Bold Words

In his famous article from the 2003 HBR Issue, Nicholas G. Carr has written some bold words. The article was titled IT Doesn’t Matter, and I had the chance to digest the article as it was a case study for “Introduction to Information Systems” course at METU Informatics Institute.

The main argument of the article was about Information Technologies becoming less strategically important, and companies needed to adapt their ways of IT investment and management.

Carr supported his main argument with the following sub-arguments:

• The strategic advantage of IT was diminishing: in the early years of IT’s introduction to businesses, companies with cutting-edge proprietary IT solutions had a huge advantage. With massive investments in IT throughout the years, IT has become more of an infrastructural technology by decreasing prices and ease of reach. IT has become more of a factor of survival.
• Commoditization of IT changed the game, companies should change their approach to IT investments. Using an interconnected and interoperable system that lots of companies use as a standard way of doing business, instead of building in-house solutions for business processes can be much more effective and cheaper choice.
• As a result of the changes mentioned above, IT management should become more conservative:
  • Spending less on IT increases the profitability of the companies because spending more doesn’t bring significant competitive advantage anymore.
  • Staying back from the cutting edge, waiting to make IT investment to new technologies until standards and best practices solidify is a smarter way of IT management. Being on the cutting edge brings unnecessary expenses without adding significant edge on the competition.
  • IT management should focus on vulnerabilities, not opportunities. With IT’s massive expansion and becoming a commodity, its risks become more important than the advantages it provides.

Is Carr’s Prophecy being Fulfilled?

If we are to encapsulate the term “Information Technology” as the technologies used for processing, storing, and transporting information in digital form, as used in the article, yes. Carr’s prophecy is fulfilled within the 12 years passed after the article was published. Because buying the newest PCs for employees instead of buying the model before newest one doesn’t matter, the older model can also do a pretty good job for the employee’s needs. This is true even for the knowledge workers. Knowledge workers don’t need to have super-computers of their own to deal with big datasets to create value by deriving insights from the data. They do it in the cloud, with several interconnected, cheap servers ready for their use. The companies pay per use of cloud computing, and most of the small and mid-sized digital firms don’t have a single server of their own, they just buy the computing power as a service from the providers.

What do you think? — Does having cutting-edge IT really bring competitive advantage? Is it worth investing so much into a not-well-known new technology?