Does IT Matter?

PRESENTED BY:-
KANISHK GOEL(17810026)
NAVNEET GOSWAMI(17810037)
NITIN DUDEJA(17810041)
SAURABH RUWATIA(17810063)
 IT Doesn’t Matter

 ……..is the title of an article by Nicholas Carr

 Published in Harvard Business Review May 2003
 Suggests IT no longer provides competitive advantage
 Followed by a book “Does IT Matter?” 2004
 Caused huge debate in IT and business communities
 Does IT Matter?
"There is less of a need for strategically thinking ClOs'
- Nicho/as Carr

More quotes from his work

 “IT's potential for differentiating one company from the pack inexorably diminishes as it
becomes accessible and affordable to all”.
 "Companies can still innovate using IT … but the competitive advantage gained through the
use of IT can quickly be neutralized by corporate rivals"
 “The center of IT innovation has moved from the user to the vendor"
 "Executives need to shift their attention from IT opportunities to IT risks, from offence to
defence"
 "Why write your own application, when you can buy read--made, state of the art applications,
for a fraction of the cost.
 Does IT Matter?
Recap: Carrs argument - more quotes
 As IT's power and ubiquity have grown, Its
strategic importance has diminished
 What makes a resource truly strategic is not
ubiquity but scarcity
 You only gain an edge over rivals by having or
doing something can't have or do
 The core functions of IT – data storage, data
processing and data transport, have become
available and affordable to all
 IT Is no longer a potentially strategic resource ,
but is being transformed Info a commodity factor
of production
 IT IS becoming a cost of doing business that must
be paid by all but provides distinction to none
 IT is best seen as the latest in a series of broadly
adopted technologies - from the steam engine and
the railroad to the telegraph and the telephone to
the electric generator to the combustion engine
 The buildout of IT forces users to adopt technical
standards, rendering proprietary systems obsolete
 The way Infrastructural technology is used
becomes standardized as best practices come to
be widely understood and emulated built into the
Infrastructure itself
 IT is highly replicable, endlessly and perfectly
reproducible at zero cost
 Proprietary applications are doomed to economic
obsolescence
 Investments in IT (USA)
 In the 1960’s IT was only 5% of total expenditures
 Today it has reached 50%
 Total dollar value of IT spending is 2 trillion annually
 Early adoption of a technology can lead to the achievement of a competitive
edge [American Hospital Supply]
 Streamline business processes
 Create new products/services/markets [still applies]
 Responses
 IT may become ubiquitous, but the sight required to harness its potential varies for company to
company.
 Even as competitors adopted Wal-Mart’s practices, they focused on the next wave of
innovations preserving a significant advantage.
 Many believe and treat IT as a commodity as they have not thought aggressively so as to how IT
can bring new businesses ( implying that the ability required to create economic value through
it are in short supply).
 Responses
 Rather than help companies understand that IT is a only a tool, technology vendors have
treated it as a panacea.
 When the impact of massive IT Implementations did not materialize, the backlash lead to this
ideology “ IT doesn’t matter”.
 Competitive advantage should never be the sole objective of IT. Rather managing costs and
assessing risk must also become its objective.
 Understanding the potential and then to seize the opportunity at the right time can lead to
realizing the potential of IT.
 Nicholas Carr Assertions
 It has los its strategic value
Carr logic is defective because his example deal only with capital intensive goods but information goods are not
subjected to such effects.
 It is a commodity that does not offer a competitive distinction and therefore does not provide a competitive
advantage.
Competitive advantage is not result of personal computers. It is result of effective management by skilled and
motivated people. So profitability and IT spending are unrelated even if identical technologies is used.
 The influence of IT will henceforth be macroeconomic and not a means for competitive differentiation.
The proposition that IT benefits to consumers and not to firms is a contradiction. Extending the benefits of global
division of labour and inclusion of billions of consumers in global market will generate trillion of new revenues.
 IT is primarily is a transport technology, and because it is open to everyone it offers no competitive advantage.
IT add value by improving the management of information intelligence and collaboration among individual, groups
and organisation. Thus Carr would the prevent the organisation from understanding IT in such a way that it can a
weapon of choice in competitive advantage.
 IT function will be homogenized and Proprietary applications are therefore doomed.
 Corporation will adopt generic applications; business process will therefore be uniform and without
competitive advantage.
 Existing IT capabilities are largely sufficient for corporate needs.
Corporations are confronting to increased uncertainty about market, competitions, resources. So there is a
need for more and better information technology.
 Widespread adoption of best –practices software makes IT based advantages disappear for everyone.
 IT is arriving at the end of its growth cycle and is reaching saturation.
 Nicholas wrote that IT is now like other infrastructure and companies that are biggest investor in IT
are not the most successful in terms of business performance.
 Carr is correct on hardware and network connectivity are commodity business but IT does matter
because of intelligent and innovation application of information solve business problems and
customers value.
 The differentiation is about information, business process and applications. Sustainable advantage
comes from delivering grater value to customers. Better understanding of customers and applying
that understanding to products, process and services and integrating all these on improved value
proposition.
 Aim IT efforts and resources at helping the business achieve its strategic objective.
Use IT to streamline the business process and speed up access to accurate information about
operation, competitors and customers.
 Focus on IT to respond quickly to changing conditions and requirements.
Everything in the business today is done to be faster than before and thing is subject to immediate
change.
 Focus on optimizing the cost effectiveness and performances of IT resources.
 Focus on minimizing the IT risks.
IT can produce significant strategic and competitive benefits for an organization but only when it is
used effectively.
 Major Points from Letters
 “IT never mattered. What matters are the people who invent technologies and who deploy and use
them.” -Mark S. Lewis
 According to Carr, IT is like other ‘infrastructure technologies’ that lost their competitive potential
once they become “accessible and affordable to all”.
 But there is a key difference between the two. Other infrastructure technologies (like electricity)
perform functions outside human capabilities. While IT mirrors or amplifies brain’s key information
handling activities thus How we apply it makes a lot of difference in our business.
 The use of IT is more comparable to innovations in transportation rather than power utilities.
 “There is no consistent relation between IT spending levels and Financial Performance.” –Tom
Pisello
 Over a long term , companies spending more on IT are demonstrating superior overall results.
 But two companies investing same amounts in identical technologies will yield vastly different
results.
 So, it depends on how well it is applied rather than how much is spent.
 According to Roy L. Pike, IT is seen as a utility in broader terms only. Linking Intercompany businesses
is not using IT as a utility as it accounts for Strategic importance of a firm and saving lots of cost.
 “The move to a common infrastructure is inevitable. But it does not reduce opportunities for
competitive advantage. It increases them” –Vijay Gurbaxani
 Technology was never a scarce resource; it was always our capabilities to create value with that
technology.
 So our spending must be more on management practices for using technology rather than the
technology itself.
 So arguments by Carr that buying best computing services alone would do the job is hard to believe.
 Steven Alters compares IT to kidneys by telling that people can survive with one kidney also but it
doesn’t mean the second doesn’t matter.
 “Hardware and Software can be easily intertwined. Sometimes a single piece of outdated
software can derail the deployment of important new functionality with real strategic value.” –
Cathy Hyatt
 Selection, maintenance and deployment of new and current IT capabilities is the main strategic
issue and it could differ for each company.
 “To exaggerate somewhat-but only a little-anything is possible with software, if not today, then
tomorrow.” –Chris Langdon
 Advancement in technology is an ongoing process and value addition is been done on each level to
make it more efficient.
 Technology itself reduces costs of various process thus taking care of the cost in acquiring the same.
 Carr believes companies should manage IT as a commodity input, seeking necessary levels of IT only
with lowest possible cost and risk.
 He believes that IT mattered in the past but now with advancement in technology, the followers are
able to catchup the first movers more quickly, which makes high investment being first user of no use.
 “Just because we need to see new innovations in IT does not mean that it pays to be pioneer.” –
Nicholas G. Carr
 Conclusion

 The points opened by Carr are true in the sense that IT has become a utility and is generalised and
common thing for each company.
 But to say it doesn’t matter at all would be very wrong as certainly it has infinite and constantly
expanding functionality which would make our business more profitable.
 So, we can say that IT certainly matters but it is not a headline.