Nicholas G. Carr - IT Doesnt Matter
Download as PPTX, PDF10 likes8,970 views
The document discusses how IT starts as a strategic advantage but eventually becomes a commodity as its adoption increases. It argues that early adoption of proprietary IT provides benefits, but once standards are established, IT no longer provides competitive advantages and instead firms should focus on risk management and reducing IT costs. The key points are that IT shifts from a potential strategic resource to a commodity factor as its functions become universally available and affordable, and that overspending on IT poses greater risks than opportunities once widespread adoption makes IT essential but no longer differentiated.
Nicholas G. Carr - IT Doesnt Matter
- 1. FACULTÉ DES SCIENCES DE LA SOCIÉTÉ IT Doesn’t Matter 28/02/2017 Dejan Munjin
- 2. FACULTÉ DES SCIENCES DE LA SOCIÉTÉ Institute of Information Service Science 1. IT gives strategical advantage in early adoption phase 2. Proprietary technology gives an advantage while protected 3. When the infrastructural technologies reach the buildout phase they become commodity 4. Strategic advantage shifts to the “risk management” 5. Spending less on IT gives a competitive advantage Main issues addressed
- 3. FACULTÉ DES SCIENCES DE LA SOCIÉTÉ Institute of Information Service Science • 1965 – 2000 = 50% of capital • World business spend over $2 trillion a year • Shifting attitude of top management towards competitive advantage • Problem: assumption that as IT’s potency and ubiquity have increased, so too has its strategic value • By now the core functions of IT have become available and affordable to all • Their power and presence have become to transform them from potentially strategic resources into commodity factors of production IT Expansion and strategic shift
- 4. FACULTÉ DES SCIENCES DE LA SOCIÉTÉ Institute of Information Service Science • How the technologies influence competition at the firm level • Proprietary technologies: as long as they remain protected, can be a long term strategic advantage • Infrastructural technologies offer far more value when shared then when used in isolation • Restricted access and superior insight in technology gives advantages over rivals (e.g. Electricity, steam train…) • There is an initial frenzy in technology uptake • The trap: assuming that opportunities for advantage will be available indefinitely Vanishing Advantage
- 5. FACULTÉ DES SCIENCES DE LA SOCIÉTÉ Institute of Information Service Science • After the buildout phase: creation of standards • Standards are beneficial at the macro economic level • Only competitive advantage for forms is cost reduction End of Buildout Phase
- 6. FACULTÉ DES SCIENCES DE LA SOCIÉTÉ Institute of Information Service Science • IT is an infrastructural technology • IT is a transport mechanism: interconnectivity • IT is highly replicable • Most of the business processes become replicable • IT Becomes an utility (e.g. fee based services) • + Investments = Overcapacity consequently surge in productivity • Gordon Moore: predictions about doubling computing power every 2 years IT Commoditization
- 7. FACULTÉ DES SCIENCES DE LA SOCIÉTÉ Institute of Information Service Science • Ex. Sites on WWW has grown from 0 to 40 million in 10 years • Ex. American Hospital Supply (AHS) with Analytic Systems Automated Purchasing (ASAP) • Standardization leads to lucrative monopolies whereas the vendors are changing the business model to “Web Services” and subscriptions (e.g. Microsoft Office IT Commoditization
- 8. FACULTÉ DES SCIENCES DE LA SOCIÉTÉ Institute of Information Service Science • When the buildout of and infrastructural technology has concluded? • IT’s power is outstripping most of the business needs it fulfills • IT functionality has dropped and is affordable to all • The universal distribution network has caught up with demand • IT vendors are positioning as commodity suppliers • The investment bubble has burst Loosing Competitive Advantage
- 9. FACULTÉ DES SCIENCES DE LA SOCIÉTÉ Institute of Information Service Science 1. Spend less, avoid penalties 2. Follow, don’t lead (Moore’s Law) 3. Focus on vulnerabilities, not opportunities: even brief disruption can be devastating Guideline for the future
- 10. FACULTÉ DES SCIENCES DE LA SOCIÉTÉ Institute of Information Service Science • When a resource becomes essential to competition but inconsequential to strategy, the risks it creates become more important than the advantages it provides • Overspending is a risk: focus on essential functions of IT (e.g. personal computers, Microsoft profit margin, waste of storage) • Spend less get more by buying IT when it’s standards and best practices solidify • Studies show that the companies who invest the most are not the best performing Guideline for the future
- 11. FACULTÉ DES SCIENCES DE LA SOCIÉTÉ Institute of Information Service Science • Google search engine as infrastructural technology ? • Any other market players and examples ? Short Case Study
- 12. FACULTÉ DES SCIENCES DE LA SOCIÉTÉ Institute of Information Service Science • Limited to economic point of view • What about new business models and market actors ? • What about education/training ? • Other interdependencies of business with IT ? Critical view
- 13. FACULTÉ DES SCIENCES DE LA SOCIÉTÉ Institute of Information Service Science • Nicholas G. Carr “IT Doesn’t Matter”. Harward Business Review, May 2003 Issue • https://hbr.org/2003/05/it-doesnt-matter Citations and References