection points.

Equipping employees with Windows PCs and laptops is simply a given to stay even with everyone else, not something that's going to propel your company to the head of the industry. At the high end, installing an ERP and CRM system won't make your company an industry leader, it will simply keep you in business.

Think about this: just about everyone has access to movie-production software, and therefore are technically capable of producing world-class films. But how many new Steven Spielbergs or Spike Lees do we see emerging on the scene? Probably not too many more than before all this technology was widespread. The same applies to the art of business -- it's what you do with the technology, not merely possessing the technology that matters.

No one has ever expected IT to solely responsible for a company’s rise or fall. Adroit management, supported by the right IT tools, makes the difference. A company that smartly and innovatively leverages its IT in new and creative ways will move to the head of the pack. And, thanks to IT, you don't need a workforce of thousands to do so.

This post was originally published on Smartplanet.com