The Industrial Revolution significantly improved mankind's living standard by replacing muscle power with mechanical devices driven by chemical, electrical, and other forms of energy. The promise of information systems, already realized to a great extent, is to produce a similar transformation not only in our mental capabilities but more importantly in our ability to communicate. Communications is at the heart of commerce-we tend to not do business with people we don't know or cannot trust. And as the pendulum of commerce has swung from one-onone interaction with artisans and craftsmen to mass production of essential and even luxury goods, and now back again toward mass customization-mass producing goods which meet the unique requirements of each customerinformation about markets, market segments, and market segments of one has become vitally important. Information technology not only gives us the opportunity to capture the required data, but to use them effectively in dealing with these diverse market populations. How many individual customer preferences can you hold in your head? Writing them down on paper significantly increases this number but also increases the work to organize them to find or share a specific one when needed. Information systems allow us to both increase the number indefinitely and retrieve quickly a specific one as needed.
Computers are actually very dumb devices capable of dealing with only ones and zeroes in extremely logical ways. Business people, indeed most people, don't normally think that way. So initially a lot of energy went into trying to "think like a computer" to get them to produce results of value, at the expense of focusing on user requirements. This led to a schism between the techies and the tycoons; IT folks were seen as more interested in the technology than in the business objectives. As computers have gotten easier to program, we have made progress in closing that gap. Although in many companies today, there is still a process which creates a strategic plan for the company or division, then appliqués onto it an "IS strategy or plan." The opportunity here is to recognize that information technology, while becoming in one sense a commodity like electricity or water, in another sense will never become a commodity because it enables one to generate, gather and use information in unique ways. So instead of thinking of how IS can support the company strategy, leading edge companies are building their strategies around what information can be obtained and how they can use that information for competitive advantage. Their business models are built on capturing, creating, and effectively using information. And the capabilities of information systems, both extant and envisioned, are an integral part of that business model and competitive strategy.
In a CAIS working paper, Vasant Dhar [footnotes shown as such] identifies three invariant concepts upon which thinking about future business models and industry structure can be based:
- rendering of things as information; for example, a bank balance rather than physical money as an indication of wealth.
- exponential growth of hardware power, bandwidth, storage and the accompanying miniaturization of ITbased devices; and
- sustained increase in programmability through modular software.
The consequences of these invariants are of substantive and lasting importance:
- digitization facilitates the separation of information from artifacts which alters the fundamental economics of a number of industries, such as music, film and publishing.
- IT infrastructures are becoming more powerful and more accessible; high speed digital connections now reach a large percentage of businesses and residences.
- the importance and variety of "spaces of interactions" in society that are mediated by IT are growing; and finally
- more data about these spaces of interaction are made available as is the ability to process these data intelligently.
"These consequences suggest a future for business that is inextricably intertwined with information technology." For the systems innovator of the future, this is a good starting point.
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