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IT doesnt matter

Argument 1: Its not ubiquity but scarcity that gives an IT firm the competitive
advantage
Sure every firm now has access to the main functions of IT, database management,
data storage etc, but why only certain firms become successful? This question
bottles down to not how much hardware one has, but what one can do with it. In
essence its the ability to use the systems is what that gives a firm the competitive
advantage. Yes, there are companies with superior internal technologies that make
them stand out. For example dell has internal infrastructure automation process
which provides them a huge advantage. Its not just having the technologies,
keeping those technologies in able hands which make use of those technologies is
a huge differentiator. Consider android development, anyone can download the
android studio and start making their own apps, yet only few companies have used
it to design apps which are successful and made billions. Why? Again its not what
you have; its what you do with it that matters. People can design apps using studio
or html or JavaScript, but to design a logic thats irrefutable, a layout which is
appealing, a successful campaign to market the product, having highly skilled
people etc are the things that gives any company the competitive edge.

Argument 2: As any firm can buy the technologies and processes associated
with it, IT provides distinction to none.
Again, buying IT might not provide any distinction, but innovating in IT definitely
provides a competitive edge. Core processes which are achieved through the use of
IT, is what you compete on. Consider Wal-Marts supply chain process. Its their own
core process which they developed on their own and its providing them the
competitive edge. Its not what you buy; its what you do with it that provides
distinction. Consider ERP software that SAP provides. Any firm can buy it. But how
you incorporate it into your strategy and make use of those processes in improving
the business is the main differentiating factor.

Argument 3: The window of opportunity arising in any technology is very short


lived.
Carr compares IT to electricity saying that many opportunities arise at the beginning
or build out phase. But at the end of the phase, the opportunities cease to exist.
This is not true. Innovation in technologies is going at a rapid pace. Even in
electricity, managing power grids efficiently is an opportunity. Alternate methods of
producing electricity, such as fusion, fission, nuclear ways etc provide new windows

of opportunity. The window might be less for the basic discovery, but for the diverse
branches it sprouts, there will be new opportunities that surface.

Argument 4: IT is just transferring of data, and that it is replicable.


IT isnt just transferring of data. IT is transformation of that data by analyzing it to
improve the business process. For example, analyzing the data of the customers
buying behavior and providing suggestions and offering deals on the items they
might like. Data collection, storage processes might be replicable but the algorithms
to analyze the data collected by them and the processes to implement them are the
core competency of a company. Even if other firms replicate the same, it hard to
sustain for a multitude of ways. They might not have the experience as firmly
established companies, not having a flexible management or skilled workers or
have the capital to thrive. If they did sustain and become successful, then much of
the success is attributed to the management than the infrastructure. There are a
bunch of start-ups which are forming in India at this time. All companies have the
similar access to the technology. But, few companies which have a different ideal or
an effective process attract the eye of investors and stay ahead of the competition.
For example, OLA cabs had a different proposition plan at the beginning which was
so appealing to the investors. They had the same infrastructure as other cab
services like Taxi for sure, but a new strategic thinking has made them thrive out
other services by buying them with the huge investment they gained.

Argument 5: Managers spend hefty amounts at the beginning for the


technologies which later become obsolete.
The very definition of a manager is that he manages the contracts to provide the
best for the company. They are not spendthrifts but strategic thinkers. No one likes
to buy technologies when they know that they wont offer any benefits. No one now
goes by the hype of some new technology anymore. Managers think strategically
and only if they think a new IT change would be beneficial down the line, they buy
and use it. And when such IT change becomes a norm later, they would have a huge
experience in using it which gives them the edge. Consider the evolution of
computer languages, from fortran to cobol to C to java. Managers who thought C or
JAVA is more beneficial as it offers multiple ways to expand have begun working on
incorporating them much before they were widely known. That kind of visionary
thinking provides benefits down the line rather than showing immediate benefits.

Argument 6: Massive investment early on in a technology, leading to falling


prices and quickly, commoditization.

Carr compares IT to railways, electricity and IT by plotting graphs for the number of
railroads, electric utility generating capacity and number of computers. He says that
huge investment after installation leads to falling of prices which then leads to
commoditization. Its true in case of electricity as its a commodity but IT isnt. IT is
more than just the number of computers. Again, ability to use them matters.
Computers have been commoditized long before, IT isnt. Sure some kind of IT falls
into the category of commoditization. Consider email, we all have it and use it, it is
not competition changing, so overinvesting in it is not wise. But there are industries
where technologies play a major role. Consider Microsofts automated
infrastructure. If we dont have it, its difficult to even compete. Even if one
manages to set up the one of those in place, it might not be successful as Microsoft.
Because its an organizational change which is a different one all together. So in
industries where these kinds of systems are important then IT really matters.

Update1:
Carr should have provided statistical data to support the claim that window of
gaining advantage is short for technologies. A correlation study on how the time
span for competitive edge is co related to lasting profits would have solidified the
argument.

Update 2:
Carr used a narrow definition of IT describing it as a process of transferring data just
like how power infrastructure is transferring of electricity. A better explanation of IT
would be a system which uses power of computation coupled with the way in which
people interact with this system. With this definition in mind, Carr could have made
statements. Just comparing IT with hardware and software doesnt provide one a
complete picture.

Update 3:
Carr states that IT doesnt provide competitive edge to individual companies, but it
influences competition at macroscopic level. Is he refuting his own assumption?
Most of the companies which are successful are successful because of the core
processes rather than the hardware they have. Hence competitive edge depends on
varied factors along with IT. Just stating that IT doesnt influence a business is a
myopic view of the point. A detailed description of the term competitive edge and
what contributes to it along with quantitative research data on how they are related
to IT would have made a compelling evidence to the claims.

Conclusion:
I personally believe that IT matters and that a firm can achieve the competitive
advantage not just by installing it but by using them efficiently. By successfully
incorporating them so as to aid their core strategic thinking makes a firm
successful. IT has made all the tedious processes so hassle free which greatly
enhanced the lives of the mankind. Also, innovation in the IT which is bought by the

companies will help them grab the unforeseeable opportunities. Finally, a novel
business idea, vision, goals and a great work ethic coupled with information
technology gives an organization a true competitive advantage.

Citations & References:


IT does not matter, Nicholas Carr, Harvard Business review.
IT Does so matter, Kathleen Melymuka, Jul 7 2009, Computer world.
Why IT matters, Robert M.Metacalfe, Jun 1 2004, technology review.