Essay on “IT Doesn’t Matter” by Carr
In 2003 Nicholas Carr published his famous article IT Doesn’t Matter and it caused great controversy in the sphere of information technology. The key idea, which was expressed by the author in this article, stated that due to the fact that an information technology gained its prevalent position, it also became a commodity within the frames of the non-proprietary technology world and this made it lose its ability to contribute greatly to building a strong competitive advantage of the company, making the business successful, growing and bringing profits. The ideas, expressed by Carr, were highly appreciated by other researchers for their stimulation, at the same time it received a portion of criticism for not having enough quantitative evidence for supporting the author’s major arguments.
1. What are proprietary vs. infrastructural technologies? Can you give some examples?
Which technology was identified by Carr as being more important for a business to gain a competitive advantage? Why? (40 points)
The article It Doesn’t Matter by Nicholas Carr caused a lot of controversies, which were related to the discussion of IT and its actual role in business. The author studied the process of evolution of IT and concluded that there was nothing unique in this process; it was actually similar to the evolutions of such technologies as electricity or railroads for example. When these technologies were launched at the very beginning, they had a strong force for supporting competitive advantage. As time passed and their availability became evident, they lost this advantage and did not contribute to differentiation anymore. Carr discussed proprietary and infrastructural technologies as two different types. Proprietary technologies have the force to support the competitive advantage, because access to them is limited, because of “physical limitations, intellectual property rights, high costs or a lack of standards.” (Carr 2003). As soon as these restrictions stop functioning, this technology does not have any strategic advantage anymore. The meaning of infrastructural technologies is more important. Even if during the first stages of its introduction and application, they might seem similar to the first type, they do not lose their positions in business infrastructure afterward. In order to make this distinction vivid, the author used the example of the proprietary railroad. If a company builds railroads purely with the aim to transport its own goods, it would be able to develop its competitiveness; still, the good would be much broader under the condition of creating a whole network of the railroads to be used by all businesses. Carr was convinced that the same scheme could be applied to information technologies, as there is no use looking for competitive advantage and restricting usage of Internet-only to some companies and organizations, instead of making it available to the whole world.
2. What technologies did Carr compare IT to when making his argument that IT is a commodity? Is IT similar to these technologies? Why or why not? (40 points)
Nicholas Carr developed his theory of IT as a commodity. He discussed such strong companies as IBM and Microsoft, which were considered to be IT utility organizations. All the business applications were controlled by these companies. However, along with costs decreasing for storing and transmitting the data, these technologies became available to other businesses. Carr did not mind that there was a great number of organizations, like for example Federal Express, which were able to become highly competitive exactly thanks to the application of IT, but he underlined that these opportunities were not able to give results for a long period of time. He assumed that “IT spurred industry transformations, most of the ones that are going to happen have likely already happened or are in the process of happening.” (Carr 2003). Important changes continued to take place in business and industry markets, at the same time Carr assumed that “the build-out of IT is “much closer to its end than its beginning.” (Carr 2003). This argument was proved by the reduction of the costs for IT functions and their availability to a greater number of businesses, by considering the IT companies as commodity suppliers and busting out of the investment bubble, which was the sign of the end of the build-out of any technology.
The position of Carr was rather unusual, and it is necessary to admit that he was correct in stating that IT technologies lost their cost and became available to more and more companies and individuals. At the same time, IT could not be compared to electricity for example, as electricity has not changed from the moment when it was invented, it functions in the same way and has the same form, whereas IT technologies never remain static, they are constantly changing in correspondence to the general and specific needs of the modern businesses and individuals.
3. What were the three reasons Carr cited for arguing that IT is a commodity? Do you agree? Why or why not? (40 points)
Carr compared IT first of all to railroads on the basis of the transportation function: railroads transport goods, whereas information technologies transport digital information. IT was considered by Carr to be “far more valuable when shared than when used in isolation.” (Carr 2003). The second argument of Carr was related to the fact that IT is replicable. He wrote that technology sharing, cheap processing, cheap storage, interconnectivity, interoperability, and standardization have caused information technology to blossom rapidly. (Carr, 2003, pp. 7-8). There is a serious problem in comparison of IT technologies to other innovations, including railroads or electricity, because it is based on the assumption that all IT host computers are free to access, which is not true. A lot of them demand payments and service agreements. Only this fact is able to change the flow of the process of commoditization of information technologies.
Secondly, Carr states that information technologies, which became commodities, could hardly have strong potential for the future of the company. At the same time, he argues with himself, when he assumes that infrastructural technologies are still able to impact the competitiveness level. Maybe it is not that important to conclude, whether these technologies should be considered commodities or they should not, as they are still in use in the business environment and this means that they are important for business competitiveness and profits.
The third argument of Carr is related to his statement that the commoditization of IT would make businesses fail. Here there is an evident weak point of this argument, as, on the one hand, the author makes the statement about the crumbling of the business and on the other hand he makes his suggestion on what to do in order to help the company survive. In addition, all the examples of the companies, like railroads or electric companies still survived and continue functioning, this means that Carr either did not believe himself in this statement or was not able to provide enough arguments to support it. Again, coming back to the issue of availability and prices, this is true that as soon as any innovative technology is developed, it becomes more and more accessible to the consumers. Millions of people nowadays use railroads for traveling. However, this does not mean that the prices are too low and that the railroad companies are on the edge of going bankrupt. Being available, they continue to bring profits and develop.
- Now more than a decade after Carr’s article was published, does IT matter? Why or why not? (80 points)
The moment more than a decade had passed after the article IT Doesn’t Matter was produced by Nicholas Carr. It is difficult to state for sure, whether this period was long enough for defining the strong basis of his argumentation and his assumptions, still, some conclusions could be made already. It is necessary to admit that Carr was one of the observers and researchers of the relationship between innovative technologies and business, who came out with straightforward argumentation and discussion. At the same time he did not manage to provide very strong argumentation on the basis of available quantitative research data, nor did he consider technologies in their broad meaning, using this notion only as the means of storing, processing, and transporting of information in digital form. In reality, information technologies could be treated in much broader meanings and frames, which would definitely be important for considering their roles for both business organizations and the private lives of individuals. It is not possible to trace at the moment, whether Carr was able to predict the speed of constant development of new technologies and the versatility of their applications at the moment when he was writing his article and working on his arguments, but even if he was not, still his presentation of the technologies was oversimplified. Thus it is not clear, whether his argumentation really failed or the IT has changed to such a great extent, that he could not predict these changes and possibilities of information technologies. When making his predictions about the future of IT, comparing information technologies to other technologies, he was actually making predictions for these technologies as well, which was another challenge.
Overall, the article IT Doesn’t Matter by Nicholas Carr caused a lot of controversies in the business world in relation to the application of information technologies; arguments, suggested by the author, his positions, and assumptions, seemed to be rational to some extent, at the same time they were criticized for having little quantitative research data and having counter argumentation, provided by Carr himself. One of the key drawbacks of the author was probably his oversimplified approach to a rather sophisticated issue.
Works cited:
Carr, N. G. IT Doesn’t Matter. Harvard Business Review. Google Scholar, 2003 Retrieved from http://scholar.google.com/scholar?hl=en&lr=&cites=8661364924339583106
