Mar 20, 2006

Does IT matter?

To say that we live in a world of technology would be to state the obvious. Technology pervades every aspect of our lives and transforms it. It influences everyone and everything - from individuals to giant multinational corporations. Technology is after all the means through which businesses deliver value to their customers. It even helps them build and sustain competitive advantage over competitors in a rapidly changing world. Or does it?

In his groundbreaking Harvard Business Review article, Nicholas Carr examined how technology and more specifically, information technology helped businesses build competitive advantage and sustain it in the long run. He argued that the costs of adopting the latest, state-of-the-art information technology was plummeting and this was in fact levelling the playing field for the smaller players, who were till now at a disadvantage. These smaller players, who couldn't afford the technologies that their bigger competitors enjoyed, no longer had to sit back and watch the game. They could also go in for the same, if not better, technology and compete with the Goliaths, and that the playing field was indeed levelled. He says that business can no longer seek to gain an edge based solely on the technology that they employ.

Let us examine this argument. It is indeed true that the cost of adopting the latest technologies in IT have fallen drastically from those of yesteryears. Processing cycles are much more abundant and a lot cheaper, storage even more so. Entire industries thrive on seeking to provide the best solutions at the lowest costs, and this competition has caused a huge acceleration in the diffusion of technology throughout businesses across the world. Concepts in Information Technology like Enterprise Resource Planning have enabled corporations ranging from the Fortune 500s to medium size businesses to integrate their business processes and cut through layers of bureaucracy, increasing efficiency and cutting response time to competition and the market. But that is that.

Even today, no business can dream of surviving, let alone beating the competition, without that necessary ingredient that we all like to preach about but seldom practice, intentionally or unintentionally - innovation. Innovation spawns new businesses, it keeps existing businesses afloat. Without it, your business is as good as dead. Like every other business aspect, innovation helps companies find new ways of better leveraging their existing IT systems, or even better, design entirely new ones. And in doing so, the company pushes itself ahead of the competition. Relentless, non-stop innovation can virtually keep the company there, but that would be too ideal a scenario.

Granted, Information Technology is only a tool that helps businesses deploy their resources at the right time and right place, against competition or in a new market. And as Carr argues, the competitive advantage that the company gains from adopting a new technology is perhaps short-lived. But in a dynamic global business environment, where markets appear and disappear in Internet time, that may be more than sufficient. IT does matter.

See both sides of the argument:

Does IT Matter?

IT Doesn't Matter

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