Written Assignment 1.docx - INFORMATION SYSTEMS MANAGEMENT...

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Written Assignment 1 “IT Doesn’t Matter” K00143666
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Technology does not create a competitive advantage. Instead, it is the appropriate management of technology that create a competitive advantage. In May 2003 article in the Harvard Business Review entitled “IT Doesn’t Matter,” Nicholas G. Carr introduced the idea that information technology (IT) does not provide a competitive advantage to companies in a strategic manner. Carr argues that IT has become a commodity, and because the very nature of strategy requires differentiation, IT cannot possibly qualify. Although IT has made spectacular gains in the last half century, it is no different than other disruptive technologies that have transformed the world since the beginning of the Industrial Revolution. It may have provided a differentiated advantage to some companies early on, but over time IT has grown cheaper and more standardized so that it is easily accessible to everyone. IT can be used to supplement and improve strategy implementation, but it is not the foundation of a competitive advantage. To handle this new approach to IT, executives will have to prevent the commoditization of IT architecture and applications from destroying their companies’ barriers to competitive advantages. Although that role is not yet entirely clear, executives need to prepare for the prospect that IT doesn’t matter to strategy. Carr argues that technology's potential for differentiating one company from the pack--its strategic potential inevitably diminishes as it becomes accessible and affordable to all. It is not technology but the use of information that provides the competitive edge . In developing his argument, Carr cites examples of how businesses in the early part of the build- out phase achieved competitive advantage from the use of IT. The examples he cites focus almost exclusively on innovation based on a specific technology. At American Hospital Supply, the key technology was connectivity across enterprises, which at that time was still new, and at American Airlines, it was the management of large amounts of complex data, a commercial first in its industry. In other industries, such as banking, the first mover advantage on the back-office technology alone has been unsustainable (for example, in the introduction of the first ATMs or Internet banking solution). As Carr notes, the competitive advantage gained from the use of these technologies proved to be short-lived as competitors soon caught up. This is extra fast that G. Carr gives in his book "As its power and ubiquity have grown, its strategic importance has diminished." "What makes a resource truly strategic is not ubiquity, but scarcity. You only gain an edge over rivals by having or doing something that they can't have or do. By now, the core functions of IT--data storage, data processing, and data transport--have become available and affordable to all. Their very power and presence have begun to transform them from potentially strategic resources into commodity factors of production."
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