KS Seminar Report-B11

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Does IT Matter

Knowledge Seminar Report (B11) Page 2

Table of Contents

About the author ..................................................................................................................................... 3

Objective and the Central Idea of the book ........................... ................................ ............................ ....... 3

Authors Intent of writing the book ........................ ................................ ...................... ............................ 4

Structure of the book............................................................................................................................... 4

Dilemmas presented by the author ........................ ................................ ...................... ............................ 7

Conflicts .................................................................................................................................................. 8

How has the book affected your thinking? ............................ ................................ ....................... ............ 9

Does the problem relate to any other aspect in management or business or day-to-day life or local

context? ................................................................................................................................................ 10

How do you relate yourself to the book? ............................................................................................... 10

Any other project context aspect relevant to the book, that comes up during discussion with your faculty

guide. .................................................................................................................................................... 11

Individual Learning ................................................................................................................................ 12

Mayank Jindal .................................................................................................................................... 12

Rohit Roy ........................................................................................................................................... 13

Bibliography .......................................................................................................................................... 14



Does IT Matter


About the author

Nicholas George Carr, born in 1959, is an American writer who has published books and articles

on technology, business, and culture. Carr originally came to prominence with the 2003 Harvard

Business Review article "IT Doesn¶t Matter´ and the 2004 book ³Does IT Matter ?´ In these

widely discussed works, he argued that the strategic importance of information technology in

business has diminished as IT has become more commonplace, standardized and cheaper. His

ideas rolled the information technology industry, spurring heated outcries from executives

of Microsoft, Intel, Hewlett-Packard and other leading technology companies, although other

commentators defended his position. In 2005, Carr published the controversial article "The End

of Corporate Computing" in the MIT Sloan Management Review , in which he argued that in the

future companies will purchase information technology as a utility service from outsidesuppliers.

Objective and the Central Idea of the book

³Does IT Matter´ written by Nicholas G. Carr forces its readers to examine how much we over

emphasize the use of IT. The author tells us that the competitive edge of using IT has gradually

dissipated. This book deepens, expands, and extends a point of view that was originally

presented in an article in the May 2003 edition of the Harvard Business Review. That article,

entitled ³IT Doesn't Matter,´ has become a touchstone for a wide and often passionate debate

among the suppliers and users of information technology. In dozens of articles published in

newspapers, business magazines, and IT journals around the world, the author¶s thesis has been

discussed and dissected, questioned and critiqued, attacked and defended. Many respected

executives, business professors, and journalists have probed the strengths and weaknesses of the

arguments and offered their own views on IT and its meaning for business. Beyond the

intellectual and practical value of the discussion, which is considerable, it¶s very breadth and

intensity underscore both the importance of this subject for companies and the profound lack of a

common understanding of it.



Does IT Matter


Authors Intent of writing the book

In this book, the author has tries to convey the message that even though IT has become an

indispensable part of any organization, its importance has been over emphasized to a great extent. It

might make a company competitive but it does not provide any advantage which it used to provide

earlier in its growth stage. The intention of the author has not been to disregard the power of IT but to

prove the fact that lavishly spending on IT and other related services does not make any sense as IT is no

longer an advantage and hence spending on IT should be more strategically planned and based on need.

Structure of the book

The author has used relevant examples wherever necessary to explain his views. The book has

been divided into seven chapters. Each chapter explains the author¶s view point as to why there

is a need to re-evaluate the expenditure that the companies are incurring on IT related services.

Author opens with a brief introductory chapter, ³Technological Transformations,´ that provides

an overview of book¶s thesis and underscores the value of examining IT from a strategic

perspective. He gave a stress as the central ± and positive ± message of this book: that IT¶s

transformation from a set of proprietary and heterogeneous systems into a shared and

standardized infrastructure is a natural, necessary, and healthy process. It is only by becoming an

infrastructure - a common resource ± that IT can deliver its greatest economic and social

benefits.

Author Nicholas starts book with the invention of 4004 semiconductor, the world¶s first

microprocessor. In 1969, a young electrical engineer named Ted Hoff who had recently joined

the Intel had been assigned to a project to produce a set of twelve microchips for a new

calculator for a Japanese electronics company Busicom. Hoff feared that the total cost of the

chipset would end up exceeding Busicom¶s project. Instead of trying to pack the calculator with

a dozen specialized chips, he decided to create a single general purpose chip - a central

processing unit ± that could handle many different functions. Two years late, Hoff¶s idea came

to fruition when Intel unveiled its 4004 semiconductor. By providing the brains for a new

generation of small, easy-to-program computers, the microprocessor changed the course not only

of computing but also of commerce. The programmable microprocessor unleashed the full power

of the computer, allowing it to be used by all sorts of people to do all sorts of things in all sorts

of companies.



Does IT Matter


Hoff¶s invention set off a surge of innovation in business computing. In 1973, Bob Metcalfe

created Ethernet, the technical glue for local area networks. In 1975, the first mass produced

personal computer appeared. In 1976, Wang Laboratories introduced its Word Processing

system, bringing computers to the desks of office workers, In 1978, the first spreadsheet

program, VisiCalc, went on sale, followed by next year WordStar, the first PC word processor,

and by Oracle¶s first relational database system. In 1982, TCP/IP, a set of networking protocols

was introduced. In 1984 arrived the Macintosh, with its easy-to-use graphical interface. In 1989,

e-mail began to flow over the internet and in 1990 the World Wide Web invented by Tim

Berners-Lee.

Author has given the example of Xerox¶s advertisement pictured a manager working on the

machine and story of Electric¶s Jack Welch who tried to adopt new technologies after learning

how to send e-mail and use a Web browser during a vacation in Mexico with his wife in 1999.

Author also quoted a line which is an eye catcher and looks true in terms of business strategy,

³The wise manager always looks backward before moving forward´.

The second chapter, ³Laying Tracks,´ introduces and explains the critical distinction between

proprietary and infrastructural technologies. Author described how the business use of past

infrastructural technologies, from railroads to electric power, evolved in a predictable way that

foreshadowed what we¶ve seen with IT. In particular, the pioneers of a infrastructural technology

often gain lasting advantages in the early stages of the development, but as the infrastructure

matures and becomes cheaper, more accessible, and better understood, competitors are able to

rapidly copy and valuable new innovation.

In Chapter 3, ³An Almost Perfect Commodity,´ He examines the technical, economic, andcompetitive characteristics of IT that lend it to particularly rapid commoditization. In this chapter

the author addresses two of the most significant criticisms of his argument: first, that he

overlook the almost unlimited potential for innovation in software and, second, that he ignore the

continuing changes in the way of IT assets are organized ± in the IT ³architecture,´ as

technologies put it. While granting that computer software is more malleable and adaptable than

earlier infrastructural technologies, qualities that make it less susceptible to commoditization, he

argues that other qualities that push it in the other direction ± toward commoditization. And

while acknowledging the continued evolution of the IT architecture, he will suggest that at this

point most innovations will tend to enhance the reliability and efficiency of the shared

infrastructure rather than enable proprietary uses of that infrastructure.

In the fourth chapter, ³Vanishing Advantage´, the author tries to look at the history of the use of

IT by companies, showing how closely it follows the pattern established by earlier infrastructural

technologies. According to some critics IT never mattered as a source of advantage. In this

chapter, however, the author shows, through case studies of several IT pioneers, that information

systems and networks actually formed very durable barriers to competition in the past but that



Does IT Matter


those barriers have fallen as IT has advanced. He gives the example of Sabre, installed by IBM

in American Airlines in 1953. It was the first computerized reservation system installed. Hence,

American Airlines were the pioneers in introducing computerized reservation system. However,

as technology became cheaper and more affordable, more and more airlines started introducing

this system and it¶s no longer a competitive advantage anymore. Also, in those days, cost of

computer hardware was very high. However, it was software development which was a major

barrier. Programmers were few and far between and recruiting them was expensive. Hence, only

a few companies were able to use such services. However, this advantage vanished after

sometime as technology became much more affordable.

³The Universal Strategy Solvent,´ which is the fifth chapter of the book, steps back from the

close examination of IT management to describe how the emergence of a new business

infrastructure can change the basis of competition in markets. The author discusses the corrosive

effects of the IT infrastructure on some traditional forms of competitive advantage and describes

how business success increasingly hinges on the simultaneous pursuit of both sustainable and leverage able advantages. He also explains how companies should take care

in balancing the need to share information and processes with partners with the need to maintain

their organizational integrity. The IT infrastructure makes specialization and outsourcing easier,

but that doesn't mean companies should rush to pursue them. He gives the example of Dell and

Wal-Mart. Both these companies underscore the importance of intelligent strategy. Both have

used IT but neither has built its advantage on technology itself. He explains the concepts of

sustainable and leverageable advantage. Leverageable advantage can be defined as a privileged

market position that, however fleeting, provides a stepping stone to another privileged position.

Unlike a sustainable advantage, a leverageable advantage is a way station, not a destination. To

explain the power of leverageable advantage, the author gives the example of Apple Computer.

The company was left for dead a few years ago but it has survived as a profitable company in the

cutthroat PC business by returning to its original sources of sustainable advantage: a flair for

design, a tight integration between hardware and software, a strong and meaningful brand, and

an exuberant dedication to product innovation. At the same time however, Apple has also used

these and other advantages as leverageable advantages. Its design skills, its adroitness at

combining hardware and software, and its appeal to trendsetters provided the platform for a

successful leap from PCs to music players. Today, Apple¶s iPod holds the dominant share of the

MP3 player market while also selling at a premium price- a desirable position for any product.

In the sixth chapter, ³Managing the Money Pit,´ the author turns to the practical managerial

implications of the commoditization of IT. Stressing the importance of controlling cost and risk,

he offers four guidelines for IT investment and management: spend less; follow, don't lead;

innovate when risks are low; and focus more on vulnerabilities than opportunities. He also

provides a number of examples of recent company practices that provide models for action. The

author¶s intent is to offer a new managerial perspective that will help both business and



Does IT Matter


technology managers make appropriate decisions in the years ahead. The author gives the

example of UPS which has been following FedEx by learning not just how to copy its rivals

systems but also how to make them cheaper and better. However, today, UPS handles far more

shipments from internet retailers than its more technologically aggressive rival, and it remains

more profitable as well. When it comes to IT, the tortoise often beats the hare.

The final chapter, ³A Dream of Wonderful Machines,´ explores the broader consequences of

information technology for economies and societies. The author describes how our natural

enthusiasm for a new technology, with its promise of renewal, can lead us to exaggerate its

benefits and overlook its costs, and he examines how this bias has influenced our perceptions of

the so-called computer revolution. The author tells us that it is a natural phenomenon that

whenever a new technology is launched, people get very excited about it and over emphasize on

its importance and benefits. This is exactly what happened with IT also. Even though IT has been

a revolution, its advantages have been over emphasized and because of this, companies have

been spending a lot on the implementation of IT increasing the cost of services provided bythem.

To conclude, the author mentions that there are three important trends that will shape the future.

First, companies are re-evaluating their approaches to IT investment and management as the

economy emerges from the post-Internet-bubble downturn. Second, the technology industry is in

the midst of a restructuring, as vendors reshape their competitive strategies in response to shifts

in the marketplace. Third, policy makers and economists are assessing the broad impact of

computers on industrial performance and productivity, which will lead to crucial government

decisions about the development of the IT infrastructure throughout the world. Making the right

choices in all these areas requires an open exchange of information and views.

Dilemmas presented by the author

Dilemma presented by author in book is, ³Whether IT gives competitive advantage to businesses

or not?´

According to author, IT often gains lasting advantages in the early stages of its development, but

as the technology matures and becomes cheaper, more accessible to everyone, there is no longer

competitive advantage to business as every competitor is able to rapidly copy any valuable new

innovation.



Does IT Matter


The answer is explained using the examples of railroad, telegraph and electric power. Author

discusses how business who were using these technologies initially gained advantage in

comparison to their competitors but as technology started maturing after some years, that

advantage is longer their as it was available to everyone.

The dilemma is answered and supported by examples from history which clears the confusion

raised by dilemma.

Conflicts

This book has given a lot of knowledge. It has given a new insight and a new perspective as to

how to look at things. The author has been successful in making us believe that IT has been over

estimated. However, there are a few points where the author is not agreeable. Such points are

discussed below.

y Nicholas G. Carr mentions that IT has lost its strategic value. He argues that IT is no

longer strategic because it has ceased to be a scarce good, and he contends that pro¿t

margins on IT-related innovations will consequently disappear. However, he does not

support this argument with research ¿ndings (except for a reference to my own researchand a misunderstood example from the Alinean Corporation). He bases his conclusions

entirely on his reasoning, by analogy that IT must follow the patterns that arose as

businesses adopted steam engines, railroads, telephones, electric generators, and internal

combustion motors. But any proof that rests entirely on analogies is Àawed.

y He also states that IT is a commodity that does not offer a competitive distinction and

therefore does not provide a competitive advantage. It is true that Microsoft desktops

running on Intel processors have become widespread, but they account for less than 12%

of IT budgets, and that number is declining. Most IT products are diverse±they certainly

are not commodities. And while many business processes do rely on standardized

desktops, are those processes therefore doomed to uniformity? In other words, does

partial standardization wipe out opportunities for gaining competitive advantage? The

evidence does not support such a conclusion. Competitive advantage is not the result of

personal computers. It is the result of effective management by skilled and highly

motivated people.

y Also, he mentions that since IT is an infrastructural technology that is easily acquired and

copied, it cannot offer a competitive advantage. Instead, easy availability of information



Does IT Matter


technology makes it increasingly valuable. E-mail, fax, and cell phones gain in utility as

they become more widely used, because they can be acquired on attractive terms.

y IT is primarily a transport technology, and because it is open to everyone, it offers no

advantage. This proposition is a misunderstanding of what IT is all about. Message

transport is not the primary reason why organizations deploy IT. Information technology

adds value mainly by improving the management of information intelligence and

collaboration among individuals, groups, and organizations. The transport function is

essential, but its importance as a conduit is only tertiary. The value is in the message

itself, not in the means of conveyance.

y Existing IT capabilities are largely suf¿cient for corporate needs. It is a blunder to assert

that we have already attained the pinnacle of what is ultimately achievable. The history of

that assertion is a history of failures. The Chinese burned their Àeet when they thought

nothing further could be gained from overseas trade. The leaders of the Soviet Union

retained their bankrupt central planning system because they considered it perfect for

managing the economy.y IT is arriving at the end of its growth cycle and is reaching saturation. After 50 years of

cyclical growth, there is not a shred of evidence that IT developments have reached a

plateau, as did innovations in industrial-age machinery. Physical mechanics impose limits

on the size and performance of locomotives, turbines, airplanes, refrigerators, and trucks;

there are no such con¿nements to information technologies, as far as we can tell. The

capability of a software-enriched global network has no boundaries. The current cyclical

correction to the excesses of the past decade is a crucible for generating more and better

innovation.

How has the book affected your thinking?

Reading this book has been a learning experience. It has changed our thinking about the use of

IT. We had been taught in school and in college that use of IT is extremely important for success

in business. However, this book by Nicholas G. Carr has transformed our thinking to a greatextent. We have realized that the importance of IT has been over-estimated. The lesson to be

learned from the past several decades is that IT by itself rarely confers strategic differentiation.

Yet, IT is inherently strategic because of its indirect effects±it creates possibilities and options

that did not exist before. Companies that see, and act on, these possibilities before others do, will

continue to differentiate themselves in the marketplace and reap economic rewards. IT may



Does IT Matter


become ubiquitous, but the insight required to harness its potential ill not be so evenly

distributed. Therein lies the opportunity for signi¿cant strategic advantage.

Does the problem relate to any other aspect in

management or business or day-to-day life or local

context?

Yes, problems mention in the books can be related to management and business day-to-day life

as management and business always faces the problem whenever they have to invest in IT. IT

being the important factor for business now-a-days, Managers are usually confused on how muchto invest and when to invest in IT. IT keeps changing very fast and this is the reason which

makes investment in IT, difficult for managers.

Even in our day-to-day life, we are usually used to adapt changes in IT. Versions of software

changes and we have to adapt new versions to upgrade our self to changes. Social Media which

we were using before 3 years was not the same social media which we were using today. With

time, IT upgrades social media, search engine, software, hardware, etc.

How do you relate yourself to the book?

Relating ourselves to the book, we can say that we are also somewhat similar to changes and up

gradation of IT. We also change ourselves with time and try to upgrade ourselves with new technologies

and systems. We do it for personal development of our soul. We learn new things every day and try to

adapt some changes in ourselves to make ourselves compatible with changing technology and world.

We think, this is the similarity between us and IT which was discussed in book.



Does IT Matter


Any other project context aspect relevant to the book,

that comes up during discussion with your faculty guide.

As discussed with Maam in one discussion, we related Social Media as one of the ITs component which

we think will mature soon and it was similar to things discussed in book.



Does IT Matter


Individual Learning

Mayank Jindal

³Does IT Matter´, is an important and insightful book which will have a significant impact on

how corporations think about IT and its role in business strategy.

In this book, Nicholas Carr is essentially issuing a warning: Organizations need to get realistic

about what IT can and cannot do for them. In spite of all the hype, wireless systems and other

exciting new computer technologies aren¶t going to create lasting strategic advantages.

I also think Carr is trying to help us learn from the mistakes we made during the late 1990s,

when companies were making huge investments in e-business initiatives in an attempt to achieve

competitive and strategic advantages. Many of those investments never produced significant

benefits ± many of the initiatives were never completed. With the benefit of hindsight, Carr istelling us most of those gigantic efforts were never going to deliver real strategic advantage, even

if they had been successful.

Carr forces us to reexamine some of our most basic assumptions about IT and business value. He

challenges all of us to be clearer about where the value of IT resides. Critical business choices

and actions hinge on the outcome of this debate.

History given by author in book regarding technological transformations provide in depth

information about how technological transforms took place in past and also provide information

about changing trends in IT. Change in IT is very frequent and therefore no business can take IT

as their competitive advantage.

Examples of companies like Amazon.Com, General Electric, HP, Dell, Google, etc. and their

commoditization of hardware and software in IT gives knowledge of real situation of companies

where IT has been implemented several years ago.

Before reading this book, my thinking was, ³IT plays a very important role in business and

matters a lot to business´. But after reading this book, I am also little convinced with author¶s

justifications on IT, not being a very important factor as it was perceived by people. IT needs

huge investment and managers should invest carefully while implementing IT in their business

as IT changes very fast.

According to me, ³IT does matter but not just IT´. IT is needed in today¶s world to grow fast but

there are other factors also which are equally needed to grow business. One needs to be highly

skillful in other things also to succeed in their business.



Does IT Matter


Rohit Roy

Does It Matter, authored by Nicholas G. Carr is an insightful book which gives the reader a piece of the

authors mind with respect to the use of IT in business. The author has been extremely critical about the

use of IT in business. He mentions that in order to gain benefits from IT, it has to be used innovatively

buy businesses. Merely using IT will not make a business successful. Even if one does make innovative

use of IT, eventually the advantage will be corroded away as it will become much more affordable and

accessible to others.

Another important learning from the book was that businesses should put in considerable effort in

minimizing the risks involved with using IT. Risks can be in the form of hacking, spamming etc. These

things can wreak havoc on an organization. Hence, companies should not just concentrate on installing

IT systems but should also concentrate on proper safety measures.

Also, in this age of dynamism, nothing can stay static. Same holds good for IT systems as well. Everything

in business today has to be done faster than ever, and everything is subject to immediate change.

Therefore, IT decisions have to be made more quickly. Put critical IT initiatives on the top of priority list.

And slot them on a fast track; they need to be completed in the shortest time possible and updates

frequently.

The IT system should be set up in such a way that it helps in achieving the strategic objectives of the

business. It should be able to provide quick access to customer, supplier and shareholder records. Also,

sales, purchases records should be quickly accessible so that resources could be allocated timely for

various purposes.

This book also provides an insight about the human behavior. It shows that whenever a new technologycomes into being, which a renewable one, is also; people tend to exaggerate its usefulness to the extent

that they are ready to pay any price for the technology. The same has been the case with IT. When it

was introduced, it started off slowly but now the kind of expenditure that the businesses are incurring

on IT and related services is astounding. Even though the benefits of IT cannot be neglected, the kind of

expenditure cannot be justified.

To finally conclude, reading this book has been a great experience and has increased my learning to a

great extent. It was a very thought provoking effort by the author, wherein the basic structure on which

all businesses are standing has been questioned. The author has been agreeable on various occasions,

however, no matter what is said, IT has given us huge benefits and saying that it does not matter wouldbe hypocrisy. In my opinion the expenditure on the use of IT should be reduced but the use of IT should

not be reduced as it helps in the overall development of the economy, especially for a developing

country like India which has gained a lot of benefits from the use of IT.

Hence, I agree with the author that expenditure on IT and related services can be reduced but I disagree

on the point that IT does not matter. Its importance is immense and it is still in its growing stage in my

opinion and things can improve leaps and bounds by the use of IT.



Does IT Matter


Bibliography

Carr, N. G. (2004). DOES IT MATTER? Information Technology and the corrosion of competitive

advantage. Boston, Massachusetts: Harvard Business School Press.

Stewart, T. A. (2003, June). Does IT MATTER? An HBR Debate. Harward Business Review . Harward

Business Review.

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