IT is not what it used to be…

I realise I am behind the times on occasion, but Nicholas Carr’s book Does IT Matter? Information Technology and the Corrosion of Competitive Advantage seems to be even more relevant today that when he first published it in 2004. I highly recommend this book if you wondering where IT is headed - at the very least it will make you think!

You can read the original article “IT Doesn’t Matter” (published in the Harvard Business Review in 2003) on his website here, or buy and download the whole thing - IT Doesn’t Matter (HBR OnPoint Enhanced Edition).

Even more revealing though is the trail of responses to the article and the book - which he has carefully, and reasonably fairly documented here.

What really struck me was that all the people who that disagreed with his assertions were all, to a greater or lesser degree, financially motivated to do so!

In a nutshell what he is saying is this - IT is simply becoming a commodity - much like electricity. Without it, you are not even in the game. But having it is less and less an opportunity for competitive advantage - in reality, you best option is to get exactly what you need for as little as possible:

“The 25 companies that delivered the highest economic returns, for example, spent on average just 0.8% of their revenues on IT, while the typical company spent 3.7%. A recent study by Forrester Research showed, similarly, that the most lavish spenders on IT rarely post the best results. Even Oracle’s Larry Ellison, one of the great technology salesmen, admitted in a recent interview that “most companies spend too much [on IT] and get very little in return.” As the opportunities for IT-based advantage continue to narrow, the penalties for overspending will only grow.”

“IT management should, frankly, become boring. The key to success, for the vast majority of companies, is no longer to seek advantage aggressively but to manage costs and risks meticulously. If, like many executives, you’ve begun to take a more defensive posture toward IT in the last two years, spending more frugally and thinking more pragmatically, you’re already on the right course. The challenge will be to maintain that discipline when the business cycle strengthens and the chorus of hype about IT’s strategic value rises anew.”

Everything I am seeing as an experienced consultant in the industry is that he is exactly right. If he is, how would it change your approach to IT in your company? Worth thinking about I think…

Originally from TechGripe! by Brett Ryland (17 September 2007).