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Get Over Yourself

The pervasiveness of IT may be making it strategically irrelevant.

By Kathleen Melymuka
May 12, 2003 12:00 PM ET

Computerworld - Information technology has become a commodity. All that's left to do is mitigate risks and control costs. So states Nicholas G. Carr in this month's Harvard Business Review. Carr argues that IT, like railroads, electricity and other infrastructural revolutions that came before, has become so pervasive that companies can't live without it but that it now offers them little strategic advantage. Carr, HBR's editor at large, told Kathleen Melymuka why he thinks "IT management should, frankly, become boring."

Why is the strategic value of IT diminishing? For any resource to have strategic value, it has to allow companies to use it in a distinctive way. As information technology becomes more powerful and ubiquitous, it is increasingly a shared resource that everyone has access to. As a result, it's getting harder and harder to use IT to gain any kind of edge over competitors.

Does this apply to all kinds of IT, or just to infrastructure? I'm defining IT as the processing, storage and transmission of data, so I'm talking quite broadly. All of that is actually becoming part of the general business infrastructure, just as the rail system became part of the infrastructure in the 1800s and the electric power grid became part of the infrastructure in the early 1900s.

Nicholas G. Carr, HBR's editor at large
Nicholas G. Carr, HBR's editor at large

Are you saying, for example, that businesses have already derived most of the value they can get from the Internet? Most of the strategic value. Companies are going to continue to use the Internet to increase productivity, but that's going to happen at the industry level, not at the level of individual companies. As a means of differentiation, I think we're already past the peak and on the downside.

What are the characteristics of IT that guarantee this rapid commoditization you write about? First, IT is essentially a transport mechanism. It carries digital information in the same way power grids carry electricity. That's much more valuable when it's shared than when it's used in isolation, so everyone quickly moves to shared systems. Second, the almost infinite scalability of many IT functions, combined with the rush to technical standardization, means there's no economic benefit to having proprietary applications.

No one writes their own e-mail or word-processing applications, and that approach is quickly moving to supply chain management and CRM. Generic systems are efficient but don't offer advantages over competitors because we're all moving to the same systems. With the arrival of the Internet, we've got the perfect delivery channel for generic applications. As we move to Web services, where we can purchase key applications just like we buy electricity, that will push us further toward the homogenization of IT capability.

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