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Tech Industry

Why IT still matters

Wading into a debate triggered by a recent Harvard Business Review article, Microsoft's Paul Flessner tells CNET News.com in an interview that the proffered policy prescription won't cure what's really ailing the computer industry.

A recent article in the Harvard Business Review stirred unusual interest within the senior ranks of the computer industry by contending that the broad availability of information technology has dulled IT's effectiveness as a competitive weapon.

Since then the piece, "IT Doesn't Matter," has been endlessly dissected--as much as for what it suggested as for what it reported. Indeed, if the central thesis of the article proves true, the implications for an IT industry struggling to recover from nearly three fallow years are grave.

Like most tech companies, Microsoft has more than an academic interest in how all this turns out. The company, which has sold billions of dollars of software over the years, would suffer the effects of yet another slowdown in customer buying.

Paul Flessner, senior vice president of Microsoft's server platform division, recently waded into the debate in an interview with CNET News.com. Yes, he allowed, IT providers do indeed have a lot to answer for in terms of unfulfilled promises. But Flessner roundly rejects the notion that businesses should hand over the keys to their core businesses systems because the technology is too complex. He argued that companies with an interest in driving services revenue (read: IBM) are behind the promotion of the idea that IT should be paid for like gas or lighting bills.

Instead of wide-scale outsourcing, Microsoft says companies need products that are easier to implement and administer. In that vein, the company is working on ways to simplify data center operations and more tightly integrate products--two initiatives whose success or failure may well help decide how much IT ultimately matters in coming years.

Q: It seems like Microsoft is essentially defending the position of IT in businesses. Are you?
A: You bet. I was an IT professional for a number of years. The (Harvard Business Review) article just isn't clean enough. (It) actually makes some good points; there are certain parts of any value chain that are less critical to a business. If you're a distribution company, you want to outsource or out-service your payroll system. Microsoft outsources our payroll system. There are systems that are less mission-critical to your business than others, and if they are truly viewed as commodity, then sure, manage them cost-effectively.

Any problem with that view?
I have no problem with that. I encourage it. I think it's exactly the right thing to do. But to say that because everyone has the same technology, it's a commodity? The golf club example is real: I don't play golf like Tiger Woods. Not everyone has the same systems that Wal-Mart does. It's just silly to think that there's no competitive advantage to be made in IT. It's insanity in my mind.

You also hear companies talking about utility computing, the idea of outsourcing your systems altogether but also getting more out of the systems that you have. What's Microsoft's feeling on that?

As an industry, we don't know how to manage an application today.
We support cost-effective management of your enterprise. And if there are low-value or lower-value systems that you believe are in a commodity state--I use payroll as an example--sure, manage them the way that you need to manage them. But to say that if you're in the distribution business, there's no competitive advantage for your distribution system, I guarantee you that companies where their core competency is located won't be outsourcing those systems.


So if anything I'm providing a tone of balance to the message. IT doesn't matter: What the heck is that? That's absolutely bull. You know, IBM's quote "We're in the post-technology era"--what is that? I don't even understand what it means. It means you're a services business--that's what it means. And if IBM wants to be a services company, that's OK with me. But don't put the rap on the IT guy; that's just the wrong thing to do.

You said that Microsoft has something to answer for the complexity that people have and you talked about the Systems Center initiative of integrated management products in 2006. Can you tell me how that will come together?
Initially, there's no real product integration. We're just going to bundle (management products)-kind of like Office was in the early days; we'll just bundle two products and make them available at a discounted price or something along those lines. But we wanted to signal hard to the market that we're going to a different place.

What specifically do you think is wrong with the status quo?
I think the entire systems management operations management area is a bit at a stale place in its overall life cycle. There doesn't appear to be the necessary leadership and vision...As an industry, we don't know how to manage an application today. Can I take this transaction offline and not affect that system? If I want to version change this module, is it going to goof up any other module? There's just so much about an app that we don't understand.

What will be Microsoft's response?
It will be a significant management push. Other management vendors will be able to plug into the operating system services that provide this information and tools. It won't be something that will be closed just to Microsoft.

Jumping to your Jupiter line of server applications (due in 2005). It seems bundling and integration is the key theme there as well.

The customer shouldn't have to be the systems integrator.
Bundling is the step toward integration. Integration is about taking cost of ownership out. The customer shouldn't have to be the systems integrator. We're not IBM. IBM loves WebSphere (Java-based server software) because it's big and cumbersome and difficult to integrate and they put 140,000 services people on the street to integrate. I don't have that. I have to take the integration out of the hands of the customer and the service supplier and put it back into Redmond. And get it right so the customer has an easy deploy and setup. And they can deploy their developers and systems integrators on higher levels of business value, not on integration. I think it puts us in a stronger position against IBM. And overall, it's certainly a big customer-satisfaction thing.

What about hosted services?
Well, we want to serve all sectors of the market. We talked a lot about hosted services during the Internet boom and didn't know where it was headed and had all kinds of thoughts about it. There's a good business there and an important business, and I think we're talking about other management types and management PC initiatives we can offer. The small medium-size business sector still can be served well through some sort of hosting services. I think the Business Solutions group (that sells packaged applications to small and medium-size businesses) has a plan there. You'll see it where it makes sense.