IT Does or Does Not ?

Nicholas G. Carr argues in his article “IT Doesn’t Matter” that information technology no longer gives businesses a competitive edge. He examines the evolution of IT and argues that it follows a pattern very similar to that of earlier technologies like railroads and electricity. At the beginning of their evolution, these technologies provided opportunities for competitive advantage. However, as they become more and more available as they become ubiquitous they transform into "commodity inputs," and lose their strategic differentiation capabilities. Carr concludes that since information technology no longer provides a competitive advantage to businesses, they should stop spending wildly on advanced information technology products and services.

Although Carr had made some good points, I still have to disagree. IT matters. Investments in IT are definitely an important area for an organization. Carr says there's virtually no competitive advantage to be gained through IT, because anyone can buy what you buy. That’s certainly not true. It is not what you buy but what you do with it. Standardization and commoditization of a technology don't always mean that innovation stops. You can gain competitive advantage by innovating in IT. You can't count on a single-shot competitive advantage, but you can gain a continuing advantage by being a continuing innovator in IT. I believe IT is really about change. If you want to change your company, you build an IT system to make it possible to. Although IT may be ubiquitous and increasingly less expensive, the insight and ability required for it to create economic value are in very short supply do that change. Investing in IT systems can help a company to cut costs.

In class we discussed that competitive advantages do not last forever. And in this article, IT technology can be replicated. The great example is Wal-Mart. Wal-Mart innovated continuously around new generations of IT. Even as competitors adopted Wal-Mart’s practices, the retailing giant focused on the next wave of innovations, preserving a significant productivity advantage relative to competitors. The fact that you buy identical technology doesn't buy you anything; it's how you manage it. Doing something better and cheaper than the competition is always valuable, even if the competitive advantage is only temporary.

Companies investing wisely in IT increase revenues much faster than those that invest unwisely. New technologies will continue to give companies the chance to differentiate themselves by service, product feature, and cost structure. The first mover takes a risk and gains a temporary advantage. Companies cannot afford to ignore information technology; IT still matters.