During the past decade, articles and books on the virtues and potential of information technology (IT) and information systems (IS) to provide new sources of advantage for business operations have besieged managers.1 Indeed, the operative phrase today is “IT changes the way we do business.” These publications either have developed intuitively appealing prescriptive frameworks that provide alternative approaches to leveraging IT competencies or have described cases of successful exploitation of IT as a way to encourage managers in other companies and industries to consider IT as a strategic weapon.

We entered the 1990s highly skeptical of IT’s benefits. The productivity gains from IT investments have been disappointing. Loveman observed that “Despite years of impressive technological improvements and investment, there is not yet any evidence that information technology is improving productivity or other measures of business performance.”2 Max Hopper of American Airlines —whose SABRE Computer Reservation System (CRS) is often invoked to illustrate IT’s competitive potential —remarked that the era of competitive benefits from proprietary systems is over, since computers have become as ubiquitous as the telephone, and that any travel agency could replace its CRS within thirty days.3 Looking at the macroeconomy, Strassman observed essentially no correlation between levels of investments in information technology and such business performance indices as sales growth, profit per employee, or shareholder value.4 In a related development, many companies have handed over their IT and IS operations management to external vendors or systems integrators, such as EDS, IBM, Subsidiary-Issc, CSC, and Andersen Consulting, and the stock market seems to respond favorably to such moves.5

Against this backdrop, such questions as these confront senior managers:

• Is the logical requirement of aligning business and IT and IS strategies, so compelling just a few years back, now obsolete?
• Has IT (and IS) become a common utility that is best managed for efficiency alone?
• Is the role of IT in our business today fundamentally different from its role in the past decade?

• Does IT still play a role in shaping new business strategies, or does it simply play a supporting role in executing our current business strategy?
• What is the source of IT competence, inside our organization or outside through partnerships and alliances?

These are valid questions because we are on the threshold of fundamentally reassessing the logic for organizing business activities and reevaluating IT’s potential role. My aim in this article is to highlight the