IT: Does it matter?

Journalist-turned-MIT pundit Michael Schrage takes on Nicholas Carr’s recent argument in HBR that IT doesn’t matter (link to $7 PDF reprint). Carr’s argument: as information technology has spread, it’s become a commodity utility, useful only for cost reduction, and is no longer a source of competitive advantage. In other words, the same thing is happening to IT as once happened to the electrical grid and the railroad: It was briefly a source of opportunity, but now is just another cost of doing business.

Schrage’s rebuttal: even commodities (like capital, or talent) can be a source of competitive advantage, because the key is not how available those resources are, it’s how they’re deployed.

It’s not free and easy access to a commodity that determines its strategic economic value to the company; it is the way that commodity is managed that determines its impact.

Besides, he points out, IT is not so much a set of technologies available to all, as it is an arsenal of techniques, which different companies deploy with varying degrees of skill. I would add: Information technology is a continuously changing field of techniques and technologies. A better comparison is not to the electrical grid or the railroads, but to power (in general) or transportation (in general).

Capitalizing on new innovations in IT still conveys enormous advantages to the companies that can do it effectively. Witness Wal-Mart and FedEx, both of which have built their empires in large part upon continuous improvement in their underlying tech, which allows them to move faster, quicker, and more cheaply than their competitors.

IT: Does it matter?