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My friend Adam Hartung, author of Forbes‘ “Phoenix Principle” blog, is convinced we’re in the throes of a megatrend away from owning stuff. He’s further convinced this trend spells the end of corporate IT.

As covered in last week’s missive, this trend toward rentership is nowhere near an open-and-shut case. As correspondent Tim Harris points out, it’s a simple algorithm: If the costs of ownership (including intangibles), divided by total usage exceeds the cost of renting, rent. Otherwise don’t.

As for the death of IT:

According to The Phoenix Principle, the reason we wanted PCs in the first place was because of all the data we wanted to put on them. That data will now be in the cloud, so we don’t need PCs anymore.

This is bad history. I was there. We wanted PCs because of the programs we could run on them. That’s why we want smartphones too.

Yes, mobile devices can do some of what PCs can do. But does anyone seriously think you can replace a customer service rep’s PC and voice terminal with a smartphone?

The Phoenix Principle’s clincher: “What will a company need an IT department to do if employees use their own mobile devices, across common networks, using apps that cost a few bucks and store files on secure clouds?”

Answer: If?

We’ve seen this movie before. In the PC’s early days there were those who figured business users would soon be able to do on their PCs everything IT did on the mainframe, using cheap, simple programs without any need for IT involvement.

Another Phoenix Principle point: “If corporate technology is reduced to just operating some “core” large functions like accounting, how big — or strategic — is IT? The “T” (technology) becomes irrelevant as people focus on gathering and analyzing information. But that’s not been the historical training for IT employees.”

I agree. This entirely imaginary IT that never, for example, existed, will go away.

Unlike real IT, which runs, not “just” some “core” large functions like accounting. It runs systems that support every function in the enterprise, from supply chain to manufacturing to sales to finance and accounting to human resources to marketing. Oh, and information technology is required for every change business executives can envision, too.

It’s as strategic as things get.

So best of luck running an enterprise on apps that cost a few bucks with files stored on secure clouds. I can see JPMorgan Chase’s CFO right now, closing the year-end books with his Android edition of Quicken.

Or, for that matter, the CMO calculating some complex analytics on a petabyte Hadoop data set stored in the cloud with her ten-buck iPhone app. “Siri, which customer demographic and psychographic segments are most likely to want our new line of fashions? Rank them in order of size and willingness to buy, correlated with color and fabric preferences.”

This latest forecast of IT going away because it’s now all so easy completely misses everything IT has actually been doing all these years:

  • IT has never insisted on owning anything. IT always performs a lease/purchase analysis for hardware. As for software, IT licenses it, except when it “rents” it via a subscription. To my direct knowledge, these practices all date to the 1970s.
  • The historical training for IT employees hasn’t included information? News to me. Designing efficient data structures is at the heart of the discipline.
  • IT isn’t, at its core, about the technology. Or about information either. The heart of IT’s job is to configure and integrate … especially integrate … the multitude of applications a large enterprise needs to operate effectively. Owning vs leasing vs renting is a blip.
  • In ownership lies risk avoidance. As someone once said, those who ignore the lessons of history are doomed to repeat the seventh grade. This lesson goes back to 2000 when Pandesic, a cloud-based joint venture (back then it was called an ASP) between Intel and SAP didn’t pan out. The result: Intel and SAP shuttered it, giving its customers three whole months to make other arrangements.

IT isn’t going away any time soon. One wonders why, for so many years, so many management pundits have engaged in so much wishful thinking on the subject.

My guess: IT is expensive and hard to understand. Shipping it all offshore, into the cloud, or both means not having to worry about it anymore. Sure it does.

And if the logic required to accept this proposition is shaky, that’s okay, because the rules of confirmation bias are clear:

We only scrutinize evidence and logic that disagrees with what we want to be true.

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One problem with trendspotting is that often, trends are reported as facts even though by definition they’re really predictions.

Example: My friend Adam Hartung, he of Forbes estimable “Phoenix Principle” blog, is enamored of the trend away from ownership in favor of renting. This trend will, he’s concluded, end the PC era and have a major impact on IT due to the ability to store data in the cloud and rent applications that run there, SaaS in the form of the overused-because-it-has-too-few-brethren Salesforce.com being an archetypical example.

On the theory that if you can’t pick on your friends, who can you pick on? … I’m afraid this isn’t Adam’s most compelling effort.

His trail of logical breadcrumbs begins with an unfortunately weak example — the illogic of owning a video library in an era of streaming videos. Except that videos tell us nothing about the desirability of rentership compared to ownership, because with the exception of a few classics like Back to School and Caddy Shack, relatively few of us watch the same movie over and over again, unlike our cars, which we drive on a regular basis, and homes, where we spend a lot of our time.

Also, not to quibble, but quibble me this: the fraction of Netflix’s video library available for download is small, suggesting we aren’t quite there yet when it comes to getting all of our bits from the cloud when we’re in the mood for them.

Adam also cites the move away from home ownership. Except that, last I looked, demand in this marketplace is up at the moment, not down. He asks, rhetorically, “Home ownership costs are so high that it means giving up a lot of other things. And what’s the benefit? Just to say you own your home?”

Like so many rhetorical questions, this one is easily answered: (1) Rent goes up. You can get mortgages that don’t. (2) If you own your own home you can decorate it as you like. If you rent, you can’t. (3) If you rent, your money is spent. If you own, some of your payments become equity. (4) The rent for a specified space in a specified neighborhood isn’t all that much lower than a mortgage would be, even before the rent goes up.

One more topic, cars, which, “especially in urban areas” are often more trouble than they’re worth.

Except, this has been the case for decades. Take New York, where the solution isn’t and has never been to rent a car when you need one.

New Yorkers know the solution: cabs, subways, and busses. In deeply urban areas, owning a car really is more trouble than it’s worth, but that’s because mass transit makes owning a car more trouble than it’s worth, unlike the suburbs, exurbs, and rural areas. Do you know anyone in non-urbanized areas who rents a car when they need one because that’s more convenient than having one in the garage? Me neither.

There’s a simple example that might illustrate the point well enough to put this to bed: Most men own their own suits, shirts and ties, but rent a tux on the rare occasions they need one.

Is the balance shifting? Maybe. Is a reported tendency of millennials to prefer renting to owning more than older generations evidence that this is a trend? Maybe, or maybe millennials have less income and wealth, on the average, than older generations. When I was younger and my personal pittance was even smaller than it is today, I rented because I had no choice. But being human I rationalized it as a preference.

Not sure this matters, but I’m guessing it should play a part in the analysis, too: In order for one person or business to rent something, another person or business has to own it. More renting doesn’t mean less owning. It just means someone or something else does the owning, and (and this is very important) they have to turn a profit on the deal.

Which is why, in the absence of factors like an owner having greatly better economies of scale, the economics of renting have always included an inescapable calculation: In the aggregate it has to cost more than owning the same item.

Is rentership on the increase? My guess is that there’s a trend in here somewhere, but it will turn out to be smaller and more nuanced than its current proponents are predicting. So far as actual evidence and logic are concerned, though, support for the claimed rentership megatrend is both sparse and ambiguous.

And as we’ll see next week, the connection between rentership and yet one more IT-is-going-to-go-away prediction is even more tenuous.

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