Why It Matters - an Analysis of Nicholas Carr's

Why IT Matters

An Analysis of Nicholas Carr's

Harvard Business Review Article

"IT Doesn't Matter"

Does IT still matters? Nicholas Carr offered a thought-provoking theory in his 2003 Harvard Business Review Article "It Doesn't Matter". He said that Information Technology or IT doesn't matter anymore in business because it has lost its strategic edge and is now a cost that should be managed. In previous years, IT became very important to business because it changed many processes, structures and operations. In fact, companies have invested a lot of money on IT and based their strategies on it. Nicholas Carr, however, suggests that IT as a strategic tool has lost its business value because of its availability, uniformity and affordability. Also, he said that IT has become a cost that should be managed conservatively so that a company can be competitive. These are my opinion on the points Carr made in his article:

1. Information Technology's strategic importance has lessened because it has grown in power and ubiquity. Carr said that a company can gain advantage from its competitors if it has something that the others do not have. I agree with this statement because IT, just like other new technologies, offered this advantage at the start. In order for your company to be the best in your industry, it is important that you have the best technology that is being offered. As such, companies were motivated to invest heavily in new technologies to be in the top of their business. Other companies, though, invested in IT so that they will not be left behind in the technology race. Whatever the reasons behind businesses acquiring IT, companies knew that they could not afford to lose their position by lagging behind the others.. Having a technology that others do not have was the way to go and it is only logical that companies allotted a major piece of their budget in financing technological investments. Before, investing in IT is very expensive and it requires experts which at that time are too few. A company who can afford to acquire such investments would really have an edge over his competitors. Executives today, though, have long since learned that they overestimated technology's value to their bottom line. They discovered that having these technologies do not necessarily mean that they would gain a lot of profit. Therefore, IT's importance as a strategy of a company has lessened. With the massive amount of money invested on new technologies, supply has increased more than the demand for it. IT became cheaper and accessible to everyone and with the prevalence of IT experts, its initial advantage has disappeared. The very edge that made IT as a prime tool to make a wide gap between competitors was reduced. This doesn't mean that the importance of IT to business has completely disappeared. IT's value to companies lessened in terms of using it as the cornerstone of their strategy but IT, as an integral part of business, is here to stay. From the article, we can glean that the problem lies with how a company invested on IT and what kind of technology they invested in. Too many businesses jumped on the information technology bandwagon without extensive study of what specific IT tools they needed. This left them with expensive assets that they could not maximize with unnecessary features or tools that their businesses do not need. Another reason why companies are saddled with IT investments they do not require is because these companies felt the need to invest on technology just because their competitors are doing so. Their need to be better than their competitors drove them to make decisions hastily even though their present processes are doing so well.

2. IT is an infrastructural technology and has reached its peak already. I disagree with this statement. I think that the potential of IT has not been fully realized. I agree that if a company owns a technology that is hard to copy, it gives them a big edge on which to base long-term company goals. But technology now is easily acquired, affordable and accessible. And businesses have discovered that IT has more value when it is shared. Consider the internet. If only a few companies have access to it, its worth would be insignificant than when it can be accessed by many. The internet works because everybody can avail of it. Further, Carr said that IT, like any other infrastructural technology, has undergone the build-out phase already with the billions of dollars already spent on fiber optics, software, hardware, middleware, storage, etc. And because we have more technology than what we need, he concluded that IT has reached its peak already because the opportunities IT afforded for companies to have distinct advantage over the others are over because it became accessible and affordable. He also assumed that IT will go the way of other infrastructural technology and become inconsequential to strategy. Bob Evans of Information Week said that Carr's view is "astonishingly shortsighted" and I agree with him. The prospects of these new technologies have not been exhaustively tapped and the possibilities of new IT are, at this point, indescribable. There will still be speedier microchips, larger storage capacity and servers and more effective middleware and networking systems which will be developed. Several phases of IT development are inevitable and I believe that it is critical that businesses are prepared for it.

3. IT has become a commodity. I agree with Carr when he said that IT is now easily duplicated. This means that the use of IT in business is already standardized. As an example, a few years back, companies want systems that are made to fit their needs. Customization was very expensive because of the shortage of IT experts and costly IT equipments. If a company invests on these equipments, it is only logical that they get technical analysts also. Sellers of technology knew this and they make huge profits by selling software and hardware with astronomical prices. However, processes have since been standardized and IT along with it that made customization an unreasonable solution. Any business can now buy IT solutions for very low and competitive prices which when slightly modified will be able to suit a company's needs like an expensive customized system. Why buy something unique when there are already systems or software that already answers your procedural needs at a cheaper price? In this sense, Carr had it right in saying that IT has been commoditized. However, business needs are not static.