In a Harvard Business Review article last May that drew more than its fair share of attention, Carr, a former executive editor at the magazine, argued that even as the power and presence of information technology has grown, its strategic importance has de Does IT Matter?
Information Technology and the Corrosion of Competitive Advantage
By Nicholas G. Carr
Harvard Business School Press, April 2004
208 pages, $26.95
In a Harvard Business Review article last May that drew more than its fair share
of attention, Carr, a former executive editor at the magazine, argued that even
as the power and presence of information technology has grown, its strategic
importance has decreased.
The relationship between those two factors isn't causal, Carr argued. But it
is inevitable.
You can understand his logic. If everyone has access to the same technology—if
everyone can store, process and transport data—then technology itself cannot
be a competitive advantage.
The result, Carr says: "As IT has become more powerful, more standardized and
more affordable, it has been transformed from a proprietary technology that
companies can use to gain an edge over their rivals into an infrastructure technology
that is shared by all competitors."
Here, Carr expands his initial argument into a book-length treatise. While he
has softened his title a bit—the HBR article was titled, more controversially,
"IT Doesn't Matter"—his conclusion remains the same: "Information technology
has increasingly become . . . a simple factor of production—a commodity
input that is necessary for competitiveness, but insufficient for advantage."
At its heart, Carr is doing little more than saying the same thing management
theorists have been arguing for at least 20 years: Everyone (basically) has
access to the same capital markets, and everyone (basically) has access to the
same resources (such as technology). If that is the case, then the only true
source of differentiation is your employees and how they use and adapt the tools
available to them.
It is easy to seize on the tiny exception to the argument. It is true, as Carr
concedes, that technology differentiation can give you an edge—momentarily.
But that misses the broader point: If that edge cannot be sustained over the
long-term, then it is not the place to hang your corporate hat.
When it comes to technology, the real question is how best to invest in and
use it to make your organization successful.
Again, this is an area where Carr could make CIOs cranky. He makes a plausible
argument that IT spending can be cut. Personal computers need not be replaced
every couple of years for people who use them primarily for word processing
and manipulating spreadsheets. In addition, Carr praises companies that buy
used storage equipment, and argues that since the price of both hardware and
software is constantly falling, simply dragging out the timing of your purchase
orders—a strategy the best IT managers are already following—can save
your company money. "The rapid, ongoing fall in IT prices means that even small
delays in purchases can dramatically reduce the cost of achieving a given level
of IT functionality," he writes.
And he goes further, arguing that your ultimate goal for the good of your organization
may be to make yourself obsolete, "to make the IT infrastructure so stable and
robust, so taken for granted that it no longer requires high-level management."
It is only human to want to lash out at someone who attacks the very value of
what you do for a living. But Carr's expanded arguments make a good case for
managing IT to the goals he describes. And even if you don't agree with him,
your boss very well might.
Paul B. Brown is the author of numerous business books including Publishing
Confidential: The Insider's Guide to What It Really Takes to Land a Nonfiction
Book Deal, just published by Amacom.
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