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IT does so matter!

Kathleen Melymuka Today’s Top Stories

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July 7, 2003 (Computerworld) -- Our recent interview with Nicholas G. Carr about his article in the May issue of Harvard Business Review caused an uproar in IT circles (see story). His thesis, that IT has become a commodity that no longer provides strategic advantage, was so passionately refuted by readers and some of the big thinkers in the IT world that we felt compelled to give equal time to their views. Kathleen Melymuka spoke separately with Rob Austin and Andrew McAfee, both assistant professors of technology and operations management at Harvard Business School; Paul A. Strassmann, an IT management consultant, a Computerworld columnist and recently the acting CIO at NASA; and Tom DeMarco, a Cutter Consortium analyst and co-author of Waltzing With Bears: Managing Risk on Software Projects (Dorset House, 2003). They make the case for why IT matters more than ever.

McAfee: I don't agree that IT doesn't matter, but I think Nick wrote a really interesting article. He provided a great service by focusing the debate.

DeMarco: It created a buzz, but it's not a healthy buzz. All the response doesn't imply a useful argument. It's traceable to the deep-seated ignorance of the article.

Carr says that information technology has become so pervasive that, like railroads and electricity, it has lost its strategic value. What's wrong with his argument?

DeMarco: The argument is not very well made. He presents three graphs: railroads, electric power and IT. Each has a very similar curve, so he deduces that information technology is commoditized. But what's really plotted in the graph is the number of computers, which is not the same as information technology. Boxes have been commoditized for a long time. This is very old news. But he tries to use this to prove IT as a whole is commoditized, and that's just wrong.

See a collection of opinion columns on the controversy plus the original interview with Carr at Viewpoint: Does IT Matter?.

Austin: He says ubiquity, not scarcity, is the problem with IT. He seems [to think] that IT is primarily hardware. The problem is not a scarcity of equipment; it's always been a scarcity of ability—the ability to envision new possibilities from IT and understanding how to get it all to work. If IT were not a source of competitive advantage, you would rarely see IT projects fail. There are still vast differences in how much value people obtain from IT. Look at Wal-Mart, Dell, Cisco and their attempted imitators.


Andrew McAfee of Harvard Business School

McAfee: It's a matter of whether we're talking about IT enhancing productivity or competition. The telephone has made us able to get more done in a day. Has the phone continued to radically affect the competitive balance among companies? No. That's Nick's point. Some kinds of IT fall into that category. For example, e-mail. We all have it; we all use it. But it's not competition-changing, so overinvesting in it is not a great idea. The bases of competition revolve around other things.

[But] there are industries where technologies are fundamentally important. Dell has an IT business-process automation infrastructure that really works. If you don't have one of those, do you have a hope of competing in that industry? And even if you want to put one of those in place, there will be a really big difference in how successful you are vs. another company, because it's tough organizational change in a technology wrapper. We're not equally good at doing it. If we find ourselves competing in an industry where these kinds of systems are important, then IT matters like crazy.

Carr says there's virtually no competitive advantage to be gained through IT, because anyone can buy what you buy. How would you respond?


	Tom DeMarco, a Cutter Consortium analyst

DeMarco: There may be no competitive advantage to buying IT. You can gain competitive advantage by innovating in IT. The number of examples is too obvious to belabor.

Strassmann: It is not what you buy but what you do with it. Carr most likely used the same Microsoft Word program to write his article as I used in my rebuttal [letter to Harvard Business Review], yet we got different results.

Austin: Geoffrey Moore talks about core and context. Context is the commodity stuff, and that's a pretty big percentage of IT. You can buy context anywhere, and that may be what Carr's talking about. Core is the stuff you compete on. Companies that succeed, or succeed faster, obtain advantage. Think of Wal-Mart's supply chain systems. Those are core, proprietary: They grew them or glued them together themselves. And surely that is providing competitive advantage.

Carr says that even when a company does achieve some competitive advantage through IT, it's bound to be short-lived. Isn't that true?


Paul A. Strassmann, acting CIO at NASA

Strassmann: That is certainly not true. When Wal-Mart started 40 years ago, anybody could have gone to NCR and bought the Teradata system, which is really the basis of Wal-Mart's success. The fact that you buy identical technology doesn't buy you anything. It's how you manage it.

DeMarco: Change is fast and becoming faster, and anything you do will have a shorter payback than similar things you might have done a decade or a century ago. That proves you can't count on a single-shot competitive advantage, but you can gain a continuing advantage by being a continuing innovator in IT.

Carr seems to view IT as a corporate service akin to accounting or building maintenance. What is it about IT that makes it truly different?


	Rob Austin of Harvard Business School

Austin: He seems obsessed with the plumbing. He says it's hard to imagine a more perfect commodity than a byte of data. As we move to the knowledge economy, IT is not just a transport mechanism; it's a transformational mechanism. It's increasingly about the transformational potential of bytes.

DeMarco: When we talk about IT, it really is about change. If you want to change your company, you build an IT system to make it possible to do that change. That's why IT is hard. The idea of IT becoming commoditized is as silly as the idea that change is becoming commoditized.

Carr sees the future CIO as a bean counter, not a strategist. What do you see as the future role of the CIO and the IT department?

McAfee: It's really going to depend on the situation. A CIO in a headhunting firm might be a cost minimizer—really interested in wringing the maximum efficiency out of minimum technology. But the CIO of Cisco or Wal-Mart or Dell had better be a really different kind of person. He'd better be an IT strategist and an organizational change specialist and a business needs assessor and a tough cost minimizer, or he'd better be talking with all of them if he's not.

Austin: I think the CIO has to continue to facilitate the process of helping the business people understand the technical possibilities. That is not a bean-counter role. It involves imagination, vision and the ability to explain that vision to people who are not native technologists. The business guys understand how to make a business work, and the technologists understand the potential in new technology, and the CIO has to get those two spheres to overlap.

Strassmann: Let's go back to fundamental economics. The financial assets CFOs report on account for less than a third of the value of a corporation. Two-thirds of the valuation is based on knowledge capital, which is information. The CIO of the future will be responsible for the custody and protection and security of knowledge capital. Right now only the CFO has to sign a financial statement. I predict within 10 years the CIO will have to sign for the security of knowledge assets. Right now only the CFO can go to jail. My hope is for the CIO of the future to be also eligible to go to jail.

DeMarco: There has to be an element of vision. That's the thing that can't be commoditized. Carr's advice to be a follower is so upsetting. He's saying, "Don't be a visionary." This is unhealthy, because some weak-minded but powerful person looking for something to cut will read Carr and say, "Let's cut IT." That's a shame. The view that IT doesn't matter is equivalent to the view that the printing press has had its run. But the printing press wasn't about printing enough Bibles for all the people. It was about creating a man whose knowledge is bigger than what lies in his head, and the impact of that has never peaked. I think that will be true of IT as well. Man is an information animal, and IT lies as close as anything to the core of his endeavors.

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