But it’s not just the software that is replicable. Companies gain an edge by having or doing something others can’t have or do. Most have appointed chief information officers to their senior management teams, and many have hired strategy consulting firms to provide fresh ideas on how to leverage their IT investments for differentiation and advantage. What makes a resource truly strategic—what gives it the capacity to be the basis for a sustained competitive advantage—is not ubiquity but scarcity. Because most business activities and processes have come to be embedded in software, they become replicable, too. In 1965, according to a study by the U.S. Department of Commerce’s Bureau of Economic Analysis, less than 5% of the capital expenditures of American companies went to information technology. The consequences of moving from tightly controlled, proprietary systems to open, shared ones? At the same time, the buildout forces users to adopt universal technical standards, rendering proprietary systems obsolete. An industrial manufacturer may discover an innovative way to employ a process technology that competitors find hard to replicate. If it wanted to, that company could just build proprietary lines between its suppliers, its factories, and its distributors and run its own locomotives and railcars on the tracks. Companies that were quick to recognize the broader opportunity rushed to build large-scale, mass-production factories. Saying of “IT Doesn’t Matter”: “Carr’s. Carr doesn’t actually say that in the article – instead, he argues that the opportunity for strategic differentiation through IT is rapidly diminishing. But like many broadly adopted technologies—such as railways and electrical power—IT has become a commodity. Reviewing Nicholas Carr "IT Doesn't matter" Sravan Pathipati IT doesn’t matter Argument 1: It’s not ubiquity but scarcity that gives an IT firm the competitive advantage Sure every firm now has access to the main functions of IT, database management, data … In 2002, the consulting firm Alinean compared the IT expenditures and the financial results of 7,500 large U.S. companies and discovered that the top performers tended to be among the most tightfisted. Both the technology and its modes of use become, in effect, commoditized. These applications have been technologically mature for years; they require only a fraction of the computing power provided by today’s microprocessors. For a brief period, as they are being built into the infrastructure of commerce, these “infrastructural technologies,” as I call them, open opportunities for forward- looking companies to gain strong competitive advantages. Of the essay, written by Nicholas G. Carr, then editor at large of. The author of "IT doesn't matter" told a London crowd that smaller companies which use less technology are … it is important.Nicholas G.Carr’s “IT Doesn’t Matter,”published in the May 2003 issue,falls into the third category. In both cases, companies and individuals, dazzled by the seemingly unlimited commercial possibilities of the technologies, threw large quantities of money away on half-baked businesses and products. Consider electricity. Nicholas carr it doesn't matter What these early efforts dont show is the full extent and power of a true. Today, no one would dispute that information technology has become the backbone of commerce. Second, the price of essential IT functionality has dropped to the point where it is more or less affordable to all. The smartest users of technology—here again, Dell and Wal-Mart stand out—stay well back from the cutting edge, waiting to make purchases until standards and best practices solidify. He also clarifies that he does not mean that information itself doesn’t matter, nor does he mean that the people using the technology don’t matter. Doesn’t Matter,” Nicholas G. Carr introduced the idea that information tech-nology (IT) does not provide a competitive advantage to companies in a strate-gic manner. Indeed, in an ironic, if predictable, twist, the closed nature and outdated technology of AHS’s system turned it from an asset to a liability. Start imposing hard limits on upgrade costs—rather than buying new computers and applications every time suppliers roll out new features. Restricting employees’ ability to save files indiscriminately and indefinitely may seem distasteful to many managers, but it can have a real impact on the bottom line. Nick Carr's 'IT Doesn't Matter' still matters. It takes one side of an argument that’s undeniably urgent and important to business leaders. IT Doesn't Matter A review of Nicholas Carr's Perspective on Information Technology Today, no one would dispute that information technology has become the backbone of commerce. Copyright © 2020 Harvard Business School Publishing. But he was also making a prediction about the coming free fall in the price of computer functionality. Chief executives now routinely talk about the strategic value of information technology, about how they can use IT to gain a competitive edge, about the “digitization” of their business models. The bulk of what’s being stored on corporate networks has little to do with making products or serving customers—it consists of employees’ saved e-mails and files, including terabytes of spam, MP3s, and video clips. What really doesn’t matter, he says, is the no-longer-proprietary technology infrastructure for storing, processing, and transmitting information. At the close of the 1990s, when Internet hype was at full boil, technologists offered grand visions of an emerging “digital future.” It may well be that, in terms of business strategy at least, the future has already arrived. Harvard Business Publishing is an affiliate of Harvard Business School. Nicholas Carr, Harvard Business Review, 2003. Today, smart IT users hang back from the cutting edge, buying only after standards and best practices solidify. IT Doesn't Matter Analysis 7-21-03.PDF. Businesses worldwide pump $2 trillion a year into IT. IT Doesn't Matter magazine article. Best practices are now quickly built into software or otherwise replicated. IT Doesn’t Matter An article by Nicholas G. Carr published in the Harvard Business Review in. But the opportunities for gaining IT-based advantages are already dwindling. Hardly a dollar or a euro changes hands anymore without the aid of computer systems. In IT’s earlier days, forward-looking firms trumped competitors through innovative deployment of IT; for example, Federal Express’s package-tracking system and American Airlines’ Sabre reservation system. It Doesn't Matter Nicholas Carr Photograph by Opto When the Harvard Business Review (HBR) published “IT Doesn’t Matter” in May 2003, the point was to start an argument, or, as they say in the more genteel world of academia, a debate. Similarly, if an industry lags in harnessing the power of the technology, it will be vulnerable to displacement. Instead of aggressively seeking an edge through IT, manage IT’s costs and risks with a frugal hand and pragmatic eye—despite any renewed hype about its strategic value. In 2000,nearly half of U.S.corporate capital spending went to information technology.Then the spending col- “Optimism about a future of indefinite progress gave way to uncertainty and a sense of agony,” wrote historian D.S. This war for scale, combined with the continuing transformation of IT into a commodity, will lead to the further consolidation of many sectors of the IT industry. IT Doesn't Matter A review of Nicholas Carr's Perspective on Information Technology Having or doing something that they. (For more on the challenges facing IT companies, see the sidebar “What About the Vendors?”). Wal-Mart and Dell Computer are renowned examples of firms that have been able to turn temporary technological advantages into enduring positioning advantages. Often, in fact, the best practices end up being built into the infrastructure itself; after electrification, for example, all new factories were constructed with many well-distributed power outlets. Delay IT investments to significantly cut costs and decrease your risk of buying flawed or soon-to-be obsolete equipment or applications. In fact, the opposite is usually true. IT has become a commodity, and therefore has no more strategic advantage in and of itself. The operational risks associated with IT are many—technical glitches, obsolescence, service outages, unreliable vendors or partners, security breaches, even terrorism—and some have become magnified as companies have moved from tightly controlled, proprietary systems to open, shared ones. That is exactly what is happening to information technology today, and the implications for corporate IT management are profound. 1- Reflection on the article of Carr In May 2003, Harvard Business Review (HBR), a magazine mainly addressed to business people in general such as managers, analysts and strategists etc., and IT constituencies in particular such as vendors, researchers, engineers etc., published a revolutionary article written by Nicholas Carr entitled “IT doesn't Matter”. It’s unusual for a company to gain a competitive advantage through the distinctive use of a mature infrastructural technology, but even a brief disruption in the availability of the technology can be devastating. The staff of HBR voted “IT Doesn’t Matter” the best article to appear in the magazine. Information Technology and the Corrosion of Competitive Advantage expands and extends the arguments in Nicholas Carr’s explosive Harvard Business Review article “IT Doesn’t Matter.” Does IT Matter? But those cases are becoming rarer and rarer as IT capabilities become more homogenized. The pattern continued with electrical power. If so, you’re not alone. Information Technology and the Corrosion of Competitive Advantage expands and extends the arguments in Nicholas Carr’s explosive Harvard Business Review article “ IT Doesn’t Matter.”. Summary IT doesn’t matter by Nicholas Carr In his article in the Harvard Business Review of 2003 Carr argues that IT has lost its strategic value. What’s important—and this holds true for any commodity input—is to be able to separate essential investments from ones that are discretionary, unnecessary, or even counterproductive. From a practical standpoint, the most important lesson to be learned from earlier infrastructural technologies may be this: When a resource becomes essential to competition but inconsequential to strategy, the risks it creates become more important than the advantages it provides. The arrival of personal computers and packaged software, together with the emergence of networking standards, was rendering proprietary communication systems unattractive to their users and uneconomical to their owners. If a company needs evidence of the kind of money that might be saved, it need only look at Microsoft’s profit margin. Of the essay, written by Nicholas G. Carr, then editor at large of. As long as access to the technology is restricted—through physical limitations, intellectual property rights, high costs, or a lack of standards—a company can use it to gain advantages over rivals. How did Nicholas Carr defend his argument that "IT doesn't matter"? In fact, the opposite is usually true. Information Technology and the Corrosion of Competitive Advantage expands and extends the arguments in Nicholas Carr’s explosive Harvard Business Review article “ IT Doesn’t Matter.”. If a particular country, for instance, lags in installing the technology—whether it’s a national rail network, a power grid, or a communication infrastructure—its domestic industries will suffer heavily. Moreover, the standardized nature of infrastructural technologies often leads to the establishment of lucrative monopolies and oligopolies. Scarcity—not ubiquity—makes a business resource truly strategic. IT is best seen as the latest in a series of broadly adopted technologies that have reshaped industry over the past two centuries—from the steam engine and the railroad to the telegraph and the telephone to the electric generator and the internal combustion engine. When companies buy a generic application, they buy a generic process as well. In his HBR article, 'IT Doesn't Matter,' Nicholas Carr has stirred up quite a bit of controversy around IT's role as strategic business differentiator. Computerworld estimates that as much as 70% of the storage capacity of a typical Windows network is wasted—an enormous unnecessary expense. In turn, business profits evaporated. But it’s mistaken. The telegraph system spread even more swiftly. Twenty years ago, most executives looked down on computers as proletarian tools—glorified typewriters and calculators—best relegated to low level employees like secretaries, analysts, and technicians. In actuality, the window for gaining advantage from an infrastructural technology is open only briefly. 17��Lɓ��I����x>FR��'&��mBʹm�1��.&%r;�8:X;:::$:���`1< ���lG�@��)-H��(Xd'/���*W!� ���(q��9n��y�Ջz%+VE�dM���!ӑ �D� uKJ� endstream endobj 93 0 obj <> endobj 94 0 obj <> endobj 95 0 obj <>stream Nicholas carr it doesn't matter What these early efforts dont show is the full extent and power of a true. Imagine yourself in the early nineteenth century, and suppose that one manufacturing company held the rights to all the technology required to create a railroad. The near-infinite scalability of many IT functions, when combined with technical standardization, dooms most proprietary applications to economic obsolescence. Nicholas Carr, Harvard Business Review, 2003. Doesn't Matter by Nicholas G. Carr As information technology's power and ubiquity have grown, its strategic importance has diminished. But the veneration of IT goes much deeper than dollars. From a strategic standpoint, they became invisible; they no longer mattered. By that measure, Nicholas Carr cut into the heart of IT professionals in his seminal paper, IT Doesn't Matter, arguing that IT had become commodified to the point that it offered little competitive advantage. It Doesn't Matter Nicholas Carr Photograph by Opto When the Harvard Business Review (HBR) published “IT Doesn’t Matter” in May 2003, the point was to start an argument, or, as they say in the more genteel world of academia, a debate. The time has come for IT buyers to throw their weight around, to negotiate contracts that ensure the long-term usefulness of their PC investments and impose hard limits on upgrade costs. It is getting much harder to achieve a competitive advantage through an IT investment, but it is getting much easier to put your business at a cost disadvantage. The article, by Nicholas Carr, an Editor at Large for HBR, is provocatively, but somewhat inaccurately, titled 'IT Doesn’t Matter'. He also clarifies that he does not mean that information itself doesn’t matter, nor does he mean that the people using the technology don’t matter. For most business applications today, the benefits of customization would be overwhelmed by the costs of isolation. it is important.Nicholas G.Carr’s “IT Doesn’t Matter,”published in the May 2003 issue,falls into the third category. In addition to being passive in their purchasing, companies have been sloppy in their use of IT. From 1978 to 1983, AHS’s sales and profits rose at annual rates of 13% and 18%, respectively—well above industry averages. It Doesn T Matter Nicholas Carr Pdf. Railroad tracks, telegraph wires, power lines—all were laid or strung in a frenzy of activity (a frenzy so intense in the case of rail lines that it cost hundreds of laborers their lives). IT Doesn’t Matter Part 2. With the end of the great buildout of the commercial IT infrastructure apparently at hand, Joy’s question is one that all IT vendors should be asking themselves. Indeed, it is hard to imagine a more perfect commodity than a byte of data—endlessly and perfectly reproducible at virtually no cost. And now he has expanded his thesis into a new book called Does IT Matter. Here, too, a company that sees what’s coming can gain a step on myopic rivals. Proprietary technologies can be owned, actually or effectively, by a single company. “Information technology” is a fuzzy term. Nicholas carr it doesn t matter pdf Nicholas carr it doesn t matter pdf Nicholas carr it doesn t matter pdf DOWNLOAD VINT Symposium in 2008 edit3. List price: $7.46. Consider some statistics. They let their impatient competitors shoulder the high costs of experimentation, and then they sweep past them, spending less and getting more. IT Doesn't Matter Nicholas G. Carr. At a high level, stronger cost management requires more rigor in evaluating expected returns from systems investments, more creativity in exploring simpler and cheaper alternatives, and a greater openness to outsourcing and other partnerships. Netgear dg834g pdf manual Doesnt Matter, published in the May.Matter by Nicholas G. As information technologys power and ubiquity have. Even with the recent sluggishness in technology spending, businesses around the world continue to spend well over $2 trillion a year on IT. Why write your own application for word processing or e-mail or, for that matter, supply-chain management when you can buy a ready-made, state-of-the-art application for a fraction of the cost? When the Harvard Business Review HBR published IT Doesnt Matter in May 2003, the point. Given the rapid pace of technology’s advance, delaying IT investments can be another powerful way to cut costs—while also reducing a firm’s chance of being saddled with buggy or soon-to-be-obsolete technology. IT Doesn't Matter Analysis 7-21-03.PDF. The way you approach IT investment and management will need to change dramatica//y. Others, like Reuters with its 1970s financial information network or, more recently, eBay with its Internet auctions, had superior insight into the way IT would fundamentally change an industry and were able to stake out commanding positions. The title is sensational but Carr makes a compelling case that information technology has matured to the point where it no longer gives companies significant competitive advantage. IT Doesn’t Matter An article by Nicholas G. Carr published in the. 1 Review. And waiting will decrease your risk of buying something technologically flawed or doomed to rapid obsolescence. And since the 1980s, more than 280 million miles of fiber-optic cable have been installed—enough, as BusinessWeek recently noted, to “circle the earth 11,320 times.” (See the exhibit “The Sprint to Commoditization.”). HBR AT LARGE • IT Doesn’t Matter Nicholas G. Carr is HBR’s editor-at-large. The cost of processing power has dropped relentlessly, from $480 per million instructions per second (MIPS) in 1978 to $50 per MIPS in 1985 to $4 per MIPS in 1995, a trend that continues unabated. The rapidly increasing affordability of IT functionality has not only democratized the computer revolution, it has destroyed one of the most important potential barriers to competitors. Industries and markets will continue to evolve, of course, and some will undergo fundamental changes—the future of the music business, for example, continues to be in doubt. After the introduction of the personal computer in the early 1980s, that percentage rose to 15%. Of doing business that must be paid by.IT Doesnt Matter. It’s a very different world today, of course, and it would be dangerous to assume that history will repeat itself. While no one can say precisely when the buildout of an infrastructural technology has concluded, there are many signs that the IT buildout is much closer to its end than its beginning. Little has been said about the way the technologies influence, or fail to influence, competition at the firm level. Netgear dg834g pdf manual Doesnt Matter, published in the May.Matter by Nicholas G. As information technologys power and ubiquity have. For a brief period, as they were being built into the infrastructure of commerce, all these technologies opened opportunities for forward-looking companies to gain real advantages. Every year, businesses purchase more than 100 million PCs, most of which replace older models. But, for the broader economy, the value produced by such an arrangement would be trivial compared with the value that would be produced by building an open rail network connecting many companies and many buyers. The spark igniting the controversy was a May 2003 Harvard Business Review article, IT Doesn't Matter, by business theory iconoclast Nicholas Carr. The point is, however, that the technology’s potential for differentiating one company from the pack—its strategic potential—inexorably declines as it becomes accessible and affordable to all. The staff of HBR voted “IT Doesn’t Matter” the best article to appear in the magazine. And because it was proprietary to AHS, it effectively locked out competitors. Third, the capacity of the universal distribution network (the Internet) has caught up with demand—indeed, we already have considerably more fiber-optic capacity than we need. Share English PDF. Many commentators have drawn parallels between the expansion of IT, particularly the Internet, and the rollouts of earlier technologies. In this article, it is used in its common current sense, as denoting the technologies used for processing, storing, and transporting information in digital form. Make IT management boring. When electric generators first became available, many manufacturers simply adopted them as a replacement single-point source, using them to power the existing system of pulleys and gears. IT is also highly replicable. The key to success, for the vast majority of companies, is no longer to seek advantage aggressively but to manage costs and risks meticulously. In some cases, being on the cutting edge makes sense. A company that produces consumer goods may acquire exclusive rights to a new packaging material that gives its product a longer shelf life than competing brands. That’s not to say that infrastructural technologies don’t continue to influence competition. It underpins the operations of individual companie… Also assess your data storage, which accounts for 50%+ of many companies’ IT expenditures—even though most saved data consists of employees’ e-mails and files that have little relevance to making products or serving customers. Nicholas Carr, in his article “IT Doesn’t Matter” (HBR, 2003) raises a point that IT has become ubiquitous and cheap and is no longer a competitive advantage for a business. As the first worldwide depression took hold, economic malaise covered much of the globe. … (See the sidebar “New Rules for IT Management.”). Over the last ten years, the number of sites on the World Wide Web has grown from zero to nearly 40 million. As the commoditization of IT continues, the penalties for wasteful spending will only grow larger. In the long run, though, the greatest IT risk facing most companies is more prosaic than a catastrophe. Today, an IT disruption can paralyze a company’s ability to make its products, deliver its services, and connect with its customers, not to mention foul its reputation. Virtually all companies today continue to spend heavily on electricity and phone service, for example, and many manufacturers continue to spend a lot on rail transport. Businessmen probably assumed that rail transport would essentially follow the steamship model, with some incremental enhancements. IT Doesn’t Matter. It underpins the operations of individual companies, ties together far-flung supply chains, and, increasingly, links businesses to the customers they serve. HBR AT LARGE • IT Doesn’t Matter Nicholas G. Carr is HBR’s editor-at-large.He edited The Digital Enterprise,a collec-tion of HBR articles published by Harvard Business School Press in 2001,and has written for the Financial Times,Business 2.0,and the Industry Standardin addition to HBR.He can be reached at ncarr@hbsp.harvard.edu. Developed in-house, the innovative system used proprietary software running on a mainframe computer, and hospital purchasing agents accessed it through terminals at their sites. By the end of the buildout phase, the opportunities for individual advantage are largely gone. Yet the vast majority of workers who use PCs rely on only a few simple applications—word processing, spreadsheets, e-mail, and Web browsing. Carr proposes that IT has ceased to be the. By wiring their plants and installing electric motors in their machines, they were able to dispense with the cumbersome, inflexible, and costly gearing systems, gaining an important efficiency advantage over their slower-moving competitors. IT Doesn’t Matter Zach Evans. In a few cases, the dominance companies gained through IT innovation conferred additional advantages, such as scale economies and brand recognition, that have proved more durable than the original technological edge. IT may be a commodity, and its costs may fall rapidly enough to ensure that any new capabilities are quickly shared, but the very fact that it is entwined with so many business functions means that it will continue to consume a large portion of corporate spending. Studies of corporate IT spending consistently show that greater expenditures rarely translate into superior financial results. When Gordon Moore made his famously prescient assertion that the density of circuits on a computer chip would double every two years, he was making a prediction about the coming explosion in processing power. For most companies, just staying in business will require big outlays for IT. But the greatest IT risk is overspending—putting your company at a cost disadvantage. It is evident as well in the shifting attitudes of top managers. Because more efficient ordering enabled hospitals to reduce their inventories—and thus their costs—customers were quick to embrace the system. h�b```f``Ra`a`P�b�g@ ~�+sltd`�V����cY��ۿ��L``p���1��w� It suddenly became economical to ship finished products, rather than just raw materials and industrial components, over great distances, and the mass consumer market came into being. His invention of the microprocessor spurred a series of technological breakthroughs—desktop computers, local and wide area networks, enterprise software, and the Internet—that have transformed the business world. What are the 5 reasons Nicholas Carr gives for IT having reached the end of its buildout? They let more impatient rivals shoulder the high costs of experimentation. In the mid-1800s, when America started to lay down rail lines in earnest, it was already possible to transport goods over long distances—hundreds of steamships plied the country’s rivers. 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