Technology Paradise Lost: Why Companies Must Spend Less to Get More from Information Technology: Why Companies Will Spend Less to Get More from Information Technology

An engine of the world economy―the computer industry―is sputtering. What happened? Will it regain its power and again drive economic growth as in the past? No.

That’s the surprising conclusion reached by Erik Keller, a central player in the booming IT world of the 1990s. Driven by fear of being left behind, American corporations let IT grow until it reached one half of all corporate capital spending by the year 2000. Now, chastened by their spending failures, IT managers are converging on a new consensus: to exploit IT competitively they must use their smarts over big money.

This shift in thinking comes just as free, open-source software, low-cost international programming labor, and new technologies combine to make the new approach possible. A former Research Fellow at Gartner, Keller had an insider’s view of the irrational spending at many Fortune 500 companies, personally influencing billions of dollars of technology acquisitions.

In Technology Paradise Lost Keller describes how the new thinking is working inside some of the country’s most complex and successful organizations―including Merrill Lynch, JetBlue, Harrah’s, and Motorola―which have cut IT spending to gain a competitive edge, and experienced marked gains to their bottom lines. As it advances, the new IT think will cause further massive disruptions in the computer business, with fundamental changes in the ways software is developed, sold, and used. Efficiency of IT investment will grow as excess fat is squeezed out of IT salaries, software system costs, and consultants’ fees.

In an unexpected twist, Keller argues that even as IT spending is reduced its importance for competitiveness will grow. Reduced spending does not mean IT has become a commodity. Counterintuitively, companies that spend less in order to get more from information technology will likely be the big winners.