This is an MIT Sloan Management Review article. Information technology is undergoing an inexorable shift from being an asset that companies own to being a service that they purchase from utility providers. Three technological advances are enabling this change: virtualization, grid computing, and Web services. Virtualization erases the differences between proprietary computing platforms, enabling applications designed to run on one operating system to be deployed elsewhere. Grid computing allows large numbers of hardware components, such as servers or disk drives, to effectively act as a single device, pooling their capacity and allocating it automatically to different jobs. Web services standardize the interfaces between applications, turning them into modules that can be assembled and disassembled easily. The resulting industry will likely have three major components. At the center will be the IT utilities themselves--big companies that will maintain core computing resources in central plants and distribute them to end users. Serving the utilities will be a diverse array of component suppliers--the makers of computers, storage units, networking gear, operating and utility software, and applications. And finally, large network operators will maintain the ultra-high-capacity data communication lines needed for the system to work. IT's shift from an in-house capital asset to a centralized utility service will overturn strategic and operating assumptions, alter industrial economics, upset markets, and pose daunting challenges to every user and vendor.

This widely debated article now includes 14 Letters to the Editor. As information technology has grown in power and ubiquity, companies have come to view it as evermore critical to their success; their heavy spending on hardware and software clearly reflects that assumption. Chief executives routinely talk about information technology's strategic value, about how they can use IT to gain a competitive edge. But scarcity, not ubiquity, makes a business resource truly strategic--and allows companies to use it for a sustained competitive advantage. You gain an edge over rivals only by doing something that they can't. IT is the latest in a series of broadly adopted technologies--think of the railroad or the electric generator--that have reshaped industry over the past two centuries. For a brief time, these technologies created powerful opportunities for forward-looking companies. But as their availability increased and their costs decreased, they became commodity inputs. From a strategic standpoint, they no longer mattered. That's exactly what's happening to IT, and the implications are profound. In this article, HBR's Editor-at-Large Nicholas Carr suggests that IT management should, frankly, become boring. It should focus on reducing risks, not increasing opportunities. For example, companies need to pay more attention to ensuring network and data security. Even more important, they need to manage IT costs more aggressively. IT may not help you gain a strategic advantage, but it could easily put you at a cost disadvantage.

Managing corporate projects as though they were a portfolio of financial options appears to be an exact science. But it's not. That's because decisions to drop projects are never made as objectively as decisions to sell shares.

Annette Innella is just coming into the lunchroom at Concord Machines when Bob Dunn starts screaming at her. After throwing his lunch tray against the wall, he stomps out, leaving Annette stunned. Naturally, Annette, the new senior VP for knowledge management, is beside herself. She knows her proposal to establish a cross-functional knowledge management committee is progressive thinking for this old-line manufacturer, but Bob's reaction is totally over the line. If Bob stays, she goes--that's all there is to it. Bob is contrite, but he's under a lot of pressure. The general manager of the Services Group, he's just returned from a two-week trip around the globe to gear up his troops to beat revenue targets again, despite shrinking budgets and hiring freezes. Now an e-mail from Annette requests that two of his best people devote half their time to what he calls her "idiotic" Knowledge Protocols Group. CEO Jay Nguyen is in a bind. Bob is his top manager--he brings in all the money. And even though future revenues are going to have to come from somewhere else, Jay is not totally behind Annette's initiative in the current business climate. He can't afford to lose Bob. But if he reins in Annette, it will look like he's condoning Bob's outburst. What should he do? In R0201A and R0201Z, four commentators offer advice in this fictional case study.

Annette Innella is just coming into the lunchroom at Concord Machines when Bob Dunn starts screaming at her. After throwing his lunch tray against the wall, he stomps out, leaving Annette stunned. Naturally, Annette, the new senior VP for knowledge management, is beside herself. She knows her proposal to establish a cross-functional knowledge management committee is progressive thinking for this old-line manufacturer, but Bob's reaction is totally over the line. If Bob stays, she goes--that's all there is to it. Bob is contrite, but he's under a lot of pressure. The general manager of the Services Group, he's just returned from a two-week trip around the globe to gear up his troops to beat revenue targets again, despite shrinking budgets and hiring freezes. Now an e-mail from Annette requests that two of his best people devote half their time to what he calls her "idiotic" Knowledge Protocols Group. CEO Jay Nguyen is in a bind. Bob is his top manager--he brings in all the money. And even though future revenues are going to have to come from somewhere else, Jay is not totally behind Annette's initiative in the current business climate. He can't afford to lose Bob. But if he reins in Annette, it will look like he's condoning Bob's outburst. What should he do? In R0201A and R0201Z, four commentators offer advice on this fictional case study.

Annette Innella is just coming into the lunchroom at Concord Machines when Bob Dunn starts screaming at her. After throwing his lunch tray against the wall, he stomps out, leaving Annette stunned. Naturally, Annette, the new senior VP for knowledge management, is beside herself. She knows her proposal to establish a cross-functional knowledge management committee is progressive thinking for this old-line manufacturer, but Bob's reaction is totally over the line. If Bob stays, she goes--that's all there is to it. Bob is contrite, but he's under a lot of pressure. The general manager of the Services Group, he's just returned from a two-week trip around the globe to gear up his troops to beat revenue targets again, despite shrinking budgets and hiring freezes. Now an e-mail from Annette requests that two of his best people devote half their time to what he calls her "idiotic" Knowledge Protocols Group. CEO Jay Nguyen is in a bind. Bob is his top manager--he brings in all the money. And even though future revenues are going to have to come from somewhere else, Jay is not totally behind Annette's initiative in the current business climate. He can't afford to lose Bob. But if he reins in Annette, it will look like he's condoning Bob's outburst. What should he do? In R0201A and R0201Z, four commentators offer advice on this fictional case study.

According to new research, the way deadlines are set has a profound effect on the degree to which workers procrastinate and even on the quality of their work.

The current high level of venture capital investment is driving enormous innovation in business. About 40% of the growth in the U.S. GDP is coming out of the tech sector, and most of that can be traced to the vibrancy of entrepreneurial initiatives, according to accomplished entrepreneur and venture capitalist Vinod Khosla. But in a wide-ranging interview, Khosla says greed is at a high level, too, and he's concerned about its effect on entrepreneurs and their infant businesses. Today, an entrepreneur with a plan for a new business can get funded within a week. But the entrepreneur doesn't get an honest, painstaking critique. The weaknesses of the plan are often ignored. The result is that great ideas don't reach their full potential. Khosla touches on the qualities required of today's entrepreneurs and the difficulties that established companies face in adapting to the Internet. He also offers some of his secrets for finding and exploiting the biggest new technologies.

Akamai Technologies is attracting investors, employees, partners, and customers like a supercharged magnet. The Cambridge, Massachusetts, company is transforming the way the Internet works, and everybody, it seems, wants to be "Akamaized." But will the attraction last? Will the company meet the challenges of explosive growth? Will it maintain its technological edge? Will it fulfill the giddy expectations of investors? Much of that depends on the performance of George Conrades, Akamai's chairman and CEO. In this interview, Conrades explains how Akamai pushes Web content and services closer to end users through the use of distributed servers and proprietary software. He shares the challenges and thrills of working at Internet speed--forging partnerships with site operators, ISPs, and application providers; setting and achieving short-term business goals while preserving the company's intellectually combative corporate culture; and maintaining a customer focus. Conrades discusses the company's "virtuous circle" business model--better technology attracts more content providers, which begets more ISP participation, which begets better technology--and reveals the strategies and processes Akamai uses to keep that circle spinning. He discusses his own role as an absorber of uncertainty: by taking on the inevitable risks of competing in the networked economy, he frees up the rest of company to act. Conrades, who's been in business long enough to see the industrial era give way to the Internet era, says the new economy is all about "speed and scale." But it's also about risk-taking, innovation, and teamwork. Bureaucratic CEOs need not apply.

As we enter the twenty-first century, the business world is consumed by questions about e-commerce. In this article, four close observers of e-commerce speculate about the future of commerce. Adrian Slywotzky believes the Internet will overturn the inefficient push model of supplier-customer interaction. He predicts that in all sorts of markets, customers will use choiceboards--interactive, on-line systems that let people design their own products by choosing from a menu of attributes, prices, and delivery options. And he explores how the shifting role of the customer--from passive recipient to active designer--will change the way companies compete. Clayton Christensen and Richard Tedlow agree that e-commerce, on a broad level, will change the basis of competitive advantage in retailing. The essential mission of retailers--getting the right product in the right place at the right price at the right time--is a constant. But over the years retailers have fulfilled that mission differently thanks to a series of disruptive technologies. The authors identify patterns in the way that previous retailing transformations have unfolded to shed light on how retailing may evolve in the Internet era. Nicholas Carr takes issue with the widespread notion that the Internet will usher in an era of "disintermediation," in which producers of goods and services bypass wholesalers and retailers to connect directly with their customers. Business is undergoing precisely the opposite phenomenon--what he calls hypermediation. Transactions over the Web routinely involve all sorts of intermediaries. It is these middlemen that are positioned to capture most of the profits.

Year-old Priceline.com has already changed the way many people shop for airline tickets, hotels, and even cars. Founder Jay Walker discusses his company's "demand collection" model and the revolutionary nature of e-commerce.

When most people think about business innovation, they think of product development. But consultants at the Doblin Group take a broader view. They've created a way to map innovativeness across ten categories, from business models to processes to brands.

A team of MIT researchers has created an electronic "process repository" that enables managers to easily explore different options for performing common tasks.

Given the changes wrought by the new economy, it makes sense for companies to pursue ever-greater levels of flexibility. But does it make sense for human beings? Do we really want to be free agents, hopping from job to job and from city to city, virtual employees of virtual companies? Richard Sennett doesn't think so. In The Corrosion of Character: The Personal Consequences of Work in the New Capitalism, Sennett, a sociologist and well-known social critic, lays out a dark vision of what the new economy means for working people at all levels of society. He draws on poignant stories to show how the flexibility demanded by the new economy causes us to lose the attachments--to people, places, or companies--that form our character. Without such attachments, we lose the ability to focus on the long term: if everything's going to change overnight, why worry about tomorrow? In the aggregate, the demands of flexibility erode society's foundations. But as Nicholas Carr points out, this isn't a complete picture of what flexibility means for people today. For example, the spread of cheap computers is expanding opportunities to launch, market, and manage microbusinesses. And the networked economy--by making workdays more flexible and location less important--will give many of us more control over where we live and how we parcel out our time. Despite Sennett's blindness to the benefits offered by the new economy, his book provides a thoughtful counterbalance to the empty-headed boosterism that characterizes much of the current writing on the subject.

On January 1, 1999, 11 European nations formally adopted the euro as a common currency. What will the new monetary union mean for managers? In this Perspectives piece, senior executives from Merloni Elettrodomestici, PricewaterhouseCoopers, DaimlerChrysler, Sara Lee/DE, and ICI discuss how the euro will alter the European business landscape and change the rules of management. The contributors suggest that the single currency will require executives to rethink many of their long-held assumptions about doing business in Europe. Because consumers will be able to easily compare prices across the Continent, for example, it will become much more difficult to have different product positioning and pricing strategies from country to country. Similarly, the need for pan-European thinking may require companies to reconsider their decentralized organizational structures, which grant autonomy to national units. And at the operational level, fragmented supply chains may turn into severe disadvantages. There are many other changes that managers must consider with the introduction of the euro. Not only will they have to cope with confused and suspicious customers, they will also incur major up-front costs in implementing the changeover to the new currency. No two companies will take the same course in responding to the myriad challenges, but the practical insights of these five contributors will help all companies think clearly about their options.