Does IT Matter ? IT and the Corrosion of Competitive Advantage (2004) - Nicholas G Carr Week 6 The Economic Impact of IT II : Beyond the Productivity Paradox

Introduction IT : necessary for competitiveness but not sufficient for advantage How we use technology is more important than the technology itself

IT : necessary for competitiveness but not sufficient for advantage

How we use technology is more important than the technology itself

Technological Transformations First Microprocessor - Ted Hoff at Intel in 1969 Ethernet – Bob Metcalfe in 1973 Word Processing System – Wang Labs in 1978 TCP/IP – 1982 Macintosh, laser printer – 1984 E-Mail – 1989 WWW – Tim Berners – Lee in 1990 - Inventions

First Microprocessor - Ted Hoff at Intel in 1969

Ethernet – Bob Metcalfe in 1973

Word Processing System – Wang Labs in 1978

TCP/IP – 1982

Macintosh, laser printer – 1984

E-Mail – 1989

WWW – Tim Berners – Lee in 1990

Technological Transformations Mind-set Shift IT that is scarce = Competitive Advantage. How do we ensure it is kept that way ? Differentiate commodity resources from those that have potential to create advantage Risk mitigation and Cost cutting take precedence.

Mind-set Shift

IT that is scarce = Competitive Advantage.

How do we ensure it is kept that way ?

Differentiate commodity resources from those that have potential to create advantage

Risk mitigation and Cost cutting take precedence.

Laying Tracks Rainhill Trials - 1830 Access Proprietary Technology Infrastructural Technology Foresight Risk in making the first move Advantages due to Infrastructural technologies will not be available indefinitely

Rainhill Trials - 1830

Access

Proprietary Technology

Infrastructural Technology

Foresight

Risk in making the first move

Advantages due to Infrastructural technologies will not be available indefinitely

An almost perfect commodity Will IT become a commodity input ? Commoditization of Hardware PCs, Servers, Storage systems and Networking devices are being standardized Overshooting – to stay on the “cutting edge” Wintel Grid

Will IT become a commodity input ?

Commoditization of Hardware

PCs, Servers, Storage systems and Networking devices are being standardized

Overshooting – to stay on the “cutting edge”

Wintel

Grid

An almost perfect commodity Commoditization of Software Can human intelligence ever be considered a commodity ? Software : producing expensive, reproducing inexpensive. Simple, Cheap, Standard and Networking Parallel to machine tools

Commoditization of Software

Can human intelligence ever be considered a commodity ?

Software : producing expensive, reproducing inexpensive.

Simple, Cheap, Standard and Networking

Parallel to machine tools

Software’s future Upgrade instead of buying a new package Easier programming languages Modularity promotes commoditization. Role of internet Grid Architecture Diffusion of Wi-Fi made portable computers attractive Web services An almost perfect commodity

Software’s future

Upgrade instead of buying a new package

Easier programming languages

Modularity promotes commoditization.

Role of internet

Grid

Architecture

Diffusion of Wi-Fi made portable computers attractive

Web services

Vanishing advantage Study by Erik Brynjolffson and Lorin Hitt’s Study by Baba Prasad and Patrick Harker When IT was new Earliest barrier was technical Economic barrier Access barrier : software

Study by Erik Brynjolffson and Lorin Hitt’s

Study by Baba Prasad and Patrick Harker

When IT was new

Earliest barrier was technical

Economic barrier

Access barrier : software

Locking in Advantage American’s Sabre, AHS, Reuters Technology Replication Cycle Being a first mover is expensive Homogenization of the processes The software influences the practice Installation, Deployment periods and Turning point Vanishing advantage

Locking in Advantage

American’s Sabre, AHS, Reuters

Technology Replication Cycle

Being a first mover is expensive

Homogenization of the processes

The software influences the practice

Installation, Deployment periods and Turning point

Universal Strategy Solvent Sustainable advantage Leverageable advantage A strategic challenge Two schools of thought Business Strategy Industry based view Resource based view

Sustainable advantage

Leverageable advantage

A strategic challenge

Two schools of thought

Business Strategy

Industry based view

Resource based view

Managing the money pit Risks associated with resources Low success rate of projects Spend Less Learn from others mistakes No relationship between IT and business productivity

Risks associated with resources

Low success rate of projects

Spend Less

Learn from others mistakes

No relationship between IT and business productivity

Managing the money pit Work together to reduce risks Invest on Security 90% of companies have unauthorized intrusions

Work together to reduce risks

Invest on Security

90% of companies have unauthorized intrusions

A dream of wonderful machines IT is revolutionary – “ changes everything ” Has IT been truly transformative ? Have we changed much ? Can we live without IT ? Is a great depression in waiting ?

IT is revolutionary – “ changes everything ”

Has IT been truly transformative ? Have we changed much ?

Can we live without IT ?

Is a great depression in waiting ?

Nicholas G Carr Independent business writer, work centers on business strategy, IT and their intersection Top editorial position at Harvard Business Review B.A from Dartmouth College and M.A from Harvard University www.nicholasgcarr.com

Independent business writer, work centers on business strategy, IT and their intersection

Top editorial position at Harvard Business Review

B.A from Dartmouth College and M.A from Harvard University

www.nicholasgcarr.com

Thank You