Does IT Matter?
Introduction By Thomas Stewart
► notes
that there are 3 perineal items
 new ideas
 truths (that should not be forgotten)
 disputes
► Carr
started a dispute
► IT
expenditures grew to almost 50% of
corporate capital spending by 2000 and
then collapsed -- why?
► the article does not say IT is dead or that IT
will not continue to be a source of dramatic,
transformational change
► the article does say that IT is becoming a
commodity and that commodities are known
to have little strategic impact
Brown & Hagel Rebuttal
► Carr
of IT
is right, businesses overestimated the value
 how and why?
► Carr
is right, the critical nature of IT on daily
business requires managers to become more
focused on vulnerabilities
 what do most managers know about the vulnerabilities
and risks?
 what strategies have managers used -- why is
outsourcing a problematic response?
► where
is Carr incorrect?
 IT, by itself, never was the competitive advantage -- its
advantage came by enabling innovative business
processes and practices (they reference the McKensey
Global Institute study and there are many more)
► six
of the 59 studied industries showed significant positive
productivity correlated to IT investment while 53 were
negligible improvement
► why? the advantage of the 6 'pulled' the other 53 to respond -they did not reap significant benefits because they were
responders instead of innovators
► Carr
was incorrect in counting only the
impact of the cost of data storage,
processing, and transmission
 impact of business practice changes such as
distribution changes ala Wal Mart
 impact of team/community solutions made
available via networks
 relaxing the necessity of problem solvers being
proximate to solve problems
► IT
impact has been more incremental than
'big bang' even though popular media (and
many business publications) only address
the 'big bang'
 the 'big bang' applications are high risk, they
are more likely to fail spectacularly than to
succeed
 'bolting on' applications (such as CRM) has been
much more profitable but less glamorous
► IT
impact continues to grow
 Moore's Law has continually defied the experts
by doubling power every 18 months for a
constant price
 that did not happen with Carr's examples of
steam engines, electricity, railroads, and
telephones
► managers
buying IT did not pay attention
 thought solutions to problems was in the buying
of IT and not in the using of IT
 did not buy the skilled labor to use the IT
 IT is a long term practice, not a short term fix
 IT is a means to an end, not the end itself
(remember the selling or ERP systems for Y2K)
 IT has little value as a stand alone asset, there
is great value in marrying it to other assets in
the business
McFarlan & Nolan Rebuttal
"In no other area is it more important to have
a sense of what you don't know than it is in
IT management. The most dangerous
advice to CEOs has come from people who
either had no idea of what they did not
know, or from those who pretended to
know what they didn't. Couple not knowing
that you don't know with fuzzy logic, and
you have the makings of Nicholas Carr's
article."
► when
McFarlan and Nolan talk about the
societal changes of technologies they are
talking the second wave theories
 for example, most people now understand that
the impact of railroads distributing goods to
geographically dispersed consumers (as per
Carr) was very small compared to the societal
impact of transporting consumers to live in
metropolitan areas
► the
societal changes of a computer that
runs 10 million times faster in 20 years for
the same cost makes the train speed of 6
times faster in 20 years a laughable
comparison
► Russell Ackoff wrote "Management
Misinformation Systems" in 1967 - it caused
a similar uproar and many of McFarlan and
Nolan's rebukes are similar
► the
pace of computing theory (in
communications, grid computing, etc) will
continue to accelerate the fantastic growth
even as stated by Moore
► the lack of nurture to sustain IT competitive
advantage has been a primary reason that it
does not always lack (back to the earlier 'set
it and forget it' attitude of managers
towards IT)
Strassman Rebuttal
► points
out that Carr's assertion that
economic vale of IT is diminishing is wrong - states that Carr cited Strassman for the
decline but says Carr didn't understand
what Strassman had written
 pay attention here where Strassman
differentiate how hard technology (such as
railroads) do not behave at the margin as soft
technologies (such as software) behave
► stating
that IT is a commodity and does not offer
completive advantage ignores that most IT
products are diverse and the strategic advantage
is in the use of IT not the IT itself
► the view that IT influence will be macroeconomic
versus microeconomic beneficial to the firm is
incorrect, it is a contradiction to believe that giving
a benefit to your customers does not have a
positive economic impact to your firm
► says
that Carr's citing of standard Microsoft
applications is invalid because of how it is used -i.e. both Carr and Strassman wrote their articles
using Microsoft Word yet the outcomes were
substantially different
► Carr's assertion that IT is reaching maturity is
wrong since the evidence shows rapid growth in
innovations and diversified applications
► risks do not exceed advantages -- executives
should better understand what the advantages are
and where they come from
Broadbent, McDonald, & Hunter Rebuttal
► "To
put it simply, it's not about the box; it's
about what's inside the box."
► "The source of competitive advantage
shifted from simply having a computer to
knowing how to use it."
Schell's Rebuttal
► it
was never the IT tool but the skill of using
the IT tool that mattered
► managers of IT have frequently been
chosen from non-technical areas because
senior management viewed IT as a
commodity -- as such, it was not considered
a flaw that non-technical people were
managing technology and technically
trained professionals
► decision
analysis and choice sets and
timeliness of decisions matter -- tools that
affect these problem characteristics must be
understood, not just used
► understand that Carr was making an
editorial statement as opposed to an
academic article - he achieved his objective,
lively debate