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IT Delivers

Opinion by Frank Hayes

MAY 19, 2003 (COMPUTERWORLD)

Does IT matter?

By now you've surely heard about Nicholas G. Carr's article in the May 2003 issue of Harvard Business Review, "IT Doesn't Matter." Carr's thesis is simple: Now that the IT infrastructure has been built out, you can't get sustainable competitive advantage from IT, because anything you can buy, your competitors can buy too. So there's nothing left for IT managers to do but cut costs and manage risk.
Scary, isn't it? No, not about IT -- about Carr. Here's a big-deal business pundit who not only misunderstands IT's relationship to competitive advantage, but who also thinks he's discovered something new.

Carr is right about one thing: You can't get sustainable competitive advantage by buying IT products, services or information. And his logic and historical analysis on this point are dead-on. Like railroads and electricity before it, IT has become infrastructure -- widely available, affordably priced and standardized. That means any competitive advantage you get just from buying IT will last only until your competitors buy the same products, services and information you just bought.

But, hey -- that's not news! Every experienced IT (and MIS and data processing) manager over the past 40 years has doped this out.

Sure, vendors claim that their hot new products will revolutionize your business. They always have. But we all figured out soon enough that new hardware, applications, networks, protocols and programming languages don't give you a lasting business advantage over your competitors. Whatever you buy, they can buy. Whatever you build, they can build too.

Carr's great insight was common wisdom in the mainframe 1960s, the time-sharing 1970s, the PC 1980s and the Internet 1990s. You've never been able to get a sustainable competitive advantage directly from IT. Yes, technology can cut costs. But real competitive advantage, just from technology? It never lasts. Heck, it barely exists.

Does that mean IT doesn't matter? Then IT hasn't mattered for 40 years -- since the days when IBM's System/360 introduced standardized hardware and software, and Ross Perot's EDS invented utility computing.

But IT does matter -- or at least it can. You can get real business advantage with technology. You just don't get it from products, services and information.

You get it from processes, skills and execution -- the same things that let any business differentiate itself in ways that don't involve IT.

Retailers understand the value of processes, skills and execution. They have to -- they must choose the products they sell from exactly the same pool as their competitors. So Nordstrom differentiates itself from Wal-Mart through its business processes, its employees' skills and how those employees execute on those processes. And Wal-Mart differentiates itself with its own processes, skills and execution.

When IT is used most effectively, when it's really focused on the business it serves, it reinforces and amplifies that differentiation. It maximizes the advantages a company gets from its business model. It improves processes, leverages skills and streamlines execution in ways that help a business deliver on its unique strengths. It helps Wal-Mart be Wal-Mart and Nordstrom be Nordstrom.

That's how you get competitive advantage.

If that sounds a little fuzzy, it's because every company is unique. That's why you've got to know your company inside and out if you want to deliver IT that truly serves the business. The kind of IT that doesn't come out of a shrink-wrapped box. The kind your competitors can't match by writing a purchase order.

It's as much about business and people -- your business and your people -- as about technology. But it is about technology.

And when that's what IT delivers, IT really does matter.

A lot.

Frank Hayes, Computerworld's senior news columnist, has covered IT for more than 20 years. Contact him at frank_hayes@computerworld.com