Does IT matter anymore?

With all due respect to The New York Times and the Harvard Business Review, CNET News.com's Charles Cooper says the prophets of decline are missing the forest for the trees.

Charles Cooper Former Executive Editor / News
Charles Cooper was an executive editor at CNET News. He has covered technology and business for more than 25 years, working at CBSNews.com, the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet.
Charles Cooper
3 min read
When The New York Times speaks, people usually prick up their ears.

In the last month, the Times has twice referred to "IT Doesn't Matter," a provocatively titled piece in the May edition of the Harvard Business Review that makes the argument that the information technology sector has lost its special status as a growth industry.

Briefly put, the argument is that IT is no longer a strategic weapon that endows a company with strategic advantage and has simply become one of the costs of doing business. And the thinking goes that if IT is simply the latest in the conveyor belt of industry-shaping technologies, such as the railroad, the telegraph and the internal combustion engines, the necessarily conclusion is that the industry is doomed to a diminished future.

Whether IT has gone through a normalization process is one thing. Suggesting that IT doesn't any longer matter is quite something else.

To be sure, after all the excesses of the recent past--after the dot-com implosion, after the disappearance of thousands of jobs and the evaporation of billions of dollars in market value--the optimists don't have much of an answer to the party's-over crowd except to say, "Wait until tomorrow."

Being a naysayer about tech used to be a contrarian position, and now it's the conventional wisdom. But is it a correct reading of the future?

That question of what's wrong with Silicon Valley and where it is heading recently got taken up by Sequoia Capital founder Don Valentine, one of the technology industry's legendary venture capitalists--with an ego to match his outsized reputation.

"This is the nature of both technology cycles and economic cycles," he told a ballroom full of entrepreneurs gathered last week in Santa Clara, Calif. "Recessions are normal. We will have more recessions."

Silicon Valley is about change, and the end-of-history approach is of limited value.
Even though Valentine took more than a few shots at the press for being addicted to sensationalism and being saddled with the institutional memory of a gnat, I found myself wondering if he wasn't right. Silicon Valley is about change, and the end-of-history approach is of limited value when you want to figure out the future of an industry that keeps morphing as rapidly--sometimes radically--as the IT business.

In 1978, Merrill Lynch issued a less-than-prescient report concluding that prospects for entrepreneurship in Silicon Valley were dimming. The timing was a bit off, considering that the declaration came just before the biggest burst of creation in the history of the technology community. But Merrill wasn't alone; you can find the same theme of imminent decline repeated in headlines carried in major newspapers and magazines over the following two-and-a-half decades.

The tut-tutting of the prophets of decline notwithstanding, company-to-company business transactions over the Internet this year will finish to about $4 trillion. And even after sifting through the rubble left over by the likes of the Webvans and Pets.coms of the world, online retail sales still reached $76 billion in 2002. ("The big busts in the last five years were mostly retail businesses rather than technology businesses," local tech marketing whiz Regis McKenna noted.)

The boom and bust was hairy, but it forced the survivors to adopt a sober approach to the investment and management of information technology. That may suggest to some we're nearing the finish of the great build-out of the IT infrastructure. I think it's a signal that we're simply stuck in a holding pattern after gorging on the hors d'oeuvres.