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Mastering 3 worlds of IT

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TOOL KIT

Mastering the Three Worlds
of Information Technology
by Andrew McAfee

I

CLAUDIA NEWELL

n the information era, the best of
times are the worst of times. Computer
hardware keeps getting faster, cheaper,
and more portable; new technologies
such as mashups, blogs, wikis, and business analytic systems have captured the
imagination; and corporate IT spending
has bounced back from the plunge it
took in 2001. In 1987, U.S. corporations’
investment in IT per employee averaged
$1,500. By 2004, the latest year for
which government data are available,
that amount had more than tripled to

november 2006

$5,100 per employee. In fact, American
companies spend as much on IT each
year as they do on offices, warehouses,
and factories put together.
However, as IT’s drumbeats become
louder, they threaten to overwhelm general managers. One of the biggest problems companies face is coping with the
abundance of technologies in the marketplace. It’s hard for executives to figure out what all those systems, applications, and acronyms do, let alone decide
which ones they should purchase and
141

YEL MAG CYAN BLACK

There are three
categories of IT, each
of which provides
different organizational
capabilities – and
demands very different
kinds of management
interventions.

T O O L K I T • M a s t e r i n g t h e T h re e W o r l d s o f I n f o r m at i o n Te c h n o l o g y

how to successfully adopt them. Most
managers feel ill equipped to navigate
the constantly changing technology
landscape and thus involve themselves
less and less with IT.
Adding to executives’ diffidence, corporate IT projects have often delivered
underwhelming results or been outright
failures. Catastrophes – such as the one
at American pharmaceutical distributor FoxMeyer Drug, which went into
Chapter 11 and was sold in 1997 when
a $100 million IT project failed – may
be less frequent today than in the past,
but frustration, delay, and disappointment are all too common. In 2005, when
IT consultancy CSC and the Financial
Executives Research Foundation conducted a survey of 782 American executives responsible for IT, 50% of the
respondents admitted that “aligning
business and IT strategy” was a major
problem. The researchers found that 51%
of large-scale IT efforts finished later
than expected and ran over budget.
Only 10% of companies believed they
were getting high returns from IT investments; 47% felt that returns were
low, negative, or unknown.
Not surprisingly, any fresh IT proposal sparks fiery...
YEL MAG CYAN BLACK
november 2006
141
n the information era, the best of
times are the worst of times. Computer
hardware keeps getting faster, cheaper,
and more portable; new technologies
such as mashups, blogs, wikis, and busi-
ness analytic systems have captured the
imagination; and corporate IT spending
has bounced back from the plunge it
took in 2001. In 1987, U.S. corporations’
investment in IT per employee averaged
$1,500. By 2004, the latest year for
which government data are available,
that amount had more than tripled to
$5,100 per employee. In fact, American
companies spend as much on IT each
year as they do on offices, warehouses,
and factories put together.
However, as IT’s drumbeats become
louder, they threaten to overwhelm gen-
eral managers. One of the biggest prob-
lems companies face is coping with the
abundance of technologies in the mar-
ketplace. It’s hard for executives to fig-
ure out what all those systems, applica-
tions,and acronyms do,let alone decide
which ones they should purchase and
I
There are three
categories of IT, each
of which provides
different organizational
capabilitiesand
demands very different
kinds of management
interventions.
Mastering the Three Worlds
of Information Technology
by Andrew McAfee
CLAUDIA NEWELL
TOOL KIT
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