IS 577

Case Briefing IT doesnt Matter

Sunil Razdan
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The crux of this paper is the argument Carr is putting forward that IT has become a
commodity, like electricity or railroad and no longer is a strategic advantage or
differentiator but rather something you need, to do your business (cost of doing
business). He compares rapid growth of IT infrastructure to that of Railways as quoted in
the article In the 30 years between 1846 and 8176 m reports Eric Hobsbawm the Worlds
total rail trackage increased from 17,424 kilometers to 309,641 kilometers. He goes on
drawing parallels with spread of telegraph, electricity et al. and mentions how various
forward looking businesses took advantage of these early build-outs and used it as a
strategic advantage for a short window before it spread to larger economy and became a
commodity (meaning everyone has it now). He cites an example of a large US
manufacture of nuts and bolts Plumb, Burdick & Barnard , locating its factory near
Niagara Falls in New York , the primary reason being this location was near the site of one
of the earliest large-scale hydroelectric power plants.
Carr also argues that executives fall into trap of complacence assuming that
opportunities for an innovative IT advantage will last indefinitely when in reality
window for gaining advantage from a new infrastructural technology is very short , before
it begins to be appreciated broadly and everyone including their competitors catch on to
it.
Carr does layout his reasons as to why IT is becoming a commodity. Firstly the cost of IT
infrastructure (compute, storage, and network) has come down drastically in last few
decades , enabling more and more businesses to deploy computer systems to support and
automate their operations, IT infrastructure has become so prevalent that it is equated to
needing electricity when you open a business.
Second aspect is standardization of application packages like (ERPs, CRM ) systems
which not only provide a standard software but also incorporate standard industry best
practices as processes which a company has to implement when they implement the
software system for their operations.

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IS 577
Case Briefing IT doesnt Matter
Sunil Razdan
_____________________________________________________________________________________

As more and more customized and proprietary systems are replaced by packaged soft
wares which are standardized , incorporate industry best practices , come at a fraction of
cost (vs. creating your own) and are available to everyone, the advantage businesses had
diminishes and it no longer gives them a strategic edge over their competitors. He cites
many examples to make this point like Sabre reservation American airlines had in place
or Federal Express with its package-tracking system which had gained important strategic
advantages (for a period of time) over their competitors through deployment of these
innovative IT technologies.
In the last part of this Paper Carr argues that management of IT should recognize this
shift of IT becoming commoditized and change their approach to management of IT (he
labels it as from offense to defense). The focus should not be to gain strategic
advantage using IT , but rather managers should look at opportunities of optimizing IT
costs (as he sees IT as a cost center and thus the focus of reducing the cost). He advises
that companies should stay risk averse when it comes to adopting new technologies and
focus on stability of their systems and availability than innovation or going cutting-edge.
In my opinion, while it may seem that various facets of IT are commoditized (as Carr
indicated) as is evident with the rise of hosted and cloud services in last few years.
Companies dont want the overhead and hassles of managing IT infrastructure as it
presents no strategic advantage , they are realizing that it is cheaper to outsource and
host it externally , allowing them to focus on their core business and at the same time
reducing their IT costs.
But the point Carr misses to mention is that there are many companies who are still
investing in IT innovations and leveraging IT to gain competitive advantage over their
competitors , case in point is Big Data which is many forward looking companies are
already tapping into and finding innovative uses of it to generate new revenue streams,
customer touch et al.
This paper came out in 2003, since then lot of new technologies and innovations have
happened in the field of IT which has been game changing, to name a few twitter,
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IS 577
Case Briefing IT doesnt Matter
Sunil Razdan
_____________________________________________________________________________________

Facebook, IPad, Big Data et al. I see endless opportunities and possibilities IT will
uncover for years to come. IT is vast in scope and touches every aspect of life from
medicine, to space, to education, to social life and so on. It is not fair to compare IT with
railroad and project that it will follow the same trajectory.
References
1. IT Doesnt Matter by Nicholas G. Carr.
2. http://www.forbes.com/2010/04/23/commoditization-trap-branding-leadershipmanaging-marketing.html
3. http://www.infoworld.com/article/2625231/managed-services/cloud-computing-it-as-commodity.html
4.

http://www-01.ibm.com/software/data/bigdata/use-cases.html

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