Intermezzo: IT doesn't matter?

In an article published in 2003, Nicholas G. Carr argues IT Doesn’t Matter when it comes to gaining competitive advantage. He sets forth a plethora of arguments and stories that empower is point of view. Now, 16 years, data is more valuable than oil and many companies invest millions into new IT/Data Architecture in order to increase profits. Although his arguments are not completely irrelevant, I will in retrospect discuss and try to counter some of the most important ones.

The most prominent statement is that information technology has become a non-proprietary commodity, invisible, and has therefore become an infrastructure technology. This seems to be correct if we look at the evolution of cloud services and their providers such as Microsoft, Amazon, IBM and Google. When businesses want to realize a new platform they have a rich set of tools at their disposal, which they easily assemble into a fully scalable and high available foundation where they can build their platform on. This toolkit forms what is called an Infrastructure As A Service (IAAS). Carr argues that because of IT becoming a commodity the window for gaining advantage from IT is open only briefly. This may be true for a certain technology or service, but it is untrue from an IT management’s ability to conduct continuous innovation and long term planning. One of the prime examples here is Amazon, which kept investing in the newest IT/Tech frontiers in order to cut costs and become market leader renowned for their cheap prices and unbelievable market deals.

Another statement is that the uniqueness, scarcity & proprietary technologies bring strategic advantage but also vendor lock-in. As the ubiquity and power of IT has grown, its strategic importance has vanished. and henceforth cannot be used in order to gain competitive advantage. This seems to be in line with Porter’s Barriers of Entry & the Five Competitive Forces, as they state that non-proprietary technologies cause a company to lose its strategic power. It seemingly counts for infrastructure services, but Data Science is a non-proprietary technology that can be used to gain significant strategic power when used for business decision making. Furthermore Carr does not provide that many statements from field experts or any empiric results, which make the statement more like an intuitive observation.

In a contradictory argument Carr states that technology sharing cheap storage, processing power, connectivity and standardization have caused IT to ascend to uncharted territories. Is that not because of the increasing market demand, therefore contradicting the title of the article? Little evidence is provided to convince the reader of his opinion, most of his arguments are purely anecdotal.

Carr also argues that commoditization of IT causes IT business to crumble. He may be referring to the DotCom bubble, but since 2003 many IT businesses skyrocketed becoming what is now known the 'Big Tech’. Today, even small innovative companies could take down goliaths by assembling IT commodity services into new user platforms, welcoming their visitors into the new digital realm. The quick rise of the commodity services could cause the downfall of a company when not correctly used or when ethical values are disregarded. So don’t use those cheap computing services to manipulate the elections! Concerning policymaking and the constructions of fundamental data rights, IT does most certainly matter. The commoditization may even be the cause of many data leaks, since badly managed new technologies are sometimes the Achilles tendon of an IT infrastructure.

Despite all the previous critiques, it is worth noting that what Carr also suggested is that skills outweigh commodities. This statement most certainly holds a truth: A company acquiring and investing money in skilled programmers is more likely to gain some advantage than a company investing large quantities of money solely in cloud service commodities. That is because strategic value gained through obtained IT skills scales super-linearly and its effects are more long lasting.

Strategic value obtained through skills can be viewed as:

• necessary for survival,
• a platform for change & innovation,
• fundamental to the business and its long term value.

Since the programming realm is subject to a quantum shift, programmers need to keep up with the pace and learn the state of the art in order to maximize their contributions to the strategic value. Project managers need to seek the best methods to maintain the all-round productivity. Skills can also be required in other frontiers relevant for IT.

Further articles will discuss methods and frameworks used in IT Management to strengthen the strategic value of a business. Be sure to subscribe to further updates in my newsletter below!