"IT does matter," C.K. Prahalad told the audience at the Interop/Software 2008 conference today. Despite predictions of its imminent loss of influence, not only does IT matter, it's a way to create enduring competitive advantage in the New Age Of Innovation. "That's the punch line," Prahalad said.

Prahalad opened the conference, one of the largest business technology conferences in the world today. with his keynote address, which represented the introduction of his book in the United States. The book was introduced earlier this month in India.

Prahalad angled his message to the mostly tech crowd, exhorting them to use the tools at their disposal to drive business innovation and valuation. "Do you folks have some influence on the glue" that holds together the technology infrastructure, he asked rhetorically. Then "the monkey is on your back" to make sure technology is used to its best advantage by the companies you work for.

There are four issues that are changing the competitive landscape, he said, and they're all technology related: connectivity, convergence, digitization, and social networks. The radical nature of the change is apparent with the issue of connectivity alone: soon there will be four billion people interconnected around the world by PCs and cell phones -- with cell phones the increasing network node of choice, Prahalad said.

"What are the new building blocks for valuation?" he said, by way of explaining the basic tenets of the book. "The starting point for me is [the move] from undifferentiated customers to personalized co-creation partners." That, of course, is represented in the book by the equation N=1. The next step, Prahalad told the audience, is "the need for accessing distributed resources." And that is represented by the equation R=G.

Why are these new? Because "the firm used to be the center of attention," Prahahad said, with all parties holding "a firm-centric view of customers" and a "firm-centric view of systems." Now, "consumers can have as much influence as the firm," he said. And instead of a vertically-integrated organization, ala Henry Ford's model of production, "now it looks like a nodal network, not a horizontal supply chain."

In the new age of innovation, not everything is turned upside-down, of course. "You may still need a product," he said. "But every company can individualize itself because you're dealing with co-created individual experience." And the global, dispersed, and agile nature of the new supply chain serves the imperative for the co-creation of value. "If you want to co-create experience, there cannot be a predetermined sequence of events," Prahalad said.

There are two business imperatives that relate to technology: real-time business analytics and resilient business processes. Also, you have to leverage legacy assets, which puts a premium on interoperability. And it all has to be done right. "It has to be Six Sigma all the time," Prahalad said.