A technology-Centric view of IT in Business

Dhar & Sundararajan(2007) argue that the past forty years certain principles in IT can be recognized that remain constant. These invariants can be used to interpret the past and make predictions about information technologies in the future. They present a model where in the influence of these technological invariants and the consequences on IT in Business are explained.

Technological invariants

The first technological invariant is digital representation, the visualization of things as information and in particular digitally represented information. Examples are: a bank balance, music, our voice or video can all represented as digital information. This digitalization allows for new possibilities in the use and transport of information.

The second invariant is computing power. “The long-term exponential growth of hardware power, broadband, storage and the miniaturization of IT devices”. Moore’s law states the doubling of processing power each six months and explains this grow in computing power. Computing power has grown, become cheaper and software has made it more reliable.

The last invariant is modularity, this is the sustained increase in programmability of IT systems in a modular way. This allows aggregated complexity to be easier integrated into existing standardized software platforms. This allows existing IT systems to add new functionality and usability with just modular additions to the software. This way Modularity fundamentally provides power to the first two invariants.

Consequences in business

These three technological invariants shape the base to recognize the consequences in business. Dhar et al. recognizes three consequences of this invariants in business. Digital representation together with the growth of computing power and communication power facilitate the separation of information from a growing number of artifacts. The music CD, where the digital distribution of mp3’s only became feasible once there was enough broadband is an example of this.

This separation of information form its artifacts can alter the fundamental economics of an industry, making their products become information goods. The economics and production of information goods differ form tangible goods and will have many consequences for the way business operates once this separation starts to plays a role in the company’s sector.

The growth in computing hardware power and the ability of software to be layered in a modular way allows for IT infrastructures to become larger, more powerful and more accessible. According to Dhar et al. supply chain management software platforms and on-demand search platforms like Google are an example of this. Modularity results in functionality adopted by early innovators to be incrementally integrated into these powerful and shared infrastructure platforms.

As a result these large IT platforms can create opportunities and threats for companies which need to be addressed in corporate strategy.

The third consequence is a growth in society of the importance and variety of IT mediated spaces of interaction. The difference between Technology-mediated spaces and spaces in the physical world is that the latter is shaped continuously by the participants, where the IT ones are developed and launched in less continuous form. Digital representation is key in facilitating exchanges of information in these spaces. Computing power supports this by allowing the built of complex Technology-mediated interfaces and Software modularity enables the evolution of spaces and the build of new ones with little effort.

This results in new way of organizing and manipulating information, giving rise to new social structures and business models. Organizations need to understand that these developments and changes in spaces can disrupt the existing business models.

Conclusion: Why IT is important in business.

We have seen that IT can transform industries and that production, economics, social structures, business models and corporate strategy are all effected by these consequences of IT in business. This underlines the importance of IT in business.  “Executives need to be vigilant about how information technologies might be transforming their industries and must be able to anticipate future transformation before it occurs.” The model they presented can help analyze the building blocks and consequences of web 2.0 and social media for businesses and the transformation that they might bring to industries.

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