IT Doesn’t Matter: An Analysis
To capture the reader’s attention and to raise the main point of the article, Carr gave it a thought-provoking title. He then immediately stated his thesis with the opening statement, “As information technology’s power and ubiquity have grown, its strategic importance has diminished.” Therefore, he argues, “The way you approach IT investment and management will need to change dramatically.”
He then defended such thesis, with much success, by stating historical examples and showing their parallelism with IT or Information Technology as viewed by corporate executives today. He laments the fact that companies have come to view IT as a resource very critical to their success, thinking of it as the golden path towards continuous growth and profit. The main assumption of these corporate warriors is that since IT’s potency and ubiquity have increased so too has its strategic value.
Although a reasonable assumption, the author argues that it is a flawed one. In order for a resource to be sustainably strategic is must not just be ubiquitous but, more importantly it must be scarce. In other words, you only gain an edge over rivals by having or doing something that they cannot have or do.
However, today every company has main IT capabilities-data storage, data processing, and data transport. This growing fact has begun to transform IT from potentially strategic resource into a common factor of production. It is fast becoming a commodity paid by today’s companies and not a differentiating factor between them.
He then cited the historical examples of previous technologies hailed as providing companies who first acquired them as being their main competitive advantage. The list includes the steam engine, the telegraph, and the telephone. For a time, he said that “all these technologies opened opportunities for forward-looking companies to gain real advantages”. But as their availability increased because their cost decreased, over time these “real advantages” no longer mattered and the same companies lost their differentiating factor. The author argued that the same is happening to information technology today, with it becoming a vanishing advantage.
Carr then defended his thesis with another point by revealing the distinction between proprietary technologies and infrastructural technologies. Proprietary technologies, as long as they remain protected, can be the foundations for long-term strategic advantages, enabling companies to reap higher profits than their rivals.
On the other hand, infrastructural technologies, offer far more value when shared than when used in isolation. He succinctly pointed out that executives wrongly assume that opportunities for advantage with IT will be available indefinitely, when in fact the window for gaining advantage from an infrastructural technology is open only briefly, as what happened with railroad tracks and telephones.
Therefore the important questions need to be answered: What should companies do? Should managers invest very conservatively in IT, or can they take some risks to get competitive advantage?
Carr very skillfully answers these questions by stating that, “When a resource becomes essential to competition but inconsequential to strategy, the risks it creates become more important than the advantages it provides.”
Therefore, in order to be successful companies need to manage costs and risks meticulously. Executives must begin to take a more defensive posture toward IT, spending more frugally and thinking more pragmatically. The bottom-line is that IT doesn’t matter because it is fast becoming a common commodity.