IT doesnt matter by Nicholas Carr Information Technology plays an important role in todays business world.

IT engineers are highly paid and their skills are in demand. Its importance continues to rise partly due to innovative projects or as a process to catch up with competition. Information technologys role has especially risen last three decades with the widespread of the Internet. However, there are people who think that IT doesnt matter, and we are spending too much money for the value added. One of them is Nicholas Carr in his article IT Doesnt Matter. In this article Nicholas argues that Information technologys strategic importance has been diminished. He mentions that the core functions of IT like data processing and storage have become a commodity and as such the money that is spent for them should be reduced. He also points out that it might not be worth as much to be the first mover in a specific technology since the price to pay for that position is very high. It is better to follow, when the product is cheap and you already know what the challenges are. He provides different examples of past industries like electricity and railroad where a lot of money was spent for their development to achieve the economy of scale. He argues that opportunities for first mover advantage do not exist for a long time and before you know everyone is doing the same thing for a cheaper price. I dont agree with Carrs points that he made in this article. We need to continue spending on IT to keep up with all the innovation that is happening around us. If we dont do it we might be out of business before we know. More than ever the competition has risen all over the world. This is due to globalization and introduction of internet. We are competing today with companies from all over the world even though they might be miles away. IT has transformed a lot of industries. Online marketing would have not been possible without IT development. We can reach to the user faster and more efficient. This means we need to leverage more targeting and segmentation. We need a lot more sophistication now than we ever needed before to achieve the same results. Majority of the time this sophistication is coming by being able to use IT to our advantage, by developing different programs and applications. IT continues to be very important factors for all the business and yes it does matter a lot. However, new competitive dynamics have emerged and there has been a greater gap between the leader and followers. Example Google is far ahead from other search companies and it continues to grow. It is true that competitors catch up fast but for the short time when you have the first mover advantage you can flourish. And it depends on the company how it wants to proceed. There are companies that constantly work to find the niche and differentiation. As the respondent to the Carr article mentioned that to extract value from IT requires innovation in business practices. (Does IT Matter? An HBR Debate) There is so much value and potential in IT but they go hand in hand with business practices. Just like Wal-Mart and Dell continue to be successful in the way they use IT for their innovation purposes. Without IT possibilities there is no innovation. IT remains a profound catalyst for the creation of strategic differentiation. All business challenges require IT to resolve them. We have come too far since the discovery of computers and the pace we are moving is very fast. If companies do not invest in IT they are left behind. In order to implement one application, sometimes it is required to

change the whole computer because the older version doesnt support the change. It is true that there is cost for changing all the computers in the company but the benefits that this change might produce are way bigger. We can always see the cash flow for Apple or Google; it is most likely in the billions. IT cannot be compared with train or electricity, because the cost of performance for IT technologies over last four decades changed 10 to the seventh vs. with train it moved only six times faster than it was earlier. (Does IT Matter? An HBR Debate, 2003) IT has allowed growth of other industries and introduction to new industries that we never thought before. For example the economics of financial transactions has dropped dramatically. It created online business models that never existed before. The new technologies will continue to give companies the chance to differentiate themselves by service, product feature and cost structure for the foreseeable future. (Does IT Matter? An HBR Debate) I agree with Paul A. Strassmann that the statements that Carr has made on the article are not based on any case studies or research. The validity of these statements is vague. Most of the statements are based on analogies and for that they might be flawed. Carrs assertions and recommendations could inhibit the most innovative and value creating means available for increasing the economic benefits to enterprises and customers. Information technologies are too important to be pronounced irrelevant. (Does IT Matter? An HBR Debate, 2003, 9) For the end IT will continue to play an important role in the business and together with business processes and applications will continue to deliver great value to the customers.

I dont share the pessimistic view that Carr share on the future of IT. The rise of on-demand computing may threaten jobs especially corporate IT jobs but also give rise to new opportunities. The shift will be from jobs in large companies to more entrepreneurial opportunities. (Mc Kendrick, 2009) With the help of technology the barriers to create a company and enter in the entrepreneurial world have been lowered and as well. We dont need a lot of money to start a company. Businesses are coming out like mushrooms after rain, especially in Silicon Valley. We have many examples of businesses starting in the garage like Apple, Microsoft, Google etc. Lots of entrepreneurs are starting even from a blog on the website. All you need is a computer and then sky is limit.

It is true that some IT parts have been commoditized like: hardware, operating systems, network and storage but there is lots of room for innovation. At the high end, installing an ERP and CRM system wont make your company an industry leader; it will simply keep you in business. (Mc Kendrick, 2009) It is not anymore about having technology, it is what you do with technology that matters. Business and technology goes hand in hand, and we cant expect technology to change the world by itself. A company that smartly and innovatively leverages its IT in new and creative ways will move to the head of the pack. And, thanks to IT, you dont need a workforce of thousands to do so. (Mc Kendrick, 2009

IT matters a lot in every industry. If we take an example Wall Street, we see that IT plays a very important role there. The simple version is that IT matters a lot when systems and networks go horribly and publicly wrong, as these things sometimes do. (Wailgum, 2008, 1) Systems cant be ignored and IT investment cannot be declined because we might see the consequences very soon after. For example the software glitch in 2000 in Nikes supply chain caused the companys stock to depress by 20% and $100 million in lost sales. (Wailgum, 2008) According to CIO of Accenture, you have to operate smoothly that IT fades from the picture but the same time you have to able to find better ways to operate so you can take friction out of business and lower the cost of doing business transactions. (Wailgum, 2008) In a survey of 300 CIO from global Fortune 100 companies, came out that IT has been paying a lot of attention in cutting costs and not enough in developing online customer service initiative. It is one of main ingredients for business earnings but it doesnt get credit for it. However, if the business doesnt do well, IT is the first one to blame that it failed to perform. (Wailgum, 2008) IT especially plays an important role for mergers and acquisitions. "One of the key factors of very big integrations is the ability of IT to consolidate and streamline the acquisition onto a single platform and gain significant cost savings," says Sanzone of Credit Suisse, who has worked in the M&A space in the past. (Wailgum, 2008, 4) A really good example on how IT could be used is found in Nordstrom. Since the company creation in 1901 until 2000, everything was done with pen and pencil, they didnt believe in technology at all. However, after 2000 they decided to invest in IT, taking advantage of new point- of- sale (POS), inventory, price automation and buying system. Company linked internet with in-store inventory management which allowed them to be more costumer friendly. This in return influenced the stock price to go from $15 in 2000 to around $60 in 2007. However, with new technology come also lots of challenges, which made Nordstrom to invest in IT $170 million every year to continue maintaining its competitive edge and deliver to customers most innovative systems. (Wailgum, 2008) This is a great example that if companies do not invest in technology are outrun by competitors and left out of the game.

IDC, technology market research company, reported that global investment in information technology was $1.9 trillion in 2003 and $2 trillion in 2004. According to IDC survey also 60% of business executives say that strategic importance of IT is increasing, while only 2% of them say it is decreasing. (Metcalfe, 2004) According to Carr, these people that are investing this money are all spending without thinking to whatever is out there to buy. However, these people are thinking wisely on how to spend best their IT money. What Carr is lacking in his article is the validity of his arguments. For example Carr shows that expenditure on IT is inversely related with financial performance of a company. On the study that Carr refers of 25 companies, they spend 0.8 percent of revenues on IT, but typical company spends 3.7% of revenues on IT. This study doesnt prove Carrs point. It rather proves that companies investing unwisely on IT have lower returns that those investing wisely. (Metcalfe, 2004) Carr argues also that information technology doesnt offer a competitive edge, but Metcalfe replied that if it is done well it does bring competitive advantage and if it is done poorly it can bring a disaster. If business executives follow Carr's advice, who will provide innovation's test beds? How will new technologies find their markets? ((Metcalfe, 2004)

Carr's opinion is an intellectual exercise based on the theory that scarcity--not ubiquity--makes a business resource strategic. Unfortunately, this argument ignores the real world. IT continues to open up new opportunities to compete, and it will continue to do so for some time to come. (Champy,2003)

Carr fails to recognize that IT alone has never delivered value or competitive advantage. It's the combination of technology and innovation that helps companies outpace rivals. All infrastructure technologies--from the electric generator to the internal combustion engine--let work be performed more effectively and efficiently, creating value. But it's the big idea--twined with technology--that makes the difference. Henry Ford showed how to use technology to change how cars are produced, creating lots of value in the process. (Champy,2003)

There are many contemporary examples of companies that combine innovative business models with technology to grab market share. Consider the Dell model: Build to order while slashing costs and blazing a direct path to the consumer. None of this would be possible without IT, and the Internet now allows a technology-savvy company like Dell to push the model even further, seamlessly linking work with suppliers and providing new channels to customers. But doesn't IT's ubiquity mean that any company can simply copy Dell's example? Not exactly. One company's operating model is not easily adopted by a rival. Issues such as fixed and dedicated resources, structure, and culture often prevent a company from mimicking competitors. Even formidable contenders such as IBM and Hewlett-Packard have failed to replicate Dell's model. (Champy,2003)

Carr is right to billboard the staggering sums that were blown on IT. By the end of the past decade, U.S. companies devoted almost 50% of their capital spending to IT. Many poured millions into large IT projects with zero value to show for it. But when IT spending isn't producing a good return, it's usually because a major development effort has been mismanaged or line managers haven't paid enough attention to how much work change, along with IT change, is required. That argues for leaders spending more time, not less, on IT initiatives. (Champy,2003) It's also important to avoid getting mired in the debate that IT has never been strategic. That's another empty exercise, since most business gurus can't even agree on a real definition of strategy: What's strategic to my company might be irrelevant to yours. Experience shows that IT is critical if it's used to spark innovation and change how an enterprise competes. As for considering whether IT infrastructure is a utility, don't be so quick to compare it to the electric wires that run through your office. Those copper wires don't hold the information and knowledge--

about customers, processes, operations, and markets--that a company's technology infrastructure contains. One recent study suggests that more industry knowledge may now be stored in electronic documents and databases than in the minds of the industry's workers. It's a humbling thought, but what if it's true? The IT infrastructure that contains such knowledge must be carefully managed and mined (Champy,2003)

Carr observes: "As for IT-spurred industry transformations, most of the ones that are going to happen have likely already happened or are in the process of happening. . . . It may well be that, in terms of business strategy at least, the future has already arrived. (find the page number on the article for carr) This pronouncement sounds a good deal like the belief held, more than a century ago, by some prominent physicists, who stated that all of the important work in their field had been completed.(McCredie, 2003)

The dot-com phenomenon of the 1990s certainly raised expectationsto unrealistic, unsustainable, stratospheric levelsabout how easy it is to create successful business models based on the Internet. Yet the excesses and overinvestments during this business fiasco should not overshadow the many solid achievements and successes of companies that developed creative e-business strategies. Despite the many failures during this shakeout period, we are rapidly becoming a digitally connected society. Online shopping, for everything from books to cars to homes, is now common. Many businesses have formed strategic, worldwide supply-chain and marketing partnerships based on digital technologies, and many more such partnerships are sure to be developed in the coming years. Some will likely be transformational. (McCredie, 2003)

Information technology is not close to being mature; we can expect the rapid advances of the past five decades to continue. We don't know that a technology is mature until it has been superseded by a new and better technology. The cumulative effects of IT advances will be additional thousandfold improvements in many dimensions.(McCredie, 2003)