Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

The Software Defined Megacorporation - Why IT matters

Posted by Tom Foremski - November 17, 2015

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There's a new business reality that few companies know about. If you want to be a player in global markets you will need a top-notch IT department. It won't be the same as the current one but whatever you do, don't buy the hype that you can just use off-the-shelf technologies and that the cloud makes IT departments obsolete.

Business edge will be defined by IT edge. IT matters and the performance of your IT department matters a lot.

The following is from my ZDNet column: IMHO:

The IT department will be transformed from a slow changing cost center and into a vibrant, creative organization essential to every business competing on a global scale.

More than ten years have passed since the publication of the book, "Does IT Matter? Information Technology and the Corrosion of Competitive Advantage" by Nicholas Carr, the former Executive Editor of the Harvard Business Review.

Few people disagreed with Carr's argument. In a world where every large company has the same IT systems, the same ERP apps, the same IT infrastructure, the same commodity hardware, no one has a strategic advantage.

Carr was right but that was then...

Times have changed and these days IT clearly does matter. The rise of the global digital corporation will require extraordinary levels of IT agility. Even the slightest IT edge will offer tremendous benefits at scale. Where else will that edge come from? It won't be from off-the-shelf solutions.

And don't be distracted by the red herring of arguments about the cloud versus owning your own data center. The IT department is fast becoming transformed into a software organization, and into the most strategic and most valuable resource within every global enterprise.

Deadly dull IT

Ten years ago I remember writing posts about how IT enterprise markets had become dull and boring. All the innovation in tech was with web companies such as Google. Oracle was rolling up huge swaths of the IT industry with its acquisitions, and few major IT companies remained. There was virtually no innovation, that is until virtual IT technologies from VMware and others began to emerge.

IT is far from dull these days. Over the past decade the successive waves of IT virtualization: from servers, to storage, networks, and now data virtualization -- have transformed the data center beyond recognition.

VMware talks about the "software defined data center" -- hybrid data centers combining private and cloud based IT systems. But software defined data centers are not yet a reality -- we still need to complete the emerging data virtualization wave -- but it won't be long.

The software defined corporation

Software defined data centers will make possible the software defined corporation. All global enterprises will become software defined businesses because how else will they compete and survive in a data driven world? IT agility will be tightly bound to business agility and in being the first to exploit new business opportunities.

Don't be distracted by all the red herring chatter about owning data centers or using the cloud; or how IT departments are irrelevant when every department can use cheap, off the-shelf software services. That's old thinking, a continuation of "Does IT Matter?".

Every global enterprise will need an extremely agile IT platform, and an IT department full of highly skilled technologists capable of giving it a competitive business edge. Software is the only scalable way to differentiate any and every business.

IT matters, and the IT department matters a lot.

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