A Critique on IT Doesnt Matter

The article is written by Nicholas G. Carr and was published in Harvard Business Review in
May 2003. The article revolves around theme that Information Technology (IT) is no longer
of value to business and it does not matter anymore. It is no different from other factors of
production which do not provide strategic advantage to a company. It is because the ubiquity
and easy affordability of IT will make it widely accessible and it will not provide competitive
advantage to the company any longer.
The title of the article is provoking but misleading as well. It might not reflect the theme of
the article. One might tend to think that the title seems to be used to create a sensation or
hype in the market. It is because in essence, the writer has hardly denied the effect IT has on
business. Thousands of business firms are able are able to reap out benefits from use of IT
that has made cost of information cheaper and transportation of data much faster and reliable.
Use of IT has helped firms to drastically reduce communication, search and transactions costs
thereby increasing their productivity and profitability. Thus, it will be wrong to say that IT
does not matter.
It might be hard to digest but the author claims that there are striking similarities between IT
and railroad industries and electricity plants and telegraph industries. With the passage of
time from its invention, these turned out to become nothing more than ordinary factors of
production or commodity inputs. It will no longer matter in the strategic standpoint. Business
firms make heavy investment in IT but the return they reap out of the investment is not
justified. The article makes an analogous study of IT with railways and electric power in
terms of the investment that has been made. The trend line shows that many business firms
are making millions of dollars in information technology but it cannot guarantee those firms
success or increase in profitability.
The author has categorized technologies into proprietary technologies and infrastructural
technologies. Proprietary technologies yield strategic advantages as long as they are
protected. Infrastructural technologies, contrastingly, are productive when shared. The author
has argued that technologies shift from proprietary to infrastructural when they mature. A
relevant example of American Hospital Supply (AHS) has been cited which introduced a
innovative system called ASAP. But soon it transformed from being the companys assets to a
liability.
However, the article does seem to have some fundamental flaws in it. The author argues that
if any company can enjoy competitive edge only as long as it possesses some exclusive
resources or technologies. As soon as it is affordable to its competitors, it will not be able to
achieve its strategic goals. In this case, we can take an example of a student in a university
which is well known for its teaching methodology and faculties. It will be pretty much
expected that some students perform better than others despite of the same teaching
methodology and faculties involved. This difference might be explained by the fact that the
teachers expertise and methodology are just a supplement to that students skill, knowledge,
aptitude for learning and so on. Similar is the case of a business firm which invests IT to
Kushal Shrestha (10315)

outperform its rivals. It is not IT alone that gives the firm the edge it needs. Rather, it is how
the technologies are incorporated in the business that matters.
Internet has come to the scene as the latest and the most significant achievement of
Information Technology. The information world is always evolving: from mainframe
computers to minicomputers, from minicomputers to personal computers and lately the
discovery of World Wide Web has been a breakthrough in the field of communication. It is
through the use of website and internet that a company can differentiate itself from its
competitors and achieve strategic advantage.
Dell Computers is a well known name in computer manufacturing. An efficient ordering
system and quick delivery have been the sources of competitive edge over its rival companies
like Compaq. It is customer driven and it adopts direct marketing and build-to-order strategy.
A customer can place his order online and Dell gets the computer assembled and delivered to
the customers within as less as 4 days from the day of placing the order. So how justifiable
will it be to say that IT does not matter to Dell Computers? What will happen to order
management system and supply chain of Dell computers without updated information
technologies?
The author also argues companies make huge investments in IT but are unable to leverage on
the investment. American companies have invested more than 50 percent of their investment
in IT by 2000 which is a large sum of money. Still, the return that these companies reap does
not at all justify the huge sum that has been invested. In fact, on the contrary, the author
mentions that 25 companies that delivered the highest economic return spent on average just
0.8% of their revenues as compared to the industry average of 3.7%. Thus, I agree with the
author that the executives need to make cost-benefit analysis of implementing any IT
software. It would be advisable even to be defensive in approach. The new rules for IT
management that the author cites are appropriate, especially at the time when there are high
risk and costs involved.
The assumptions based upon which the author has argued that IT is nearing its completion is
narrow and unconvincing. Merely, the dropping of the price or the behaviors of vendors do
not indicate about the life of IT.
The issue dealt with by the article is thought-provoking and still open to questions. It has
invited a lot of controversy, criticisms and rebuttals from executives of well regarded
companies, Microsoft being one of them. In my opinion, IT does matter and it always will.
Although, the easy affordability and thus the easy accessibility of IT has understated the
importance of IT, it would be wrong to say that IT does not provide competitive edge to a
business firms.

Kushal Shrestha (10315)