Role of the CIO

Carr's views have been greeted with groans, particularly from vendors, which is not surprising when he advocates such things as management spending less on IT and concentrating more on vulnerabilities than opportunities. The reaction to the book has generally lacked the quantity and the vitriol of the response to his article (Don Tapscott's piece in this magazine as recently as June this year notwithstanding).

There is a whiff of hurt pride and vested interest about some of the responses, but Carr is first to admit that the reaction from CIOs themselves has been "less reactionary; more thoughtful. Certainly not all CIOs are positive, but I think even those that are negative see that they agree with some things".

Whether that is true of the mixed future he foresees for that audience remains to be seen.

"If there's a silver lining in the commoditization of IT, it's that the balance of power is tipping away from the vendor and toward the user. With competition among suppliers intensifying, IT buyers are now in a position to throw their weight around much more aggressively - negotiating contracts, for example, that ensure the long-term viability of their PC investments, tie payments to actual usage, incorporate tough service-level agreements and impose hard limits on upgrade costs," Carr says. "And if vendors baulk, companies should be willing to explore cheaper solutions, including open source applications and barebones network PCs, even if it means sacrificing features."

As commoditization, utility services and outsourcing (and particularly business process outsourcing) continue apace, CIOs will primarily play the role of relationship managers or even that of "chief utility officer". One commentator of Carr's original article decried this vision as making CIOs' work extremely boring.

Carr sees the "virtual IT department" as quite a possibility (although he is no fan of the virtual company, which he views as entirely dangerous to corporate wellbeing). "I think it's hard to deny that that is the trend," he says. "How long it takes and how it manifests itself in individual companies is going to be all over the place." All of this works against the self-image that many CIOs are trying to build for themselves as strategy makers rather than strategy implementers. Carr warns that "trying to create this idea that people think they have to live up to is probably more destructive than constructive".

Carr stresses that IT management is not alone in this situation. "Human resource departments are in the same position. You can't fulfil your strategy without the right set of people, but the actual task of bringing in those people is not in and of itself strategic."

He does, however, throw CIOs one grain of hope, portraying them as the controlling hand, the voice of reason that comes between the lofty visions of executives and the even loftier promises of vendors.

"CIOs need to lead the way in promulgating a new sense of realism about the strengths and limitations of IT. Realism is particularly important in IT planning," Carr says. "The continuing assumption that IT has strategic value often leads to over-optimistic predictions of the returns from new investments, leading companies to spend too much too soon.

"When assessing spending proposals, it's not enough to run return-on-investment calculations. CIOs also need to lead the way in getting their organizations to think clearly about how competitors will respond and what those responses will mean for margins and profits. In particular, they need to take a hard look at whether projected cost savings or productivity gains will end up on their own company's bottom line or in the hands of customers. And they need to objectively assess whether any anticipated revenue gains are truly defensible."

But the most frightening - and to date least discussed - scenario that Carr raises is that of a major disruption to the economies of nations, heralding the potential for a new and global depression. And IT apparently has a major role in bringing this dire situation about.

In a chapter of his book entitled "The Universal Strategy Solvent: The IT Infrastructure's Corrosive Effect on Traditional Advantage", Carr discusses the levelling impact of automation, commoditized IT and especially the Internet.

"Any traditional advantage in prosecuting a particular activity or process, from setting type to designing componentry to providing customer service, will tend to dissipate as that activity or process is automated. As businesses adopt similar systems, best practices turn into universal practices, and performance converges."

He describes a late 1990s study by Mark Cotteleer of the Harvard Business School on a manufacturer's global adoption of a single ERP package. Before the new system was put into place, variations in order lead times among three regions (the US, Europe and Asia) were pronounced, with North America well behind the other two. Two years down the track, those differences had largely disappeared - the US was now ahead, and Europe and Asia's lead "had been obliterated, apparently forever".