A second point that had come up in the course of the day’s discussions was that business value was no longer contained in one place: in one country, at one site, or in one company. Through web services, a way of finding and executing business capabilities electronically on the web, any geographical connection between the place where one business process was executed and the place where another linked business process was executed had been completely broken. As an example, he cited companies’ using global resources to enable them to locate a help desk in a different part of the world from its technical operations. This phenomenon raised the question of whether value—to the customer, in the IT industry, or from the point of view of economic competitiveness—was any longer localized. “I think that it is not,” Dr. McQueeney declared.
A third issue identified by Dr. McQueeney was that of whether investment in the consumer electronics industry would drive future innovation on the commercial side of IT. He noted that IBM’s single highest-volume processor-chip business was in game systems, where the company was partnering with Sony and Toshiba. Since the microprocessor that gets the most design resources is the one that is most efficient and most advanced, he said, even though IBM could charge more for a mainframe microprocessor—and it might be able to make the best system, because the system is very complex—there was “no way that that market could afford the engineering bill to make the best microprocessor.” Mainframe microprocessors 10 years hence would probably resemble processors developed for the “consumer-gaming/handheld part of the industry,” whose customer base was so much larger than the amount of development investment that could be made in it as a fraction of revenue was much higher. Including displays and graphics chips with microprocessors, he said that the leisure-spending or disposable-income market provided “a tremendous source of investment for things that are at the bottom of the food chain for the commercial side of IT.” It furnished new ways to innovate that had not existed when the IT industry was rather self-contained in its investments.
Speaking next, Dr. Raduchel pointed out that the IT industry was not static and said huge changes could be expected in the future. Noting that the industry was “very supply-driven,” he rated the attempt to measure the contribution of IT to economic productivity as a very difficult challenge. Because advancement wasn’t “being driven necessarily by customer” but by the fact that staying alive in the industry meant heading off competitors by putting out the best product possible, the process was characterized by technologists’ efforts to do their best within the laws of physics. Such a process “doesn’t lend itself well to hedonic price indexes” and, in general, poses obstacles to arriving at easy output measures.
Identifying a second challenge by the phrase “the network is the computer,” Dr. Raduchel observed that the industry was prone to “talking about computers as isolated devices”—which, he added, “they are not.” Networks were causing massive changes in how systems that real-world people used were structured and