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Businesses have a lot in common with electric fish — a fact I can state with authority as the only person on earth who has studied them both.

One example: A deep knowledge of evolution helps to understand fish and business. IS Survivalist Thomas Munnecke recently shared an insight along these lines.

Tom differentiates performance from adaptation. IT contributes a lot of its value by improving adaptation. Since accounting systems measure only financial performance, they are blind to adaptation. Check out Tom’s paper at http://www.ncsa.uiuc.edu/SDG/IT94/Proceedings/Overviews/munnecke/www94.html if you like this thought.

A month ago, using similar arguments, I critiqued Paul Strassmann’s new book, The Squandered Computer, and his highly publicized conclusion that information technology hasn’t led to business benefits. Needless to say, Strassmann wasn’t happy with me.

After Strassmann accused me in a recent letter to InfoWorld of not reading his book he made this “point”: “Mr. Lewis’s attempt to prove that computers are essential, regardless of cost, because nobody ‘…types on Selectric typewriters or manages inventory on index cards…’ is without merit. There is no question that trucks are superior to horse-drawn carriages. However, if all firms use trucks, their freight-carrying productivity must be evaluated in terms of trucking, not in terms of horses. That’s exactly what I do. I compare the productivity of firms that use identical computer technologies.” (For the full letter, see To the Editor, Jan. 12, page 62.)

Strassmann is using a common polemicist’s trick — by speaking for me, he’s able to have me say something he can successfully refute. Regardless of cost? Puhlease!

Well, Paul, I did read your book … all 400 pages and $49 of it. It’s better than your “freight-carrying productivity” argument, at least. Seems to me if you’re trying to prove that investing in trucks hasn’t paid off, the best comparison is with other freight-carrying techniques.

Strassmann and I do agree on one basic point: that it’s important to align IT spending with business goals. It isn’t much of an insight, but it is valid.

But his daunting array of numbers cries out for statistical analysis instead of simplistic financial ratios. (I searched The Squandered Computer in vain for a multiple regression analysis, ANOVA, or even a simple paired T-test — probably the best test of Strassmann’s hypothesis.)

That’s one reason collecting facts and drawing proper inferences are two different matters. Inappropriate measures are another. Numbers folks don’t always accept that financial statements no more measure competitiveness than reproductive capacity measures biological adaptation. But they don’t.

Here’s another way of putting the situation into perspective: Imagine two Sumo wrestlers. We’ve all seen movies of these guys, pushing and struggling, expending all kinds of energy to move each other.

For a long time they don’t, though, and if you tried to measure the effectiveness of their energy expenditure by the amount one moved the other, you’d conclude they’re both wasting a lot of energy to no effect.

We know better: The moment one of them weakens, the other wins the match. The energy expenditure’s value is measured by lack of backward movement.

This isn’t just theory. A client I once worked with developed a financial outlook that was pretty grim. It showed profits plummeting to a fraction of current levels over a decade, due to fundamental competitive and marketplace changes. That client wisely decided to invest large sums of money into a business transformation, which requires significant IT spending.

Its forecast, with the investment, improves its profit picture from disaster to status quo. If all goes according to plan, profits will stay at current levels. Strassmann, seeing increased IT spending but flat profits, will conclude that this company wasted its investment.

Its executives, though, will compare their profits to the original financial outlook and be deservedly pleased.

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When I was the PC czar for a previous employer, I’d annually have to explain our spending “all this money” on PCs when we’d just spent “all that money” on PCs the year before. I hauled out all the usual arguments, and some unconventional ones besides … all to no avail.

The CFO had prepared counters to the usual arguments, of course, and became irritated at the unconventional ones. Like most executives, he disliked surprises; like many, he found countervailing facts and logic irritating once he’d made a decision. Finally, he presented his clincher: “If PCs increase productivity so much, why hasn’t our headcount dropped?”

When I expressed doubt as to the validity of headcount reduction as a useful measure of productivity improvement, I was told we lacked a good measure of productivity, so he was using that until we got one.

Recognizing the futility of argument, I changed the subject (until now).

Computer backlash seems to be picking up steam again. You can find good examples of this gleeful technology bashing in the writings of Paul Strassmann, whose new book, The Squandered Computer: Evaluating the Business Alignment of Information Technologies, received a glowing send-up in the September/October issue of Harvard Business Review.

Strassmann’s arguments go something like this: Computers are supposed to make companies more productive. If companies are more productive, their sales, general, and administrative cost (SG&A), indexed by the cost of goods sold (COG) ought to have decreased over time. SG&A per COG dollar hasn’t decreased over time, so the benefits touted by IT advocates are, in the terms of Michael Schrage’s HBR review, “… the big lie of the Information Age.”

Every big lie requires a big liar, and since nobody else seems to be around, I guess I’ll have to assume the mantle of responsibility and do my best to perpetuate this big lie.

Strassmann’s argument contains a fatal flaw: There’s no reason to expect SG&A (accounting lingo for overhead) to decrease when you invest in IT. None. Why would it?

You see, capitalist societies include a complicating business factor called competition. It’s a complicated concept, but I’ll try to simplify it. Competitors, you see, are companies that want the same customers you do, and they’ll work hard to get them (unless the company is Novell or Apple, of course, in which case they’ll work hard to give Microsoft their customers … but that’s a different story).

Competition confounds simpleminded productivity measures. Product quality, for example, doesn’t remain constant over time in a competitive environment — it improves or the product fails. And around these quality improvements companies have wrapped extensive service offerings. Why? To stay in business, because their competitors were busy wrapping extensive service offerings around their higher-quality products.

As documented here earlier this year, service isn’t enough either. (See “What customers buy,” 8/11/1997.) Progressive businesses add entertainment dimensions to their products and services; transform sales and marketing into affinity enhancement programs to move from mass marketing to mass one-on-one marketing; and “molecularize” everything to transform manufacturing from mass production to mass customization.

None of this comes cheap. These programs require significant investments in IT. Companies that don’t invest fall by the wayside; those that do stay in business so they can play the game again next year.

So here’s my challenge to those who claim IT investments are worthless: Find one company — just one company — in a competitive industry that’s succeeding while keeping the books on ledger paper, typing correspondence on IBM Selectric typewriters, and managing inventory on index cards.

It’s the nature of competition that you have to keep running faster just to stay even. The measure of IT value, then, isn’t SG&A over COG. The proper measure of success is simply staying alive.

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