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10/29/2004
03:36 PM
John Soat
John Soat
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Book Review: IT's Transformational Effect: The Real Point

By now, it's well-known what Nicholas Carr meant when he wrote "IT Doesn't Matter." He meant that business technology is rapidly becoming a lowest-cost commodity play that provides--or soon will--no strategic or competitive advantage.

Does IT Matter?: Information Technology And The Corrosion Of Competitive Advantage -- Nicholas CarrCarr set the business-technology world on its ear when he published an article in the Harvard Business Review in May 2003, with the above-mentioned headline. The fact that Carr, a business writer and consultant, has changed the equation from a statement to a question for his book, "Does IT Matter?: Information Technology And The Corrosion Of Competitive Advantage" (Harvard Business School Press, 2004) isn't insignificant, given his earlier unequivocalness. But it's certainly a question worth asking.

In both the article and the book, Carr compares business technology with earlier infrastructure technologies such as electricity or the telephone, arguing that business technology will have the same impact trajectory as those once-revolutionary developments--an earthquakelike shake-up of business processes that eventually settles into a collaborative, level playing field driven by topline, cost-of-doing-business thinking. Given the speed at which the world moves these days, the transformation of business technology into such an infrastructure commodity may happen even faster than previous changes.

Based on Carr's own comparisons, the answer to the question posed by the book's title has to be "yes," because anyone who suffered through last year's late-summer blackout is acutely aware of how much electricity matters. But that's a minor quibble. Carr has a compelling argument, and it deserves serious consideration.

Consider this: "As [IT] becomes cheaper and more standardized, as its power and capabilities begin to outstrip most companies' needs, the advantages it once provided are dissipating, and its great transformational power is starting to fade."

Business technology is indeed (finally) becoming cheap and standardized, which does lend it, or a great deal of it, commodity status, which does mean the competitive advantages it offered when it was expensive and proprietary are dissipating. That much is true and obvious and the reason Carr's original article was so compelling.

But does that necessarily mean business technology's transformational powers are fading? Or is it, instead, that the easy transformations imposed from the outside are almost complete, and that business technology may provide a longer-lasting transformational capability that can be the catalyst for major internal changes? Carr himself hints at that in a statement further on in the book. "Far from being static, the IT architecture continues to change and advance, particularly as vendors and users adapt their systems to the Internet. This fact distinguishes IT from earlier infrastructure technologies, which tended to arrive at a fairly stable architecture relatively early in their development."

In Search Of Business Value: Ensuring A Return On Your Technology Investment -- Robert McDowell and William L. SimonAt the end of the book, Carr says something that strikes me as both obvious and counterintuitive: "The key to success for the vast majority of firms is no longer to seek advantage aggressively [with IT] but to manage costs and risks meticulously." Fair enough. Managing costs and risks meticulously is always a major factor in success. But since when is no longer seeking advantage aggressively the key to success in anything? I don't mean to be disingenuous--I know Carr is saying not to seek business advantage through aggressive investment in IT--but the "follow-the-leader" strategy has proven to be self-destructive so often in the past that it doesn't cut it even as pragmatic advice.

Do you know the story about how, at the turn of the 20th century, the head of the U.S. Patent Office recommended that the office be closed, stating: "Everything that can be invented has already been invented." It's a mostly apocryphal story, points out Robert McDowell, a VP at Microsoft and 25-year IT veteran, in his book "In Search Of Business Value: Ensuring A Return On Your Technology Investment," with William L. Simon (SelectBooks Inc., 2004). But it has passed into collective memory because of its cautionary wisdom. And it serves as an example of McDowell's strongest criticism of the Carr book: dangerously short-sighted.

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