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.

One of our best excuses is that we’re responding to business requirements.

It excuses nearly everything. Why do we need more staff? We’re just responding to demand. Why are we building this system? Hey, we don’t define requirements, we just respond to them. Why is our project three years late? Users keep changing the specifications — it’s hard to hit a moving target.

Now that I have your attention I’ll back off a bit. Responding to requirements is important. It’s the tail, though, not the dog. You should wag it, not the other way around.

Businesses decide whether and where to invest in technology based on business considerations. But business users don’t keep track of technology, so they’re in a poor position to understand the opportunities.

That’s an opportunity for you, but only if you keep track of both technology and business trends. Last week we talked about the trends of the recent past: product quality and enhanced service. Product quality matters, of course, because if your product stinks people won’t buy it. Enhanced service matters because exceptional service means your customers will come back.

Quality and service are vital. They just aren’t enough anymore — they’re yesterday’s news. To understand the future you need to understand that people don’t buy products — they buy the anticipated results of owning the products. You don’t buy a car, you buy transportation. It may be luxury transportation, reliable transportation, fun transportation (supply your own adjective), but that’s what you’re buying.

The trends of the future grow out of this reality. Three stand out: entertainment, “molecularization,” and affinity. You’re going to have to support these through technology, so let’s take a look at them.

Entertainment matters to consumers, but business buyers aren’t immune. It isn’t always obvious how to add an entertainment dimension to your company’s business, but opportunities abound. Here in Minnesota we have the Mall of America, complete with an indoor amusement park to attract shoppers. McDonald’s has Happy Meals — not only a product, but a generator of consumer loyalty and repeat business. McDonald’s isn’t selling food. It’s selling a result: smiling children. Your job: figure out how technology (data warehousing and data mining, for example) can make your company’s entertainment program more effective.

Molecularization (a 20 buck word if ever there was one!) lets you break up your products and services into their component “molecules” so you can mix, match, and recombine them to create customized packages for each customer. You run across molecularization every time you buy a new personal computer: You choose how much RAM and hard disk you need, whether to install a tape drive, how big a monitor you want, and what kind of printer to attach. The installation glitches we all face testify to the difficulty of supporting molecularization.

Affinity is my favorite. Affinity drives customer loyalty programs to their logical conclusion. Frequent flier programs generate loyalty, but don’t create a bond between airline and traveler — airport “clubs” do that. User groups — independent of but supported and encouraged by providers — also create this kind of bond. And then there’s DNRC, or Dogbert’s New Ruling Class — a clublike enhancement to the already strong link between Dilbert readers and the characters in the comic strip. Members who visit the Dilbert Zone Web site (http://www.unitedmedia.com/comics/dilbert/) are a click away from a catalog of Dilbert calendars, mouse pads and so on: a perfect example of using affinity to sell product (and a great Web business strategy). The customer result here is a feeling of exclusivity, a sense of being special in a world of 5 billion people.

These three capabilities — entertainment, molecularization, and affinity — will drive the strategies of many businesses in the next decade. Not one of them can succeed without a lot of technology to support it — and that’s good, because it means I’m not going to run out of topics for future columns any time soon.

It also means you’d better start getting ready. You want to lead this parade, not slow it down.