Sometime in the not too distant future, some new Peter Drucker is going to point out how managers in the 1990s spent way too much money on information technology because CEOs were afraid, unwilling, or untrained to manage it. Instead managers blindly put their trust in technological experts whose motto was "Infallible, inflexible, and inflatable." Until finally one day, like the television anchor played by Peter Finch in the movie Network, they stuck their heads out the window and yelled, "I’m mad as hell, and I’m not going to take this anymore!" And mad they should be.

IT capital spending per white collar worker has tripled since 1980, while overall IT spending is projected to increase by 60 percent over the next five years (Exhibit 1). Yet despite all this spending, companies that manage to extract significant business value from their IT investments are rare exceptions to the rule.¹ Many CEOs have tried to improve matters, perhaps by outsourcing parts of the IT function or repeatedly changing the CIO. But little has changed. IT expenses continue to rise, major reengineering projects still languish because key systems fail to materialize, and market share and the bottom line show little...