Research on Nicholas Carr

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Introduction

For more than fifty years, information technology has been integral to business. The expenses on the same in companies are numerous due to the capability this computing technology is believed to bring to the business. The questions to ask is whether all these investments in IT have made any difference, if they have resulted in the increase in productivity, and whether companies investing in IT are having a better competitive advantage over those that do not. In this script, there will be an examination of Nicholas Carr’s position on the capability of IT to business and then the author’s opinion on the same. There will be an in-depth examination of the value brought by IT to a business and try to answer the questions highlighted above.

IT Doesn’t Matter

Nicholas Carr recently published an infamous article in the Harvard Business Review entitled “IT Doesn’t Matter.”  In this article, Nicholas argues that the information technology no longer offers enterprises a competitive edge.  He refers to information technology managers as passive, impatient, wasteful, and lured by the notion of hype regarding the strategic value of IT.  The Harvard Business Review is an influential magazine that has over 243,000 readers. Therefore, if the magazine publishes an article purporting that IT is valueless, then an awful lot of critical business leaders may believe it. If they believe that, it means that they will run their companies and the economy into a ditch.  The author’s article will not stay debunked. For that reason, he has published a new book known as Does IT Matter to expand his thesis.

Carr forcefully argues that the investments in IT are less likely to bring a competitive advantage to an individual enterprise. Carr agrees that the IT has become the backbone of commerce, but he says that IT’s potential of differentiating one company from another and its strategic potential diminishes as many companies access and get to afford it. He does not necessarily mean that IT does not matter; what he says is that as IT is being commoditized, it does not offer its users a competitive advantage.  He also clarifies that he does not mean that information does not matter, or that the people using it do not matter. He says that what does not matter is the IT infrastructure for processing, transmitting, and storing information. He concludes by saying that since IT no longer offers a competitive advantage to enterprises, they ought to cease spending on then advanced IT products and services.

The Reasons IT Matters

Michael Porter (1985) argues that an organization has a competitive advantage over other rival companies when it can sustain the proceeds that exceed the average for the industry. He argues that there are two methods by which an enterprise can obtain a competitive advantage, and they include, cost advantage as well as differentiation advantage. Porter also, in his article on Strategy and Internet (2001) examines the way the Internet can offer a competitive advantage and business strategy advantage for any organization. Porter gives a description on n how a company can create a value chain. A value chain is created by a series of activities that a company undertakes to produce a product or a service. The value chain comprises of primary as well as support activities. IT forms part of the support activities that contributes to a company’s cost and differentiation advantage.

Strategic information technology systems (ISs) have proven to give businesses a competitive advantage. A strategic IS is an IS that is meant to offer a competitive advantage. These systems popped up in the 1980s as highlighted in by Charles Wisemen and Macmillan (1984) in their book, “creating advantage competitive weapons from IS.”  It is through these strategic information systems that organizations can deliver products or services at lower costs; produce products and services that are differentiated; help businesses to focus on particular market segments, and enable innovation. One of the ways the information technology has helped to create a competitive advantage is through the integration of the supply chain electronically. That takes place via a process known as electronic data exchange.  By integrating the suppliers, partners and other business players via electronic data exchange, companies can greatly reduce the resources in the requirement to manage the relevant information.

Conclusion

Nicholas Carr’s article is a dangerous article to companies because if the business managers cut down their expenditure on IT, they will obviously throw the businesses into a ditch. The information technology systems still have the potential to enable businesses to have a competitive advantage through the business process management systems, electronic data interchange, collaborative systems, and decision support systems. While enterprises have varied broadly in their selection, adoption, and exploitation of innovations, information technology has amplified and accelerated these differences. Information systems are integral to all the components of enterprises today, and they have the potential of creating value to businesses. However, IT should be used strategically, so as to bring that value to the business.

 

References

Porter, M. E. (1985). Competitive advantage: creating and sustaining superior performance, 1985.

Porter, M. E. (2001). Internet strategy. Harvard business review, 79(3), 62-78.

Wiseman, C., & MacMillan, I. C. (1984). Creating competitive weapons from information systems. Journal of Business Strategy, 5(2), 42-49.



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