In the May issue of the respectable Harvard Business Review (HBR), Nicholas Carr argued that information technology (IT) doesn't matter anymore to corporate strategy.1 As an independent writer and editor, Carr has guided many outstanding authors of HBR articles.2 Therefore, he is a person who should know the pulse of the IT industry from a managerial perspective. As IT professionals, we must take note of this article.
His argument is quite simple. IT is extremely important within corporations, but IT has become a universal resource for those corporations. The basis for a sustained competitive advantage is scarcity, not ubiquity. Hence, IT has become a commodity resource and, therefore, is no longer strategic.
By now, the core functions of IT data storage, data processing and data transport have become available and affordable to all. Their very power and presence have begun to transform them from potentially strategic resources into commodity factors of production. They are becoming costs of doing business that must be paid by all but provide distinction to none.3
Carr distinguishes between proprietary technologies and infrastructural technologies. He argues that IT has shifted into the latter category, thus becoming the infrastructure utilized by all corporations. He substantiates this assertion with examples from railways and electrical power over the past hundred years. Carr then offers the following new rules for IT management:
Spend less. Companies with large IT investments rarely post good financial results. Achieving competitive advantage using IT is becoming increasingly difficult and expensive, putting your company at a cost disadvantage.
Follow, don't lead. By postponing IT investments, a company will get more value for its money. Additionally, by avoiding the IT cutting edge, a company will make smarter decisions as IT capabilities are becoming more homogenized.
Focus on vulnerabilities, not opportunities. A brief disruption in IT availability can be devastating to a company, and the risks of more and different disruptions are increasing.
In conclusion, Carr states, "IT management should, frankly, become boring. The key to success, for the vast majority of companies, is no longer to seek advantage aggressively but to manage costs and risks meticulously."4
Since reading this article, I have struggled with Carr's argument, aspects of which ring true but the tone of which feels terribly wrong. Are his assessments and recommendations valid for corporate IT?
First, Carr is correct that IT hardware components for processing, storage and communicating are ubiquitous within most U.S. companies, from the PDA and desktop to the data centers. Digital media is replacing the manual forms of data capture in most companies. These hardware components are becoming a commodity resource and an increasingly common infrastructure.
However, his conclusions are incorrect regarding hardware components. You can buy a terabyte of hard disk at your local computer store for a few thousand dollars. However, does that imply that you can use that storage for your terabyte data warehouse? No, much more is required to properly manage that warehouse.
Second, Carr does not mention the procedures and processes behind business activities that IT supports. These procedures evolve over years and are woven into the organizational fabric. These procedures are an asset that cannot be bought as a commodity.
Third, Carr does not mention enterprise data, which is the lifeblood of corporate IT. The integration and maintenance of enterprise data over the long term is not a commodity to be purchased off a vendor's shelf.
In summary, Carr is addressing only a part of the corporate IT picture, while proposing recommendations that are seductive to naive managers. By oversimplifying, the danger is that managers will underestimate the effort to align IT with business strategy and will discount the benefits of realizing IT potential for the business. IT does matter!
1. Carr, Nicholas G. "IT Doesn't Matter." Harvard Business Review, May 2003. p. 41- 49.
2. See http://www.nicholasgcarr.com/.
3. op. cit. Carr, p. 42.
4. op. cit. Carr, p. 49.
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