Review: Does IT Matter?
Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
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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