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Is IT Good Enough to Be a Commodity?

Posted by Frank Gens on September 25th, 2005

How’s this for an interesting perspective…

When I spoke at IDC’s CIO Conference in Milan last May, one of the other speakers was Nicholas (IT Doesn’t Matter) Carr, who presented his controversial vision of the impact of IT commoditization. Later that morning, Renzo Passera, the CIO of Italcementi, the $6B+ international cement manufacturer offered the following reaction to Mr. Carr’s presentation (I’m paraphrasing):

Since my company makes cement, believe me: I know what a commodity is. One of my frustrations as a CIO is that IT – particularly software – has such inconsistent quality. So many bugs, patches, poor documentation, on and on. One of the hallmarks of a real commodity is that you always know exactly what you’re getting – specs are well-defined, and delivery to spec is the rule or you’re out of business. IT has a long way to go before it is even worthy of being labelled a commodity.

OK, we can all agree that software is more complicated than concrete. But I’d say Renzo is more on the mark than not. We have a long way to go before software is a true commodity in the best sense. An interesting question is: how will two important megatrends – open source development models and composite applications – impact our ability to get there?

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2 Responses to “Is IT Good Enough to Be a Commodity?”

Hi Frank,

My take on your above question is that those 2 mega trends actually allow services companies and independant developers to add value to what is being increasingly embedded in off-the-shelves software or in other words “commoditized”. By creating composite apps (using components which may or not be considered a commodity, some will enevitably be) they are moving away from the commodity threat and are bringing true business value by allowing a specific process to be adressed without the exorbitant cost that pure customization causes. My take on open source, which I am still discovering, is that it allows developpers to unleash their creativity and thus allow them to bring differentiation in the marketplace. They may be leveraging commoditized IT, at an affordable price, to then spend more time and energy applying IT to the process needs.

Great post. Very informative and well written.

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