IT Does Matter

Commoditization, wastefulness dim strategic value.

Back in May, the Harvard Business Review published "IT Doesnt Matter," an article by Nicholas Carr. The headline has goaded many people to choose sides and was so provocative that the HBR ran a second piece with letters to the editor from industry luminaries.

But things are not as clear-cut as they seem. Certainly, IT no longer seems to matter as much as it appeared to a few years ago. Ill bet that plenty of the articles critics have not read it. Industry partisans who have read it but cant accept much of it as true are either awash in denial or so obsessed with self-preservation that theyre blinded to facts.

Theyre not willing to admit that Carr makes several accurate observations. The first is that corporations have invested too much in underutilized PCs. The second is that standardization has leveled the playing field and created commonality among different platforms. This has caused prices to drop so that technology is affordable to all. The third is that the window of opportunity in achieving a competitive advantage with technology is temporary and closes rapidly. The fourth is that corporations are overspending on IT in general and that too much of their budgets is tied up in IT projects.

Carrs recommendation is simple: Instead of investing in leading-edge IT, slow down, step back, rein in spending and "follow, dont lead" in IT. Some companies already do this, and Carr is only stating that many more organizations should have done this six years ago. Theres no reason that companies should be spending half their capital expenditures on IT, as Carr asserts.

Future historians will note the irony that in the late 1990s, corporate IT spending nearly killed the companies that thought they were gaining competitive advantages. Its like accidentally committing suicide by overdosing on vitamins.

Those historians will ask why corporations spent so much money implementing technology they should have known would be outdated before the projects were finished. Theyll ponder why those corporations paid people triple the rate of civil and mechanical engineers simply to administer networks and then forgot to invest in better security measures. Theyll ask why companies spent billions trying to re-engineer businesses to move them off the mainframe and move processing power to the desktop, and then spent billions more trying to get back to the place they started from.

In the follow-up article last month, Carr dismisses such luminaries as John Seely Brown, former chief scientist of Xerox, and goes on to state that "as long as ITs core functions—data processing, storage and transmission—have become cheaper, and more standardized, and more easily replicable, their basis for competitive advantage has steadily eroded." Therefore, since we have standardization on key advantages of IT, the relevance of IT is diminished.

The detractors fail to see that Carrs article is, ironically, good for the industry. The principle is simple: The truth may hurt, but it also sets you free. There is a common belief that technology for its own sake can be not just a competitive advantage but the only competitive advantage. This is wrong. Companies cant buy a million-dollar application and think theyll automatically steamroll their competitors.

Technology is more than a series of interconnecting applications, more than running electricity from high wires to outlets. Its not just a competitive advantage of a business; its a programmatic representation of an entire corporations relevancy to the world. Its not a thousand new PCs, not a million-dollar ERP solution, not the fastest database or the biggest server. Its the entire process. While the mundane parts of IT are becoming commoditized, the business processes are gaining in importance.

Theres much of IT that doesnt matter. But theres much that does. Companies that use IT as a competitive advantage—such as Amazon, Wal-Mart, and the profitable or growing airlines, including Southwest—arent wasting money by continually buying million-dollar applications and systems. Theyre using basic building blocks, such as FreeBSD, Linux and commodity Ethernet, and then using their business and technical acumen to gain competitive advantage.

John Taschek can be reached at