Investments in information technology (IT) are finally beginning to pay off, thanks to the era of the networked computer. So says HBS assistant professor Andrew P. McAfee in an article published in last October's issue of Exec: The Executive's Guide to Electronic Business Solutions.

"PCs were initially islands, and we started to get good at interconnecting them (outside universities and research labs) only about ten to twelve years ago," writes McAfee. "We've become a lot better at it over the past five years, with the explosion of the Internet, intranets, extranets, and other offspring of the Internet Protocol (IP)." McAfee explains that because they connect people to vast pools of information, networks are extremely valuable tools for businesses. "It may well be that businesses benefit primarily not from the computer's ability to execute algorithms but from its ability to interconnect information and the people who use it," he observes.

McAfee's research shows that employees generally embrace networked systems, perhaps, he says, because their databases and business processes "interconnect people within the company who were previously isolated from each other and, especially, from each other's information." He asserts that when making IT investment decisions, organizations should ask themselves, "How can I put my employees in touch with the people and the information they need?" Unfortunately, he writes, "this is not the question a lot of organizations ask when they buy IT, nor is it the question around which many IT vendors design and sell their products. Instead, functionality continues to be king."

IT decisions, however, should not be based on functionality, says McAfee, who takes an example from the automobile industry to illustrate his point. The features of a new car may be seductive, he notes, "but let's not forget that a car's real function is to cross distances and bring people to each other. And let's start to consider that the real function of IT might be strikingly similar."

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