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Boston GlobeDoes IT Matter? engages the imagination and the emotions, a rare combination in a business book.
—May 2, 2004
IT can be used to supplement and improve strategy implementation, but it is not the foundation of a competitive advantage. To handle this new approach to IT, executives will have to prevent the commoditization of IT architecture and applications from destroying their companies' barriers to competitive advantages. Although that role is not yet entirely clear, executives need to prepare for the prospect that IT doesn't matter to strategy.
One of the greatest discoveries of the 20th century was the microprocessor. It dramatically improved the efficiency of the earlier supercomputers and changed the way the world did business. It moved us from mainframes to local area networks to personal computers. It created the proliferation of information technology (IT) and its infrastructure, which were the major forces shaping business over the last 40 years.
Corporate spending habits reflect the great importance of IT to business. In 1965, corporate spending on IT was about 5 percent of capital expenditures. It grew to 15 percent in the 1980s, 30 percent in the early 1990s, and over 50 percent by the turn of the century. Even with the recent slowdown in IT spending due to the bursting of the Internet bubble, the average company still invests as much in IT as in all other capital expenditures combined.
Attitudes and practices changed as well. Twenty years ago, computers were considered suitable only for low-level employees. Now, any senior executive without one is a dinosaur. Once networks and then the Internet emerged, executives finally took notice and focused on the strategic implications of IT on a wide scale and how it could be used to create competitive advantages.
There is an assumption in the business world that the strategic advantage of IT has increased with its ubiquity. This is incorrect. Scarcity, not ubiquity, makes a business resource strategic. By now, the core functions of IT - data storage, data processing, and data transport - are available and affordable to all businesses. It is the cost of doing business for all, but it provides distinction to none. Without distinctiveness, the only basis for competition is pricing, which eventually slashes prices close to cost, and squeezes out profit. Investments in resources that provide differentiation can deliver higher profits, while commodity inputs cannot. Only when a company can distinguish commodity resources from those that have a potential competitive advantage will it avoid wasted cash and strategic dead ends.
The transformation of IT from a source of advantage to the cost of doing business raises many challenges. Executives need to re-examine spending and management of IT and rethink relationships with vendors. Different companies will reach different conclusions, but most will find that as IT merges into general business infrastructure, mitigating risk and controlling cost will become more important than pursuing innovation and new investments.
IT is probably best understood as the latest in a series of broadly adopted technologies that have reshaped industry, such as the steam engine, the railroad, and electricity. All briefly gave competitive advantages to forward-looking companies, but then became commodities. Over time, they mattered less to the competitive fortunes of individual companies.
Information technology is headed in the same direction. As IT's advantage dissipates, its great transformational power fades in a necessary and natural process. Only by becoming a shared and standardized infrastructure will IT deliver its greatest economic and social benefits and fulfill its potential.
The Great Debate
The Rise of a New Business Infrastructure
The Nature and Evolution of Infrastructural Technologies
An Almost Perfect Commodity
The Fate of Computer Hardware and Software
Information Technology's Changing Role in Business
The Universal Strategy Solvent
The IT Infrastructure's Corrosive Effect on Traditional Advantages
Managing the Money Pit
New Imperatives for IT Investment and Management
A Dream of Wonderful Machines
The Reading, and Misreading, of Technological Change
Notes and Bibliography
Posted December 19, 2009
I've been in the IT business for about 20 years now and have got to say that Carr is right on the money! He provides an outstanding comparison of technology directions and what they mean to society by comparing past important technological advances such as the electrical power distribution and services. Did you know that at one time there was a Vice President of Electricity in many companies? How does this bode for the future of IT Executives? IT truly has become more like a commodity and less than a mystery that is was even a short 5-10 years ago. Standardization in protocols, the boom of the home market and the new generation of young adults that grew up with the technology have led to a technology aware society that is not mystified by IT. The book is an easy and pleasurable read! I highly recommend this book to all of us who believe we're cutting-edge IT folks as well as the general population.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted March 18, 2005
For those of us who are 'plugged' into technology at the workplace, this book offers a realist perspective on the true value of I.T on business. Some of the authors view points were, at times, very controversial but nonetheless strikes a chord as to how technology, for better or worse, has changed the face of business forever. A must read for the technology veteran!!Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted January 13, 2010
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