The article ‘IT Doesn’t Matter’ by Nicholas Carr provides an interesting yet a disputable perspective on the strategic importance of information technology (IT).
He argues that IT has become a commodity providing little competitive advantage. Also, any technological advancement is quickly and broadly copied, rendering it meaningless for competitive advantage. So the companies should rethink how much they pay for IT given this reduced return on investment. The article asserts that information technology is inevitably headed in the same direction as the railroads, the telegraph and electricity by becoming just ordinary factors of production. I do not agree completely with the author’s views. Various authors have criticized Carr’s views and defended their position by showing the importance of IT and its role in gaining competitive advantage. From the available data, I would like to conclude that cautious investment in IT together with focus on IT process and skills, leadership and management can definitely help a business to competitive advantage Through Outsourcing">gain competitive advantage.
... telecommunications technology can provide a firm with a competitive advantage. A competitive advantage can be achieved by enhancing the firms ... telecommunications system a firm could easily gain a competitive advantage over their competitors. Telecommunications can be defined as ... probably most obvious way that telecommunications provide the competitive advantage is through the amount of time saved by ...
IT has deeply transformed today’s business world and all businesses use information technology on a large scale. As a consequence, capital expenditure devoted to IT has increased dramatically over the years and is still tremendous in spite of the current economic situation. The author criticizes this IT worship.
First, the author argues that scarcity makes a resource truly strategic and provides competitive advantage. You gain an edge over your rivals only by having something or doing something others can’t have or do. But as IT has become affordable and available to all, its competitive advantage is lost. Second, proprietary technologies may generate a competitive advantage to their owners. But the author states that infrastructural technologies are more productive when they are shared. He uses the striking examples of electric power production or trains to prove his point, showing that no company would benefit today in purchasing and maintaining its own railway network. But sharing leads to loss of uniqueness for any company. Third, the author states that a competitive advantage brought by infrastructural innovations will not last forever. By the end of the buildout phase, the opportunities for individual advantage are largely gone. Lastly, IT is prone to commoditization as it is a transport vehicle for information and is greatly standardized and highly replicable. Finally, the author suggests the new rules of IT management. According to him, the IT managers should focus on spending less on IT investment, be a follower than an innovator and focus on risks and vulnerabilities1.
F. Warren McFarlan and Richard L. Nolan responded to the article with ‘Why does IT matter’2. They do not agree with the views of Nicholas Carr. They state that Carr’s examples of railroads and electric power played out over various years. It is worth noting that although these technologies mutated significantly, the mutation was on a totally different and much smaller scale than IT. After eighty years, a train moved six times faster that in earlier periods, but a computer produced in 2000 runs 10 million times faster than a 1960s’ computer. The authors also mention that the most important thing that the Chief Executive Officer (CEO) and senior management should understand about IT is its associated economics. New technologies will continue to give companies the chance to differentiate themselves by service, product feature, and cost structure. Understanding the potential and then deciding when the time is right to seize these transformative applications will be neither routine nor boring for the CEO or Chief Information Officer (CIO)2.
... whether it will create competitive advantage through technology. Businesses with large fixed costs, capital-intensive business plans, and specialized asset ... to debtor! |s pressure and gain fundamental first-mover advantage by highly capital requirement as entry barrier ... industry evolution brings the capital intensive business to lose its competitive advantage. Iridium presents yet another example of ...
Another article ‘IT Delivers’ by Frank Hayes talks about how to gain the real competitive advantage3. He challenges the views of Nicholas Carr by stating that IT does matter. He states that it is true that a sustainable competitive advantage can not be gained directly from IT. But that does not make IT and its innovations any less important. Competitive advantage may not be obtained just from getting products, services and information. It can be gained from processes, skills and execution. IT can help a business maximize its success by improving its processes and leverage skills. He suggests that each company is unique and it is very important to understand one’s company completely. That can help to deliver IT that truly serves one’s business.
A similar view is shared in the article ‘IT Success Requires Discipline and Innovation’4. The authors argue that technological innovation is not the central issue as Carr believes. The important aspect is whether firms can convert IT investments into business results. For any business to be successful, it is very necessary that investment in IT is combined with technology leadership and management discipline. The authors oppose the views of Carr by stating that IT should not be equated with hardware and networks but with the essence of IT – information.
A recent study focuses on how strategic IT alliances can help improve the effectiveness of healthcare supply chain management5. Its results state that healthcare providers have to continuously review and renovate their operational and IT strategies to gain and sustain competitive advantage.
... leverage IT as a competitive advantage, but is getting easier to put business at a cost disadvantage; ... is a "transport mechanism" that carries digital information much the same way that railroads carry ... suppliers and even utilities; and finally, the investment bubble has burst, which is historically a ... It is possible that a company might gain a competitive advantage by building lines only to their ...
‘IT doesn’t matter’ is a highly thought provocative article. It has raised a serious question about the effectiveness of IT in gaining competitive advantage. It is true that cautious IT investment is absolutely necessary. In IT, it is very necessary for any business to focus on continuous efficient run of its infrastructural technology. Technical glitches and outrages should be avoided at any cost. But other than that, I do not agree much with Carr’s other views. But importance of IT in gaining competitive advantage should not be ignored. The field of IT is an area that still can be explored. Whether or not information systems can be a source of sustained competitive advantage is dependent on the type of information system being analyzed. Being continuously innovative and having superior insight can definitely help to find a competitive advantage. Efficient management system combined with an effective information system can definitely contribute to gain competitive advantage. To conclude, IT investment may not be able to provide competitive edge by itself, but less or no investment in IT can definitely lead to a major competitive disadvantage.