An article in the May issue Harvard Business Review by Nicholas Carr provocatively entitled IT Doesnt Matter has been at the centre of a lot of discussion in business and technology circles. In this series, I will look at the points made by Carr, some of the other opinions expressed on the article, and end with my views on it.
The key points made by Carr, a former executive editor of HBR and now an independent business writer and consultant, can be summarised thus:
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. By now, the core functions of IT data storage, data processing, and data transport have become available to all. Their very power and presence have begun to transform them from potentially strategic resources into commodity factors of production. They are becoming costs of doing business that must be paid by all but provide distinction to none.
Information technology is best understood as the latest in a series of broadly adopted technologies that have reshaped industry over the past two centuries – from the railroad to the telegraph to the electric generator. For a brief period, as they were being built into the infrastructure of commerce, all these infrastructural technologies opened opportunities for forward-looking companies to gain real advantages. But as their availability increased and their cost decreased – as they became ubiquitous – they all became commodity inputs. From a strategic standpoint, they became invisible; they no longer mattered.
That is exactly what is happening to information technology today, and the implications for corporate IT management are profound. Seeing IT in this light reveals important new imperatives for the corporate management of information technology. 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. In brief, executives need to shift their attention from IT opportunities to IT risks – from offense to defense.
The article is important not just because of its timing coming as it does when there are signs of a small revival in the technology industry, but also because it makes the point that IT has been commoditised and that there is little organisations can do to gain a competitive edge using IT. We will discuss the article from the point of view of organisations in the worlds emerging markets like India, where domestic IT penetration has only scratched the surface. But first, we will delve deeper into what Carr says, followed by the points and counterpoints of some others.
Tomorrow: Carrs HBR article (continued)